Jim and Mary Smith would like to establish a named trust fund and help their parish with Catholic School scholarship assistance. They have invested prudently in the stock market and decided to make a charitable gift with some of their unexpected growth in net worth from the dramatic market gains of recent years. they open their account by transferring $10,000 worth of IBM stock to the Archdiocese. In return, they receive a tax deduction for the full $10,000 in market value transferred, even though they paid only $5,000 for these same shares at the time of investment. (If they would have sold the stock first and then made the gift, they would have been liable for the income tax on the capital of the stock). Separately, the Smiths agree to fund a charitable bequest in their will for at least $15,000, thereby meeting the toal $25,000 commitment provision of the named fund. With the transfer, the Mr. and Mrs. James Smith Family Trust Fund is established within the Catholic Community Foundation with a trust agreement signed by the Smtihs and a representative of the Archdiocese. A provision is made that all proceeds of the fund will be designed to provide scholarship funding to children from Our Lady of Perpetual Help parish to attend a Catholic elementary or high school. The Smith Family Trust is established as an apportioned part of the entire endowment trust fund of the Catholic Community Foundation. Earnings are disbursed from the trust fund at an approximate rate of 5% annually. A report of earnings and distributions is sent to both the donor and the parish in the fall of each year. The fund is disigned to realize a strong total return of interest, dividends and total growth while taking reasonable means to convserve capital. No guarantee of performance is possible, but the fund will be managed prudently over time for both earnings and growth. A management fee of .75% will be charged to the fund annually to offset the legal, administrative, investment and development expenses of the Foundation.
Setting up these types of named trust funds holds great promise for the Church in the future. For example, named funds can be established on the occasion of a special birthday, anniversary, or retirement for example. Once established, they will likely become a favorite home for future gifts from the donors themselves or from family or friends of the donors. Most significantly these types of funds are most likely to be named as the residual beneficiary of gift annuities, charitable trusts or charitable bequests in a will. If the Catholic Church, its parishes, schools and agencies can begin to realize their share of these types of charitable gifts, the potential for sustaining and expanding critical ministries in the future is enormous. What are the possibilities for getting great gifts for your parish or school by using this creative approach? You name it.