Gift Acceptance Policy
Prospective donors are urged to educate themselves and obtain independent professional counsel before making gifts. You may also print these for easy reference. MCHT is a charitable, 501(c)3 tax-exempt organization. Donations are tax-deductible to the full extent of the law.
Maine Coast Heritage Trust (MCHT) conserves and stewards Maine’s coastal lands and islands for their renowned scenic beauty, ecological value, outdoor recreational opportunities, and contribution to community well-being. MCHT provides statewide conservation leadership through its work with land trusts, coastal communities and other partners.
This policy serves as a guideline for donors, prospective donors, staff, board members, volunteers and outside advisors interested in and/or involved with contemplating or making a gift or gift commitment to Maine Coast Heritage Trust. Prospective donors are urged to educate themselves and obtain independent professional legal and financial counsel before making gifts. Please feel free to print these guidelines for easy reference. MCHT is a charitable, 501(c) (3) tax exempt organization. Donations to MCHT are tax deductible to the full extent of the law. MCHT’s tax identification number is 23–7099105.
MCHT is governed by a volunteer Board of Directors. The Development Committee of that Board is responsible for gift acceptance matters. That committee is led by a Board member appointed as its chair. The committee includes other Board members, other volunteer members, MCHT’s President and its Director of Development. MCHT’s Board (or the Executive Committee on its behalf) must ratify any restriction of gifts and any changes to these policies. The President, The Director of Development or other authorized designees shall have the authority to negotiate gifts and gift pledges on behalf of MCHT, or issue receipts on behalf of the organization. However, only the President (or the Board chair if the President is incapacitated) is authorized to execute annuity contracts and newly established endowment funds on behalf of MCHT.
Contemporaneous receipts for gifts of $250 or more will be prepared in accordance with Internal Revenue Service requirements indicating as is best ascertainable by the organization, the gift date, amount of cash given or description of property received, and any goods or services given in exchange for the gift, a description and good faith estimate of the fair market value of those goods or services. If no goods or services were received by the donor, the receipt will include a statement to that effect pursuant to IRC Section 170(f)(8).
For individual gifts or groups of related gifts valued at $5,000 or more, which are not cash or marketable securities, a donor seeking to claim a federal tax deduction for the gift must work with their appraiser and accountant to complete IRS Form 8283. MCHT will sign an acknowledgement of receipt of the gift on this form. While MCHT is not obliged to approve the claimed value, as an accredited land trust and a charitable 501(c)(3) organization operating for the public benefit, Maine Coast Heritage Trust will review donor’s appraisals of assets and will not sign Forms 8283 if it has reason to believe that no charitable gift has been made or that a clearly fraudulent value has been claimed. If MCHT sells an asset gifted subject to a Form 8283 within three years of acceptance of the gift, it must file a Form 8282 with IRS to report the sale price and any other relevant information.
CASH: MCHT shall accept all gifts by cash, credit card, or check. Checks must be made payable to Maine Coast Heritage Trust. In no event shall a check be made payable to an individual who represents MCHT.
PUBLICLY TRADED SECURITIES: MCHT shall accept readily marketable securities, such as those traded on a stock exchange. Gifted securities are likely to be sold immediately by MCHT. For MCHT’s gift crediting and accounting purposes, the value of the securities contributed will be the average of the high and low values on the date the donor transfers control to MCHT (the official date of gift), in accordance with IRS regulations.
CLOSELY HELD SECURITIES: Gifts of closely held stock will be carried on MCHT’s books at a value of $1 in the absence of financial information that would enable determination of book value. That book value can be substantiated by receipt of appropriate audited financial statements or a qualified appraisal in compliance with IRS regulation. Gifts of securities that require a holding period will be accepted, after review and approval by the President, and sold when the holding period has expired. Gifts of securities that would not be accepted include: securities that may be determined to create a liability for MCHT; securities that, by their nature, may not be assigned; securities that on investigation have no apparent value.
REAL ESTATE: The Lands Committee of the Board must first review and recommend any gift of real estate, including conservation easements, for the ultimate approval of the full Board. A donor seeking a charitable tax deduction is responsible for obtaining an independent qualified appraisal of the property offered. In support of the initial review by the Lands Committee, designated staff will pursue a thorough due diligence of the property, as outlined in MCHT’s policies and procedures, including but not limited to: conservation values, title search and real estate deed, real estate tax bill, plot plan, substantiation of zoning status, environmental site assessment for hazardous waste, and, where appropriate, a building inspection. As a general rule, mortgages and other encumbrances should be discharged prior to conveyance to MCHT.
Maine Coast Heritage Trust exists to conserve Maine’s rich natural heritage. If a gift of real estate is offered to MCHT, staff will first determine the property’s suitability for MCHT’s conservation purposes in accordance with conservation acceptance practices and policies, recorded elsewhere.
If a proposed gift has conservation value, staff will develop a plan, including ownership and/or disposition recommendations, for protection of that conservation value based on the land’s characteristics, community needs and perception, and the landowner’s intentions for the gift property.
Gifts of real property not meeting conservation criteria may be accepted for sale at the best price attainable given current market conditions, as soon as practical, with proceeds to be used to support MCHT’s conservation mission. Such properties may be unimproved, such as a subdivided house lot or land zoned for commercial use, or improved, such as an apartment building, commercial property, summer cottage or primary residence. Real estate gifts of a non-conservation nature may take a number of forms, including outright gifts, bequests, bargain sales, fractional interest gifts, gifts of remainder interests, gifts funding a charitable remainder trust, and gifts funding deferred charitable gift annuities.
In assessing whether it is in MCHT’s best interests to accept a gift of real estate for other than conservation purposes, the organization will consider the property’s title, value, marketability, location, encumbrances, liabilities, costs and income, present and future perceptions which may arise out of MCHT’s acceptance and/or resale of the property and any other issues distinct to that property that might create unacceptable challenges, undue expense, or a perception of impropriety or conflict with the organization’s mission. Where possible, MCHT will document the donor’s intent in making the gift with the intention of resale by MCHT.
As a general rule, gifts of non-conservation real estate should have a net projected value to MCHT, measured in present dollars, of at least $50,000.
TANGIBLE PERSONAL PROPERTY: Gifts of tangible personal property to MCHT should have a use related to MCHT’s exempt purpose. Gifts of art, collections, automobiles, boats, building supplies, equipment, software, and other forms of “related” tangible personal property may be accepted, with approval from the Development Committee. Such gifts as noted above will be used or sold for the benefit of MCHT. It shall be the responsibility of the donor to obtain and share with MCHT an independent qualified appraisal of the gift dated no earlier than 60 days before it is conveyed to MCHT, which adheres to all IRS requirements for disposing of gifts of tangible personal property, including filing appropriate forms.
For tangible personal property gifts made to MCHT that are unrelated to MCHT’s exempt purposes, its deduction value is limited to the donor’s basis or fair market value, whichever is less. For example a gift of jewelry to MCHT might be considered an unrelated use.
If the donor of personal property is required to file the appraisal portion of Form 8283 in connection with a deduction, MCHT is obligated to file Form 8282 if the tangible property is sold within three years of the gift. A sale of the property may raise the presumption that the property was unrelated to MCHT’s exempt purpose. A deduction for the fair market value will be allowed, despite a sale within three years, if, at the time of the gift, it was reasonable for the donor to believe that the property would be put to related use.
Because of the special rules that apply to gifts of tangible personal property, prospective donors are advised to discuss such intended gifts with MCHT in advance of a contribution how the property will be used.
For many prospective donors to MCHT, making a gift via their estate plans is an effective method to support the long term mission of MCHT. There are a variety of ways to make a future gift:
This is a gift by will or will codicil (will amendment or addition) that is payable according to the terms of that legal document. Bequests may provide for a specific dollar amount in cash, specific securities, a specific piece of real estate, specific articles of tangible personal property, a percentage of an estate, or a percentage of a residuary estate (that portion of an estate remaining after specific bequests have been made). A bequest of all or a portion of a revocable living trust may also be made to MCHT.
Samples of bequest language:
“I give (____ dollars) (or a specific asset) or (___percent of the rest, residue and remainder of my estate) to Maine Coast Heritage Trust, the charitable, tax exempt organization located in Topsham, Maine, for its general purposes.”
BEQUEST FOR SPECIFIC PURPOSE
“I give (____dollars) (or a specific asset) or (_ percent of the rest, residue and remainder of my estate) to Maine Coast Heritage Trust, the charitable, tax exempt organization located in Topsham, Maine, to be used for the following purposes: (state the purpose).”
NOTE: If a donor wishes to restrict a bequest to a specific purpose, he or she should contact the Development Office in advance to make sure that the language used will accomplish the donor’s wish and align with MCHT’s needs.
MCHT welcomes unrestricted and specific bequests that support its mission, and credits each bequest at the explicit value of the gift or gifts conveyed, to the full extent of the law. If a bequest will be used to establish an endowment fund for either a restricted or unrestricted purpose, its value should be at least $25,000.
CHARITABLE GIFT ANNUITIES
A Charitable Gift Annuity (CGA) is a simple contract between a donor(s) and MCHT. In exchange for an irrevocable gift of cash, securities, real estate or other assets, MCHT agrees to pay one or two annuitants a fixed sum each year for life. Gift annuity payments are based on life expectancy of the annuitants, from actuarially-determined rates recommended by the American Council on Gift Annuities. The payments are guaranteed by the general resources of MCHT. The minimum initial gift to fund a CGA is $10,000; additional gifts of $5,000 are welcome. Donors must be 60 years of age or older to qualify for MCHT’s CGA plan.
DEFERRED CHARITABLE GIFT ANNUITIES
Under certain circumstances, with Board review and approval, a deferred charitable gift annuity may be issued, with payments scheduled to begin no sooner than when the youngest beneficiary has reached or exceeded the age of 60. In order to be considered for a deferred annuity, payments must be deferred at least one year. A minimum initial gift is $10,000.
A deferred charitable gift annuity funded with real estate may be appropriate when the marketability of the property is not in question. In such cases an annuity rate lower than that recommended by ACGA may be appropriate, in acknowledgment of the costs and risks of a real estate-funded deferred CGA.
Payments. The donor may select annuity payments to be paid quarterly, semi-annually or annually. Annuity payments will be rounded upward to the nearest dollar to ensure that each payment will be exactly the same amount. Individual payments shall not be rounded downward. MCHT will make every effort to mail annuity payments in time to arrive on the payment due date.
Permits and Regulation. The President is authorized, upon consultation with the organization’s counsel, to take action to obtain any special permits as necessary and to otherwise establish procedures and policies to establish and operate a charitable gift annuity program.
The organization will make an effort to be aware of the investment, registration and reporting requirements of those states that have statutes regulating charitable gift annuities, and be guided by input from its own legal counsel and staff as to the necessity for filing for a permit to write annuity agreements or registering to do business in those states. Because gift annuities may be regulated according to the laws of the donor’s state of residence, and such laws change frequently, MCHT may choose to decline to enter into an agreement with any individual who is not a Maine resident. All annuity contracts offered by MCHT are deemed to have been entered into in Maine unless otherwise expressly agreed to by the parties.
Fund Purpose and Reserve Policy. An annuity is a contract between Maine Coast Heritage Trust and the donor(s), backed by the assets and good faith of MCHT. MCHT’s policy is to invest gift annuity assets in a separate and distinct fund independent of all other accounts of the organization, known as the Maine Coast Heritage Trust Charitable Gift Annuity Fund (“Fund”). The Fund shall not be applied to for the payment of any debts or obligations of the organization or for any purpose other than the annuity benefits herein described. The Fund shall include a separate and ongoing accounting of each gift, maintained until the demise of the last annuitant. At the maturity of the gift, an appropriate amount may be withdrawn from the Fund for transfer to other organizational accounts in accordance with original donor designation, if any. This policy represents a reserve policy of 100% of gifted assets in the Fund.
Recordkeeping. MCHT will maintain a separate checking account for the Fund. Appropriate records will be maintained to permit appropriate reporting of Fund activity to those states that require it by statute, should obtaining a permit in any state be required.
CHARITABLE REMAINDER TRUSTS (CRT’S)
There are two forms of CRT’s: A charitable remainder annuity trust (CRAT) and a charitable remainder unitrust (CRUT). Each is a separately invested and managed trust. The minimum age for a one or two life plan is 60 years of age. For each trust, a minimum gift value is usually $100,000.
A CRAT pays a fixed annual income for life, based on the rate agreed to by the donor(s) and MCHT.
A CRUT pays a variable income annually for life, based on the percentage (minimum 5%) agreed to by the donor(s) and MCHT and the value of the CRUT’s assets as determined once each year.
For gift crediting purposes at MCHT, the donor(s) will be credited with the fair market value for the gift at the time of its conveyance. For federal income tax purposes, the donor(s) income tax charitable deduction for this gift will be determined by the age(s) and gender(s) of the donor(s), the value of the funding assets, and interest rates. The gift deduction is always a fraction of the gift value and is often referred to as the “remainder“ value.
A range of assets, including cash, securities and un-mortgaged real estate, can be used to fund a CRT. Mortgaged real estate is not acceptable for a CRT. Real estate-funded CRUT’s, where a “flip” CRUT is used, may be appropriate. In such cases, the donor should understand at the outset that he or she will be expected to provide cash contributions to the CRUT so that the CRUT can cover the costs of holding the property prior to liquidation of the asset.
MCHT may serve as trustee of a real estate funded CRUT if MCHT is an irrevocable beneficiary and if MCHT’s expected net charitable proceeds, measured in today’s dollars, are likely to be at least $100,000 and at least 50 percent of the trust assets.
Investment and fiduciary responsibilities for CRAT’’s and CRUT’s can be handled by MCHT or by an entity selected by the donor(s).
RETAINED LIFE ESTATES
MCHT will accept a gift of a residence (not limited to one’s primary residence) or agricultural property, for which the donor retains a life estate – or an interest running for a fixed number of years. Such property gifts subject to a retained life estate – also known as remainder interest gifts – will generally be considered only for donors 65 and older. The life tenant(s) in such situations will retain full responsibility for taxes, utilities, repairs and maintenance, etc. MCHT will work with the donor(s) to agree on a written agreement detailing these responsibilities. The donor(s) in such instances is entitled to a charitable tax deduction based on actuarial and other factors.
MCHT may agree to purchase an asset, such as real estate, for a price less than its fair market value, with the intention of either retaining or selling the asset. In the case of such a “bargain sale,” the donor/seller may claim as a charitable deduction the difference between the asset’s appraised value and the sales price to MCHT. For MCHT, if it sells the land, the value of the gift is the difference between its net sales proceeds, and the price paid to the donor. MCHT will consider such arrangements when a property has significant conservation value, in the case of retention, or in the case of resale, when the net gift value of the arrangement to MCHT is likely to be at least $50,000, and when MCHT has access to funds for the initial purchase.
CHARITABLE LEAD TRUSTS (CLT’s)
A CLT is a gift plan that allows a donor(s) to transfer assets to future generations, after providing for a stream of income for MCHT for a specified period of years. Unlike a CRAT or CRUT which provides the donor a fixed or variable income for life, with the remainder given to charity at the donor’s death, a CLT pays income to a charity upfront for a period of years, and then returns that asset to either the grantor (the donor) or non-grantors (often grandchildren). The minimum age for a CLT benefitting MCHT is 60. The minimum term of years for IRS qualification is 10 years. For CLT’s, a minimum gift is usually $500,000. Because of the variety of factors involved in the parameters of these kinds of gifts, we urge prospective donors to consult with their lawyers and tax advisors for specific advice and tax implications. MCHT receipts the donor for the sum total of the yearly income made available to MCHT for the term of the CLT.
For many donors, an easy way to earmark a future gift to support MCHT is to designate it as the beneficiary of a retirement account, such as a 401(k) or IRA. Because tax deferred retirement accounts are taxed at ordinary federal and state tax rates and may also be subject to estate taxes, those with significant retirement assets can also face significant tax liabilities. So making a gift of these assets often provides a very substantial tax savings and can be done easily by filling out a beneficiary designation form provided by the plan administrator and selecting MCHT as a recipient at death. MCHT will recognize the full value of the gift conveyed, consistent with tax law.
Also, direct transfers from an IRA may be made to MCHT for individuals 70 ½ and over, up to $100,000/year, without counting the withdrawal as current income for the donor’s federal tax purposes. Such transfers count toward minimum distribution requirements. Unless renewed by Congress, this so-called IRA Rollover provision will terminate December 31, 2013.
MCHT will accept gifts of life insurance policies only when MCHT is named as both the owner and beneficiary. If the policy is fully paid, the value of the gift for MCHT’s gift crediting and accounting purposes is the policy’s replacement costs. If the policy is partially paid up, the value of the gift for MCHT’s gift crediting and accounting purposes is the policy’s cash surrender value. MCHT’s decision to cash in each donated policy will be determined on a case by case basis. In those cases where MCHT is a designated charitable recipient of an assigned life insurance death benefit, MCHT accepts such gifts with grateful appreciation.
POOLED INCOME FUNDS
Pooled income gifts are currently not accepted. Inquiries concerning them may be directed to the Director of Development.
COSTS OF GIFT ACCEPTANCE
MCHT will clarify with the donor under what circumstances, if any, MCHT will pay for legal fees or professional fees with respect to completing a gift. Normally, in the case of real estate gifts, MCHT will assume responsibility for the cost of title review, environmental site assessments and building inspections. MCHT may also choose to pay for appraisals for its own purposes. If MCHT pays for a gift cost that is the legal obligation of the donor, the value of the gift will be reduced by the cost to MCHT for the services, or alternatively, the gift may be treated as a bargain sale with the cost to MCHT as the compensation to the donor. While MCHT, as gift recipient, is not legally responsible for determining the fair market value of gifts for tax deductibility determination, as a charitable 501(c)(3) organization operating for the public benefit, Maine Coast Heritage Trust will review valuations of claimed deductions and will not accept gifts when it determines that such valuations are questionable. MCHT will be particularly vigilant in assuring that gifts from ‘insiders’ and substantial cash donors have been fairly valued.
AGENT FOR THE TRUST
Maine Coast Heritage Trust currently uses Bar Harbor Trust Company as its Agent for investment management and administrative services for planned gift funds. MCHT reserves the right to change or add agents without notice to donors.
CONFIDENTIAL GIFT INFORMATION
MCHT shall keep confidential all information obtained about prospective donors and specific gift arrangements regardless of whether or not a gift is made. MCHT may use selected information for purposes of referral, testimonial or example if a donor grants permission.
STANDARDS OF PRACTICE
MCHT staff that work in planned giving will adhere to the American Council on Gift Annuities Model Standards of Practice for the Charitable Gift Planner (which are available on the ACGA website, www.acga-web.org).
MCHT may decline any gift that in its collective judgment creates unacceptable challenges, undue expense, or a perception of impropriety or conflict with the organization’s mission.
RESPONSIBILITY FOR POLICY REVIEW
The Development Committee has the responsibility for implementing these policies and reviewing them biennially or as needed.
The donor has the right to designate a gift for specific purposes, and he or she should discuss the feasibility and practicality of intended restrictions with an MCHT development officer. Particularly as planned gifts may not mature for many years, it is important for MCHT to be aware of and document a donor’s intentions for future implementation. The Board of Directors must expressly approve any donor restrictions.
Undesignated planned gifts up to $10,000 (and the first $10,000 of larger undesignated planned gifts) shall be used to fund then current operations at the time they are realized. Any amount in excess of the first $10,000 the Board shall restrict to the Operating Endowment or to another use in keeping with the donor’s interests. A report of any annual bequests received to date will go before the Board of Directors at its annual November meeting.
CONFLICTS OF INTEREST
Maine Coast Heritage Trust will conduct all gift transactions in accordance with its conflict of interest policy.
OTHER ADMINISTRATIVE ISSUES
MCHT and its staff shall not act as an executor (personal representative) for a donor’s estate. MCHT may act as trustee or co–trustee, or successor trustee, of a charitable trust when the trust names MCHT as an irrevocable beneficiary and the net charitable benefit to MCHT, measured in today’s dollars, is at least $100,000 and at least 50% of the trust assets.
Before an endowment fund is established at MCHT, whether during the donor’s life time or by testamentary form, it is advisable to consult with a representative of the Development Office at MCHT to discuss terms and conditions.
MOST RECENT GIFT ACCEPTANCE POLICY REVIEW AND APPROVAL BY THE DEVELOPMENT COMMITTEE OF THE BOARD OF DIRECTORS OF MAINE COAST HERITAGE TRUST: March 29, 2013.
For additional information or consultation on these policies and related issues, please contact MCHT’s Development Staff.