Elbow Lake Medical Center/Prairie Ridge Foundation

By far, the most common method for the majority of donors is a gift in the form of cash or check. The amount given is eligible for deduction on your tax return. The amount of actual after-tax cost of the donation depends on the donor's tax rate. For example, a combined (federal and state) tax rate of 36 percent could result in an after-tax cost of $640 for every $1000 given. The actual results may vary depending on your tax situation.

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The donation of appreciated investments can be an attractive option for donors where the tax cost of converting the investments to cash is substantial. Generally, a donation of appreciated investments is computed based upon the fair market value of the investments at the date of contribution regardless of the donor's original cost basis. No capital gains tax is due on the appreciation of the underlying investments. Appreciated investments include a number of assets, such as stocks, mutual funds, bonds, precious metals, real estate and many other types of investments. There are special rules associated with the contribution of appreciated investments, and we recommend that you consult your tax advisor before making any transfer of appreciated investments.

Life insurance can be an attractive way of providing for a future benefit for Prairie Ridge Healthcare. If an existing paid-up policy is gifted, the donor would be eligible for a tax deduction equal to the cash surrender value of the policy on the date of the gift. Upon death of the insured, the policy proceeds would be payable to Prairie Ridge Healthcare. Another popular alternative is the purchase of a new life insurance policy in the name of Prairie Ridge Healthcare. As the donor pays the premium, he or she is eligible for a deduction equal to the premiums paid during the tax year. Upon death of the insured, the policy proceeds are payable to Prairie Ridge Healthcare.

Many donors desire to leave assets to a charity by designation (specific bequest) in their will. Many donors make this a specific bequest in the form of either a specific dollar amount or a percentage of their estate. The donor's estate is reduced by the amount of the specific bequest, which could result in a significant reduction in federal estate taxes. To make this bequest, the donor will need to consult their attorney and direct them to revise their will to include Prairie Ridge Healthcare, as a recipient of a specific bequest.

Many donors own appreciated assets they would like to contribute to a charity, except that they desire and need to retain the income from those assets during their life. A charitable remainder trust (CRT) not only allows the donor to retain an income stream from the property; it also permits the CRT to sell the underlying property, avoid the capital gains tax on the appreciated property and take a tax deduction for the current value of the future gift to the charity. CRTs are irrevocable trusts that actually provide for and maintain two sets of beneficiaries. The first set is the income beneficiaries (you and, if married, a spouse). Income beneficiaries receive a set percentage of income for your lifetime from the trust. The second set of beneficiaries is the charities you name. They receive the principal of the trust after the income beneficiaries pass away. CRTs are a great opportunity for charitable giving. Please consult your tax advisor regarding the steps necessary to establish a CRT.