Techniques of charitable giving;

              Today's expanding economy has given rise to in­creased
income and increased community problems.
The need for charitable giving has reached an all time
high and taxpayers with substantial income are con­stantly
called upon to give more and more. A sense of
civic responsibility has prompted many individuals to
reach into their pockets to support a cause. And, aside
from recognition of the need of charitable organizations,
taxpayers have responded to the call for various per-techniques
of QTatitable
Giving
by Ronald S. Fiedelman
sonal motives. Corporations have also been active in
charitable giving for civic reasons and for the indirect
benefits they derive by maintaining a favorable image
in the local or national communities. Moved by civic
responsibilities and a knowledge of these benefits, many
individuals and corporations have further responded
because Congress has lowered the actual cost of giving
by providing attractive provisions in the Internal Reve­nue
Code. Depending upon the income tax bracket of
the taxpayer, the out-of-pocket cost of charitable con­tributions
can be reduced by 14% to 70% of the actual
amount donated by individuals and by 22% to 48%
of the actual amount donated by corporations.
This article will discuss the law and regulations and
other tax considerations which provide typical bases
upon which individuals and corporations may pursue
the field of charitable giving. It should be noted, how­ever,
that trusts, estates and other business entities are
also typical donors to charitable organizations.
WHAT IS A CONTRIBUTION?
Perhaps an idealistic definition of a contribution
would be to say that it is a conveyance of property, dur­ing
life or by will, to an organization dedicated to the
furtherance of public interest and welfare from which
the donor may realize a specific goal and satisfaction
in knowing that his generosity will directly or indirectly
benefit others. A realistic definition, however, would
couple the civic motives with tax benefits that accrue
directly to the donor.
The Internal Revenue Code has defined a charitable
contribution in terms of transfers to qualified recipi­ents.
1 These include the United States, municipalities,
community chest and individual charitable type organi­zations,
war veterans organizations, fraternal societies,
cemetery companies and certain students who are mem­bers
of a taxpayer's household. In listing these recipi­ents,
the Internal Revenue Code has further specified
that in the case of the United States and municipalities
the gift must be made for exclusively public purposes.
In addition, community chest and individual charitable
organizations must be U.S. organizations, they must be
"organized and operated exclusively for religious, chari­table,
scientific, literary, or educational purposes or for
the prevention of cruelty to children or animals."2 Earn­ings
cannot inure to the benefit of private individuals
or shareholders and the activities of these organizations
cannot be political in nature. The use of funds by war
veterans organizations and fraternal societies is simi­larly
limited. Cemetery companies and certain students
who are members of a taxpayer's household must meet
certain requirements. However, these will not be dis­cussed
in this paper.
22 THE QUARTERLY