Catholic Diocese of Pittsburgh Foundation

Origins and Purpose

The Catholic Diocese of Pittsburgh Foundation was formally established in 1985 as a positive response to changing social and economic conditions within the six-county diocesan area. The vision behind it was to create and subsequently capitalize an efficient Catholic community trust that would meet the increasing demands of the diocese’s burgeoning pastoral, educational and social service programs. The Foundation’s existence would ensure a permanent source of funds and provide a unique opportunity for all Catholics to invest in the Church’s mission, to fulfill their charitable objectives and to extend their influence to the lives of future generations.

To realize this vision, a dedicated group of diocesan volunteers then launched an ambitious effort - the Catholic Crusade for the Future - and appealed to prominent area Catholics to provide the initial capital. Today, with the benefits of wise investment, the Foundation continues to grow with the evolving needs of the community and the increasing demands of the diocesan budget.

The diocese conducts more than 100 programs today. In addition to the critical work of Catholic schools and pastoral life programs, there are human service programs that stimulate understanding and involvement in such areas as race relations, peace and reverence for life. Programs for disadvantaged families and the handicapped or for the aged that cannot be operated by any single parish or group of parishes, even with the successful Parish Share Program, are funded by the Diocese of Pittsburgh Foundation.

Many of the diocesan initiatives we see at work today are the result of the teaching of Vatican Council II, which encouraged greater involvement of the laity, the work of evangelization, a worship office and offices for ecumenism to stimulate Christian unity.

Under the leadership of Bishop Donald W. Wuerl, the Catholic Diocese of Pittsburgh Foundation has grown to over $45 million in gifts and pledges, making it one of the most successful diocesan trusts in the nation.

The Foundation has become a major financial force in stabilizing, strengthening and extending diocesan programs in the pastoral, educational, human service and administrative areas and it is prepared to meet the challenges of tomorrow by initiating and developing urgently needed new programs.

For Catholics who wish to memorialize themselves or their loved ones by creating a name-endowment fund, who wish to notify us of bequest giving or to establish a life-income plan, the diocesan Foundation is the ideal giving opportunity. It is designed to be donor-sensitive and gifts can be made to a donor’s home parish programs as well as to diocesan efforts.

For many Catholics, the Foundation’s goals reflect perfectly the ideal of Christian stewardship and the bridge that it creates between our material world and the world of the Spirit within us.

Although the Catholic Diocese of Pittsburgh was formally established in 1843, the history of Catholic influence in the area began much earlier, when, in August of 1749, a Jesuit cartographer and mathematician named Father Joseph Bonnecamps offered Mass for French pioneers in the area.

As one of the centers of the industrial revolution in America, Pittsburgh became a promised land to foreign immigrants and poor Americans seeking opportunity and freedom, and its population surged between 1820 and 1900. To these hopeful but struggling newcomers whose lives were so often fraught with poverty, disease and illiteracy, the Catholic Church stood as a refuge of spiritual comfort and temporal security.

The Church responded to the needs of all who sought her help; religious communities founded and staffed many of the area’s schools, hospitals, orphanages and universities. By the turn of the century, Catholic influence flourished in western Pennsylvania and the Church’s educational, pastoral and human service programs had made a significant impact on the area’s social, cultural and economic fabric.

True to its vision of compassion and moral guidance, the Church’s work also reflected a belief in the essential dignity and equality of all human beings and their rights to freedom and justice in the new land.

The need to preserve all these ideals is what drives the Foundation today and the spirit of excellence continues in such initiatives as sustaining the fourth largest system of schools, public or private, in the state of Pennsylvania. It is also seen in the constantly evolving social programs of Catholic Charities that promote the Catholic imperatives of care for neighbor and stranger alike - for the poor, the abused, the aging, the disabled, the homeless and the unemployed. It continues with the work of our apostolic ministries. This imperative also propels visionary initiatives in the third world, such as our mission hospital in the slums of Chimbote, Peru.

Through the Foundation, Catholics and non-Catholics can continue together to use their resources to become influential participants in the wider society. They embrace this vision as equal partners of the same body in manifesting God’s promise of compassion and justice.

Faithful Stewardship in Times of Challenge and ChangeThe Foundation addresses nearly every sort of spiritual and life-guidance issue today with a number of essential programs. The vitality of our programming helps to make the diocese a productive community that sustains its members.

Involvement in the needs of others, respect and appreciation of diversity are hallmarks of the Foundation. They are part of the cement that binds us and makes our Catholic community a hope-filled one. Our programs reflect this hope and our belief in all of the possibilities of life.

Education and service to young and old at the hub of each diocesan community
Our Department for Catholic Schools maintains the fourth largest system of schools in Pennsylvania. There are 37,000 students from every social and economic condition attending elementary and secondary schools and in our pre-school programs.

The successful Bishop’s Education Fund provides tuition grants to assist families in meeting the rising costs of Catholic education and to make Catholic school education affordable for every child in the Diocese of Pittsburgh who desires it.

Religious and moral values are a critical part of Catholic education and although many of our students are non-Catholic, programs in spiritual guidance are always inclusive rather than exclusive. Religious and traditional values are never compromised, which provides the atmosphere for academic excellence that distinguishes our schools.

Some 55,000 young people and adults are enrolled in our religious education programs through the Education Secretariat’s Department for Religious Education/CCD.

The innovative Saint Anthony School Programs allow children with mental retardation to attend school in the least restrictive environment commensurate with their abilities, and enable these students to share the Catholic school experience with their peers. Our groundbreaking program to instruct people with mental retardation in the Catholic Faith - named in honor of Rose Fitzgerald Kennedy - is being advanced in cooperation with the Kennedy Family Foundation in Washington, DC. The Department for Persons with Disabilities is nationally recognized for its service to the hearing and sight impaired as well as to the physically disabled.

Service
"We are called to be the Good Samaritans on the banks of the three rivers"--Bishop Donald Wuerl

The Catholic commitment to social problems springs from the central message of Christian stewardship: that our time, our talents and our resources be applied to preserving and uplifting each life.

Catholic Charities, which has served people in need since 1910, is among the largest providers of social services in the area. As the "good works" arm of the Church, its programs address a wide range of social and economic crises, from residential care for women and babies to services for the elderly, the abused, the homeless, those suffering from hunger or from drug and alcohol addictions.

Saint Joseph’s House of Hospitality facilities provide housing and meals throughout the year in both of its city locations. Refugee services as well as adoption and foster care are also offered through Catholic Charities.

Dislocated workers depend upon the services of The Office of Employment Development and Community Concerns, which addresses the needs of the unemployed with important initiatives like the Bishop Boyle Center. The Center provides job counseling, re-training and referral services.

Bishop Wuerl has initiated diocesan-wide forums to discuss racism and the ways that Catholics can strengthen their abilities to combat its destructive effects.

Pastoral Life: Serving God’s People in Word and Sacrament
There are 800,000 Catholics in the Diocese of Pittsburgh. They are served by more than 500 priests and men religious and 1,800 women religious. This ministry network has been a genuine continuation of the work of Jesus Christ in seeking to spread the faith.

This work also extends to third world countries like Peru, where Pittsburgh Diocesan priests and religious sisters have, for over 30 years, operated a mission hospital and social works center among the desperate poor of the slums of Chimbote.

Prudent direction of the ministers of God’s people is the daily work of diocesan offices and departments in the Secretariat for Clergy and Religious. These include such essential departments as the Office for Clergy and Religious, Department of Clergy and Ministerial Formation, Saint Paul Seminary, The Office for Chaplaincies and Campus Ministry, the Office of the Delegate for Religious, and the Office for Retired Priests.

External Affairs: Broadening the horizons of the heart
There are also a number of diocesan initiatives that advance the common hope and commitment of Catholics and non-Catholics alike. Among these efforts are the Ecumenical and Interfaith Commission, the Commission to Counter Pornography, the Commission on Justice and Peace, the Theological Commission and the Commission on Cultural Diversity.

Our diocese is one of 23 judicatory members of Christian Associates of Southwestern Pennsylvania, an ecumenical organization of Christian Churches that provides a forum to develop deeper understanding of the various Christian faith traditions. Bishop Wuerl is one of eleven bishops and denominational leaders of The Christian Leaders Fellowship, which assists and supports all people in their spiritual journey - and continues and expands ecumenical ministry and programming.

The Education Secretariat’s Office for Electronic Media produces a weekly television program, The Teaching of Christ, featuring Bishop Donald Wuerl. This highly acclaimed program, aired on KDKA-TV and local cable, brings the Faith to thousands of viewers and is distributed to a national audience.

By creating a name-endowment fund in the Catholic Diocese of Pittsburgh Foundation, you are making a lasting and permanent gift that will memorialize you or a loved one in perpetuity.

There are five types of funds available for donors at the Foundation: unrestricted, restricted, donor-designated, field-of-interest and donor-advised.

It is the general practice of the Foundation that the income from these endowment funds is channeled every year to urgent needs in the six-county Diocese of Pittsburgh. It is also the general practice of the Foundation that the fund’s principal be maintained as a permanent witness to future generations of a donor’s generosity. Each fully endowed fund bears the name of the donor, or that of a living or deceased loved-one, and disbursements from that fund are made in the fund’s name and "in praise of the Living God."

Name-endowment funds are established with current gifts of cash, securities and property, or with deferred gifts through bequests and life-income agreements with the Foundation. These and other vehicles for funding your endowment fund are described in the following section of this brochure, entitled Investing in a Catholic Future - Designing Your Name-Endowment Fund. The Foundation’s staff will be happy to discuss these vehicles with you and your financial and legal advisors.

There are presently thirty name-endowment funds in the Foundation that range in size from twenty-five thousand dollars to more than one-half million dollars.

Foundation Donor Funds
The Foundation encompasses five types of fund options for donors: unrestricted, restricted, donor-designated, field-of-interest and donor-advised.

Unrestricted
The Unrestricted Fund allows the Bishop, as trustee, to direct endowment income to the areas of greatest need and priority within the diocese. These distributions are made annually by the Bishop in consultation with the Foundation’s Advisory Board.

The unrestricted fund is best suited for:

• Donors who want their gifts to have the broadest impact on the community over time.
• Donors whose motivation is to "give something substantial back to the church community" rather than to support a particular program or cause.
• Donors who have broad charitable interests or donors who are considering creating a private foundation for broader charitable purposes.
• Donors who recognize that Catholic community agencies and community needs are evolving and want their gifts to remain flexible to respond to these changes.

Restricted
Gifts to Restricted Funds within the Foundation permit the donor to restrict the entire income of his or her name- endowment fund to a specific diocesan programmatic effort. Gifts to Restricted Funds may also be made by the public at large and those not creating a name-endowment fund with the Foundation. These programmatic efforts have been established by the Foundation in response to essential church needs:

The Bishop’s Education Fund
Gifts to this essential fund provide income which is awarded as tuition assistance to elementary and secondary students in Catholic schools of the diocese. Given the fact that the diocese maintains the fourth largest system of schools, public or private, in the state of Pennsylvania, the need is pressing. The Fund was established in 1994.

The Shepherd’s Care Fund
Gifts to this fund provide income for the full range of programs associated with priestly formation. Donors may direct their gifts to one of the three areas of interest: 1) vocations and seminarian education, 2) continuing education and spiritual formation of priests, and 3) retirement care. This fund was established in 1992 in observance of the 150th anniversary of the creation of the Diocese of Pittsburgh.

Donor-Designated
A Donor-Designated fund permits the donor to specify those diocesan programs, a parish, and other charities that are to receive the income from his or her name-endowment fund. These funds are established with a minimum of $25,000 in cash, securities, or property. The Foundation will make disbursements as directed so long as the recipient program or charity fulfills the purpose the donor originally intended.

The designated fund is ideal for:

• Donors who wish to make an endowment gift to newer programs or organization.
• Donors who want to support a particular charitable effort but want third-party oversight to ensure that principal is not invaded or that the gift is used as he or she specified.
• Donors who want to support several named charitable efforts through one substantial gift.

Field-of-Interest
A Field-of-Interest fund functions as a donor-designated, unrestricted fund. Basically, the donor designates certain broad charitable purposes (e.g., education, children at risk, care for the indigent elderly) and requests that the Bishop and Foundation Advisory Board select specific programs yearly to fulfill the donor’s intention.

The field-of-interest fund is most appropriate for:

• Donors who have an abiding interest in a particular charitable thrust rather than specific programs or organizations.
• Donors who recognize that charitable programs and organizations change in mission and effectiveness over time.
• Donors who are considering creating a private foundation to support a particular charitable cause.

Donor-Advised
The Donor-Advised Fund is the Foundation’s most flexible fund. Although essentially an unrestricted-fund endowment within the Foundation, a Donor-Advised fund allows the donor the privilege of suggesting the diocesan program, parish, or charity that is to receive the income disbursement of his or her name-endowment fund in a given year. While the ultimate decision must remain with the Bishop, as trustee, and the Foundation Advisory Board, the Foundation does its best to honor donor suggestions. These must be within the aims and purposes of the Foundation. Also, it is our policy that 30% of the yearly income of a Donor-Advised fund is placed in the Foundation’s Unrestricted Fund.

A donor-advised fund should be considered for:

• Donors who want maximum flexibility to give to varying charitable efforts or to change beneficiaries over time.
• Donors who want to involve spouse, children, or associates in charitable giving.
• Donors who currently make cash gifts to numerous charities but would benefit by giving appreciated property instead.
• Donors whose incomes fluctuate but who want to maintain a steady level of charitable giving.
• Donors who are considering creating a private foundation.

The Founders Society
The Catholic Diocese of Pittsburgh Foundation Founders Society has been established to recognize contributors to the Foundation for their generosity as true Christian stewards. Their names and the standards that they have set are perpetuated in the life of the diocese through membership in The Saint Paul Legacy Founders Society and The Saint Peter Legacy Founders Society. The Saint Paul award is for those donors who have given generously to the diocese during their lifetimes by creating an endowed, name fund or by making a current planned gift or an annual sustaining contribution. The Saint Peter award is for those donors who disclose a bequest provision in their wills or who have made a deferred gift plan commitment.

Membership in the Founders Society is at the invitation of the bishop and with the approval of the donor.

Catholics have a long tradition of charitable munificence and for centuries have lived and promoted their faith as Christian stewards -- building, supporting and enriching their communities, their nations. The evidence of Catholic philanthropy is visible in all levels of our society and our civilization as we prepare to carry this tradition into the coming millennium.

The Catholic Diocese of Pittsburgh Foundation allows the Catholic tradition of generosity to work effectively for our diocesan community today and for generations hence by giving Catholics a choice of meaningful, estate-planning vehicles. With your gift to the diocesan Foundation, you are supporting the central Christian vision of shared abundance and social justice that shapes our faith.

The purpose of this section is to offer you a brief description of giving techniques that furnish the best possible personal and financial rewards for Foundation contributors. They allow you to be creative and flexible in your estate planning.

Gifts of Cash
Our government, in an effort to encourage generous charitable giving, provides significant tax benefits that can substantially reduce the cost of a large financial gift. Federal income tax laws are clear about the fact that every dollar given to qualified charitable organizations like The Catholic Diocese of Pittsburgh Foundation can be deducted in the year that the gift was made.

For example, a person in a combined state and federal income tax bracket of 41% might give $30,000 to the Foundation at an after-tax cost of

$17,700. Or, a person in the 33% combined bracket can give $1,000 at an after-tax cost of $670. These gifts are deductible in the year that they are made. Year-end givers should be advised that a check mailed by the 31st of December is considered a completed gift, even though the check may not be received until after the year has ended.

Limitations on the Charitable Deduction
Charitable deductions can never exceed 50% of your adjusted gross income (AGI). A donor with an AGI of $100,000 this year can deduct cash gifts of up to $50,000 on this year’s tax return. Gifts that exceed the 50% limitation can, however, be carried over and deducted in the following 5 years.

Gifts by Bequest
The beauty of reaching future lives with a generous charitable bequest is the first of many reasons why Catholics include the diocesan Foundation in their wills. As their financial abilities increase, many Catholics today find great satisfaction in knowing that their personal life values will be memorialized and that future generations will profit by them.

Bequests to the Foundation of $25,000 or more may be used, at the donor’s request, to establish a name-endowment fund in his/her name, at no extra charge. The name-fund may also be in the name of another individual or remain anonymous. The interest from the fund is designated by the donor for the unrestricted use of the Roman Catholic Church, or restricted to specific purposes.

An Outright Charitable Bequest
The most common charitable bequests are for specific sums of money. In making a bequest to the diocesan Foundation, for example, you might simply state in your will:

I bequeath the sum of ____________ dollars to the Catholic Diocese of Pittsburgh Foundation, Pittsburgh, PA 15222-1618. This bequest shall be known as the [name chosen by donor] Fund. This Fund shall be devoted to the charitable purposes of the Roman Catholic Church as deemed appropriate."

You might also, however, bequeath a specific property to the Foundation. A bequest of property could include real estate, an individual retirement account, pension fund or a gift of securities, to name a few. You can enjoy some unique financial and tax advantages through such bequests in addition to a sense of personal satisfaction.

This type of bequest might say:

I give, devise, and bequeath the following described property to the Catholic Diocese of Pittsburgh Foundation, Pittsburgh, PA 15222-1618. This bequest shall be known as the [name chosen by donor] Fund. This Fund shall be devoted to the charitable purposes of the Roman Catholic Church as deemed appropriate."

The charitable bequest might also be a specified percentage of the value of your estate. In this form of bequest, the Foundation will share in the increases or decreases in the estate’s value. This bequest can be as simple as:

I bequeath to the Catholic Diocese of Pittsburgh Foundation, Pittsburgh, PA 15222-1618 an amount equal to ______ percent of the net value of my estate as finally determined for estate tax purposes. This bequest shall be known as [name chosen by donor] Fund. This Fund shall be devoted to the charitable purposes of the Roman Catholic Church as deemed appropriate.

Here is an example: A donor with an estate worth $100,000 wishes to make a significant bequest to the diocesan Foundation but wants to leave the bulk of her estate to her children. In her will she bequeaths $10,000 to the Foundation and directs that the balance go to her children.

Suppose, however, that the estate shrinks to $40,000 by the time of her death. The Foundation would still receive $10,000 but her primary beneficiaries, her children, would receive only $30,000.

If this donor had simply bequeathed 10% of her estate to the Foundation and 90% to her children, all of the beneficiaries would then have shared in increases and decreases in the estate’s value and her objectives would have been met. The percentage bequest would have assured the donor’s children the greater share of the estate. Using the above example, the children would have received $36,000 and the Foundation $4,000.

Many donors feel that a residual bequest to a charitable beneficiary will best meet their objectives. The residual of an estate is the amount remaining after all monetary and specific bequests have been satisfied. This form of charitable bequest is particularly appropriate if the donor wishes other bequests to have priority.

For example, if a donor definitely wants specific properties or dollar amounts to go to individual beneficiaries but wishes for the Foundation to receive a benefit only after the priority bequests are paid, the best choice is a residual charitable bequest. Naturally, more than one residual beneficiary can be named and the donor can direct how the residual estate is to be divided among each.

Creating a Restricted Name-Endowment Fund by Bequest
In establishing a Donor-Designated Name-Endowment Fund by bequest, only the final sentence of the above wording changes:

"This fund shall be devoted to the support of [names of chosen diocesan programs, parish and so on] to share [equally, or as the donor apportions the income from the Fund to be distributed]."

THE FOLLOWING PARAGRAPH IS ADDED:

"If in the judgment of the Bishop and the Advisory Board of the Catholic Diocese of Pittsburgh Foundation it becomes impossible to accomplish the purposes of this gift, the income and principal

may be used for such related purposes and in such a manner as determined by the Bishop and the Advisory Board."

Gifts with a Retained Right to Income
A gift to the diocesan Foundation can be made under another popular arrangement whereby income will be paid to the donor and/or beneficiaries designated by the donor for life. The Foundation will not acquire the gift property, or be able to use the gift property, until after all income benefits have terminated.

The Charitable Gift Annuity
The charitable gift annuity is a convenient means of making a significant charitable gift while retaining the right to receive an income for life.

A donor transfers cash, securities or property to the Foundation and the Foundation agrees to pay a specified income (or annuity) to the donor for as long as he or she may live. For example, a 79-year-old donor might give the Foundation a $20,000 gift.

The Foundation agrees to pay the donor an annuity of $1,560 each year of his or her life. Of this amount, more than $1,035 would be free of income taxes. The gift actually would increase the donor's after-tax income.

Furthermore, nearly 50% of the gift is immediately tax-deductible as a charitable contribution, so the donor is able to make a generous gift to the Foundation as well as significantly reduce his current income tax liability.

A charitable gift annuity can be an ideal giving technique for the donor who can afford to give up principal so long as he or she retains an income for life. The gift can be in the form of cash, but stocks, bonds, mutual funds and other securities are often given to the Foundation in a gift annuity plan. A donor who gives appreciated stock can find this arrangement especially rewarding because part of the appreciation completely escapes a capital gains tax; the tax on the portion that is taxable is then spread over the lifetime of the donor.

Most importantly, your annuity gift to the Catholic Diocese of Pittsburgh Foundation can become, after your lifetime, a permanent fund in your name or that of a loved one at your designation. This option is available to contributors who meet the Foundation’s existing policies with a gift of sufficient size.

The Charitable Remainder Trust
Another popular means of making a significant gift with a retained right to income is a charitable remainder trust. The advantages of such a trust include:

A lifetime income for you and/or beneficiaries selected by you.
An immediate and substantial income tax charitable deduction.
The reduction of capital gains taxes.
A substantial reduction of probate costs and estate taxes.
The Charitable Remainder Annuity Trust

The typical charitable remainder trust agreement will direct the donor’s trustee to pay a certain specified income annuity to the donor (donor or beneficiaries) each year for life and to then transfer the property to a specified charitable institution, such as the Diocese of Pittsburgh Foundation, upon the death of the donor or the donor’s designated income beneficiaries. This type of trust is known as the charitable remainder trust.

For example, a donor might transfer property worth $200,000 to a trust and direct his trustee to pay him an income of $10,000 for his lifetime. The trustee would hold and invest the property during this donor’s life and would make the required payments to the donor each year out of the income or the principal. At the donor’s death, the trust property would be paid to the Catholic Diocese of Pittsburgh Foundation.

The Charitable Remainder Unitrust
The charitable remainder unitrust is very similar to the annuity trust but with an important distinction. Instead of a fixed-dollar income arrangement, the payments to the donor vary with the investment success of the trust. Specifically, the unitrust must direct that the trust assets be valued each year and that a determined percentage of the value be paid to the individual beneficiary or beneficiaries. If the value of the trust assets increases, the annual payments go up. However, the reverse is also true -- the annual payments will decrease if the value of the trust assets decreases.

The charitable remainder unitrust and the charitable remainder trust are alike in some ways. Donors can select the individual beneficiaries, fix the percentage of value that will be paid to these beneficiaries and specify the period of time during which income benefits will be paid. The trust can be funded with almost any kind of property. Donors may also name one or more qualified charities to receive the trust property when the income rights terminate, or they can direct that the trust be continued for the benefit of the charitable beneficiaries.

An Immediate Charitable Deduction
Tax laws in the United States allow immediate income tax deductions for gifts made to any form of charitable remainder trust, even when the income is to be paid to the donor or beneficiaries for life. These laws were designed to encourage generous charitable giving. The amount of the deduction depends upon several factors: (1) the value of the property transferred to the trust; (2) the amount of the income benefits that are payable each year to the individual beneficiaries; (3) the length of time that the income benefits will be paid; and (4) the rate of interest that prevailed at the time the gift was made.

The Charitable Lead Trust
A charitable lead trust is a giving technique that allows donors to pay the annual income from a trust to the Foundation but to ultimately pass the ownership of the trust over to their heirs upon expiration of the trust.

This is a very popular way of providing for both the Foundation as well as one’s heirs. Depending on whether the trust is established during the donor’s lifetime or at death, the value of the charitable interest is tax-deductible for gift or estate tax purposes. The lead trust can be used to reduce taxes and make a "temporary gift" at the same time.

For example, a donor might establish a $100,000 lead trust by bequest and designate that the sum of $5,000 be paid to the Catholic Diocese of Pittsburgh Foundation each year for ten years. The trustee is directed to transfer all trust assets to the donor’s grandson at the end of the ten year period. The donor’s estate can claim an estate tax charitable deduction of over $37,000. In ten years, the donor’s grandson will likely receive the full $100,000. The donor has also, through this charitable lead trust arrangement, made it possible for the Foundation to receive $50,000.

Gifts of Property
The most common and popular gifts of property today are stocks, bonds, life insurance and real estate.

Gifts of Life Insurance
Many donors make a gift of life insurance policies because their security is already established and they feel adequately covered. When a donor makes a gift of an existing policy, they can immediately deduct the present value of the policy as a charitable contribution (or the net cost of the policy if this is less than the present value). The donor’s future premium payments will also be tax-deductible.

Gifts of Marketable Securities
Stocks that are listed on one of the major exchanges or actively traded over the counter can be transferred to the Foundation easily and quickly. Many of our donors find that their gifts of marketable securities have given them distinct tax advantages, especially if the securities have appreciated in value since their initial acquisition.

The fair market value of the stocks and bonds given to charities will usually be allowable as a deduction. If a donor, for example, would give a stock now worth $5,000, he can deduct this amount on his income tax return even if he had purchased the stock for substantially less.

The value of the stock and the amount of the charitable deduction is the mean between the highest and the lowest selling price on the date of the gift, or the mean between the bid and asked price on the date of the gift.

A donor who makes a gift of securities to the Foundation will not bear any capital gains tax consequences because the gift is not considered a sale of the securities. The government has designed this as a tax reward for those who make charitable gifts of appreciated stocks and bonds. No part of the donor’s paper profit will be taxable, no matter how much the stocks and bonds appreciate in value. Therefore, the charitable deduction is allowed for profits that have never been taxed to the donor.

For example, a donor might have purchased 100 shares of Brand X stock in 1980 at a cost of $5,285 (including broker commissions). On November 30 of 1996 he directs his broker to transfer the stock to the Diocese of Pittsburgh account and the gift transaction is completed on that day. On the same day, Brand X stock sold for a high of 94¼ and a low of 92½.

This donor can deduct $9,337 as a charitable contribution (the mean high and low price between the 100 shares on the date of the gift) while avoiding a capital gains tax on the $4,052 appreciation in the value of the stock.

The donor’s combined federal and state income tax bracket (with a 28% cap on the net long-term capital gains tax) will determine the after-tax cost of the $9,337 gift:

The Foundation is not required to pay any capital gains tax, even if the property has appreciated in value. When it acquires the stock and sells it, the Foundation retains the entire proceeds.

Thus, a donor in the 41% tax bracket can give the diocesan Foundation $9,337 at an after-tax cost of only $4,902.

How To Transfer Marketable Securities To the Diocese of Pittsburgh Foundation
If you wish to transfer securities, you can simply mail the stock certificate or registered bond to the Foundation along with a signed stock or bond power (in a separate envelope). The gift is effective on the date the certificate and the stocks or bonds are mailed.

Or, once you have notified the Foundation of your intention to transfer stock, you can then direct your broker to transfer the stock to our account and the gift will be effective on the date of the transfer. Out office will provide instructions for your broker.

Limitations On The Charitable Deduction
The allowable deduction for a gift of appreciated securities cannot exceed 30% of your adjusted gross income. If your income is $90,000 for example, the maximum deduction that you can claim in the year of the gift year is $27,000. However, the excess can be carried over and deducted in the subsequent year.

Also, though it is generally understood that the full fair market value of the stock or bond is deductible, there is an important exception to this. If a sale of the security on the date of the gift would give rise to ordinary income - as distinguished from long-term capital gain - the charitable deduction is limited to the "adjusted cost basis" for the security.

The sale of securities for one year or less produces a short-term capital gain, taxable as ordinary income. Thus, a gift of such securities would result in a charitable deduction for only your cost basis in the securities.

Gifts of Real Estate
A donor can avoid capital gains taxes and deduct the full fair market value of property as a charitable contribution by giving a gift of real estate to the Foundation. The donor cannot be in the business of selling real estate and the property in question must have been held for more than one year.

Gift of a Fractional Interest in Real Estate
Our government permits a charitable contribution for gifts of fractional interest in real estate. A vacation home, for example, that is used for only part of the year by the donor, could be such a gift.

For example, a couple owns a $90,000 vacation home that they use only in July and August. They can give the Foundation a 50% interest in the property, gain a tax deduction for approximately $45,000 (or one-half the value) and still have the right to use the property for at least half the year.

Gifts Of A Remainder Interest In a Residence
An immediate income tax charitable deduction is allowed for a remainder interest in a donor’s home thanks to a special provision of the tax laws.

The donor retains an absolute right to occupy the home for life, or may likewise give family members the right of lifetime occupancy. The property passes to the Foundation only after the termination of the life estates.

The immediate charitable deduction allowable for this future gift is the present value of the Foundation’s right to receive the property at some later date. The life tenant’s age is the primary factor in determining the present value of the Foundation’s deferred interest and the allowable charitable deduction

The gift planning vehicles outlined in this booklet have been designed to help you meet your financial objectives as you invest in a Catholic future. We hope that this information will be useful in explaining some of the basic elements of estate planning.

The tax examples contained in the previous pages, which are based on general tax and legal principles, reflect federal tax laws in effect as of February 1, 1996. We advise our donors to consult with a financial advisor or attorney for more specific advice. Please be alert to any possible legislative changes.

Please contact Paul Stabile in our diocesan Office for Planned Giving at (412) 456-3055 if you would like additional information on the different ways you can include the diocesan Foundation or your parish in your estate planning.