June, 2006: "The AFCF and Planned Giving - Life Insurance Gifts"

by Mike Bourland
American Football Coaches Foundation

Courtesy: AFCA
Release: 06/01/2006

In a prior addition of the Extra Point, we discussed life insurance gifts as one of the methods of Planned Giving which can assist The American Football Coaches Foundation (the "Foundation") to meet its financial requirements. As previously stated Planned Giving is the structured and pre-planned way to donate to the Foundation. It is charitable giving through multiple tax and estate planning methods. In this issue, we will again review giving to the Foundation through life insurance gifts. But before we discuss this Planned Giving technique, let's review some of the previously described key aspects of the Foundation, as well as the American Football Association ("AFCA") their goals and how they accomplish their goals.

The goal of the AFCA is to provide education for American football coaches so that they can better serve the public, not only through the enhancement of their technical skills and coaching capabilities, but also through role modeling and character development for young men and young women. AFCA provides substantial benefits to its member coaches, at an extremely low cost, including the annual convention that all have the opportunity to attend and from which all can benefit. In order to provide these benefits, the AFCA must have available a large amount of capital.

In regard to the goals of the Foundation they too are to provide education and education funding for American football coaches to help them to better serve the public through their role modeling and character development function and to enhance the coaches' technical skills and coaching capabilities.

The AFCA is a tax exempt trade organization. Contributions to the AFCA do not qualify for an income tax charitable income tax deduction to the donor.

The Foundation is a publicly supported, tax-exempt charity. Contributions to the Foundation qualify for an income tax and estate tax charitable deduction to the donor. Revenue generation activities of the Foundation should be structured to maintain its advantageous publicly supported tax exempt charity status.

To meet the requirements of a publicly supported tax exempt charity, the Foundation must receive at least one-third (1/3) of its support from a broad range of donors, which includes AFCA member coaches. That is why your annual contributions and membership payment are anticipated and crucial to the success of the Foundation. For every dollar from an AFCA member coach, the Foundation can receive two additional dollars from a larger donor or donor foundation without endangering the Foundation's favorable publicly supported tax exempt status. Because you are now familiar with this rule, you can see how each AFCA member coach's personal involvement is important to the Foundation's strategic game plan to solicit and receive contributions from wealthy individuals and their family foundations. With these types of gifts, the Foundation has funds that it can put to work immediately in support of the Foundation's goals.

An efficient and cost effective way for coaches and those within the coaches' sphere of influence to make gifts to the Foundation is with life insurance. A coach or someone within his sphere of influence can make a significant gift to the Foundation by naming the Foundation as the beneficiary or owner/beneficiary of a life insurance policy on the person's life. Here is how it works.

A person who believes in the goals of the Foundation applies for and receives a life insurance policy on his life. When the application for the insurance is signed, the person names the Foundation as the beneficiary of the death benefit of the life insurance policy. During his life, the person (the insured under the life insurance policy) owns the policy and pays the premiums on the policy. No income tax charitable deduction is allowed the insured for his payment of the life insurance premiums. Upon the insured's death, the death benefit (proceeds) of the life insurance policy is paid to the Foundation. The payment of the proceeds to the Foundation is estate tax free to the insured and income free to the Foundation.

As an alternative, the insured, upon applying for the life insurance policy, can immediately transfer ownership of the life insurance policy to the Foundation. The Foundation then names itself as beneficiary of the proceeds of the life insurance policy. The insured makes income tax deductible gifts annually to the Foundation to pay the premiums on the life insurance policy owned by the Foundation on his life. Upon the insured's death, the proceeds of the life insurance policy are paid to the Foundation. The payment of the proceeds to the Foundation is estate tax free to the insured and income tax free to the Foundation.

As a further reminder, there is still time to acquire a Bench, Plaque, Capstone, Tile or Brick in the Plaza of Influence. The Plaza of Influence presents a tremendous method for AFCA member coaches, as well as the general public, to prominently honor a special football coach and to make a contribution to the Foundation. The Plaza of Influence is a stone-lined plaza located at the AFCA facility. For a contribution to the Foundation ranging from $2,000, for a Bench, to $200, for a Brick, you or anyone within your sphere of influence can have an inscription for, as well as a brief salute regarding, a special football coach imprinted on that which you acquire. The inscription will honor this special football coach and will be a permanent part of the Plaza of Influence, which is a significant aspect of the AFCA facility. Payment for each item will be treated as a contribution to the Foundation and will be income tax-deductible to the donor.

Please continue to plan and conduct fundraising events in your community, such as banquets and golf tournaments, for the Foundation's benefit. Proceeds from admissions, sales of merchandise, performance of services, or furnishing of facilities at an event are classified as "gross receipts" funds of the Foundation. Gross receipts funds should target a broad base of the community, as no single person can provide more than 1% of the Foundation's total support through gross receipts and have it count toward maintaining the Foundation's favorable tax status. Also, care should be taken so that no fundraising activity becomes an ongoing business, to avoid the Foundation having unrelated business taxable income (UBTI) from the activity, resulting in taxable income to the Foundation and possible loss of the Foundation's tax exempt status.

Will you consider making a gift to the Foundation through life insurance or some other Planned Giving Technique? Will you encourage others to do this? Will you continue to plan and conduct fund raising events in your community for the Foundation's benefit? Have you acquired (and encouraged others to acquire) a permanent salute in the Plaza of Influence for the special football coach in your (or others) life? Remember that the Foundation needs participation from every member coach in order to meet its goals.

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“Coach George Smith is not only an influence on young people, but the influence is multiplied many times in the beliefs of the young people he helped mold into amazing human beings. George is an outstanding coach, but more importantly, he is an outstanding gentleman.” —Tina Jones, Principal of St. Thomas Aquinas High School