You can benefit from the tax savings that result from supporting the Smithsonian Institution without giving up the assets that you'd like your family to receive someday with a donation in the form of a charitable lead trust.
There are two ways that charitable lead trusts make payments to the Smithsonian:
A charitable lead annuity trust pays a fixed amount each year to the Smithsonian and is more attractive when interest rates are low.
A charitable lead unitrust pays a variable amount each year based on the value of the assets in the trust. With a unitrust, if the trust's assets go up in value, for example, the payments to the Smithsonian go up as well.
Contact the Office of Gift Planning at 888-419-7584 or legacy@si.edu to talk about supporting the Smithsonian by setting up a charitable lead trust.
An Example of How It Works
George would like to support the Smithsonian and receive tax benefits. George received a windfall amount of income and needs a large income tax deduction to offset the income. Following his advisor’s recommendation, George funds a grantor charitable lead annuity trust with assets valued at $1,000,000. George’s trust pays $60,000 (6% of the initial fair market value) to the Smithsonian each year for 15 years, which will total $900,000. After that, the balance in the trust reverts back to George. He receives an income tax charitable deduction of $614,445. Assuming the trust earns an average 8% annual rate of return, George receives approximately $1,600,286 at the end of the trust term.
*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.