A net net gift agreement, also known as a split-interest gift agreement, is a type of charitable giving arrangement that benefits both the donor and the organization receiving the gift. In this agreement, the donor contributes assets to the charitable organization and receives a tax deduction for the value of the gift. The organization, in turn, manages the assets and pays the donor a fixed income for a certain period of time.
This type of gift agreement typically involves assets such as securities, real estate, or other valuable property. The organization can manage the assets and invest them in a way that generates income, which is then paid to the donor as a fixed percentage of the asset value over a set period of time.
One of the advantages of a net net gift agreement is the immediate tax deduction for the donor. The value of the gift is determined by subtracting the present value of the income stream from the fair market value of the assets contributed. The donor is then able to take a deduction for the remaining value of the gift, which can be spread out over several years if necessary.
Another benefit of this type of agreement is the ability of the organization to benefit from the asset value over time. By managing the assets and investing them in a way that generates income, the organization can use these funds to finance various charitable programs or initiatives.
There are several different types of net net gift agreements, each with its own unique characteristics and requirements. It is important for both the donor and the organization to carefully consider the terms of the agreement and seek advice from legal and financial professionals before making any decisions.
In conclusion, a net net gift agreement can be a win-win for both the donor and the charitable organization. By contributing assets and receiving a tax deduction, the donor can support a worthy cause while also benefiting financially. The organization, in turn, can benefit from a steady income stream and the ability to fund important programs and initiatives. With careful planning and consideration, a net net gift agreement can be a powerful tool for charitable giving.