How to Establish a Scholarship, Make a Donation or a Planned Gift

How to Establish a Scholarship,
Make a Donation or a Planned Gift

The AFSA Scholarship Fund was established in 1932. As a 501(c)(3) charity, all donations are tax deductible. The AFSA Scholarship Program is supported by various fund-raising efforts, interest from its endowment, individual and group contributions, memorial donations, and planned giving arrangements.

Diplomatic and Consular Officers, Retired (DACOR) Bacon House Foundation through its Heyward G. Hill and Harriet G. Thurgood Scholarships and the Associates of American Foreign Service Worldwide (AAFSW) through its annual BOOKFAIR fundraiser provide substantial support to the AFSA Scholarship Program.

How to Establish an Annual or Perpetual Scholarship
AFSA accepts individual donations of any amount but also has an endowed named scholarship program for those donors who prefer to make larger contributions. These scholarships are bestowed as part of AFSA's Financial Aid program for undergraduate college study or as merit awards for high school seniors. There are two ways to establish named scholarships.

Annual Named Scholarships are established on a yearly basis and can be renewed. The minimum gift is $1,000.

Perpetual Named Scholarships are established by a donation which guarantees that a contribution will live on in perpetuity because the sum is protected and only the interest is used to fund yearly scholarships.

A minimum gift of $12,000, added to the AFSA scholarship endowment, establishes a Perpetual Named Scholarship. Once a perpetual scholarship has been established additional gifts, in any amount, can be further donated to the named fund.

In addition to providing needed financial assistance to Foreign Service children, the named scholarships are an effective way of preserving Foreign Service history. When these awards are bestowed to the students, biographical data is provided about the person for whom the scholarship has been named. Students are given an opportunity to learn about the contributions of those who have served their country abroad and are encouraged to correspond with the individual who established the award, or a member of his/her family at least once a year and many form a stronger tie. It is totally up to the donor and student how much contact they would like with one another.

All named scholarships are publicized in the Foreign Service Journal. Restrictions can be placed on a named scholarship although it may make it more difficult for AFSA to bestow the award.

Scholarships have been established in a number of ways. Donors have remembered AFSA in their wills, some have established trusts in which the AFSA Scholarship Fund is named as a beneficiary while others have donated appreciated securities. Before making a planned gift, we recommend that you meet with your attorney or tax advisor to discuss the financial and tax implications of your charitable contribution.

The Scholarship Fund endowment's is invested in large capitalization, small capitalization and international stocks whose investment broker is Smith Barney Shearson. The AFSA Governing Board oversees the management of the investment portfolio through regular review.

Contributions to the AFSA Scholarship Fund are fully tax deductible. Checks should be made to the "AFSA Scholarship Fund". A cover letter should accompany your gift which specifies your wishes.

To make scholarship donation, you can:

Use your Master Card or Visa and call 1-800-704-2372, ext. 504
Send a check payable to "AFSA Scholarship Fund",
AFSA, 2101 E Street, NW, Washington, DC 20037
Include an additional amount when you renew your AFSA membership.
Contribute through the Combined Federal Campaign. If in the Washington, DC area, the CFC # is 11759.

Planned Giving at AFSA
The Planned Giving Programs of AFSA can enable donors to make substantial gifts in ways that can complement their personal financial planning.

A planned gift to AFSA can also bring financial benefits to you. These planned gift options can generate lifelong income; convert low-yielding assets into a higher income stream at a reduced capital gains cost; obtain significant income tax deductions; and reduce or eliminate estate taxes.

Donors often find that a combination of planned gifts produces the best results. We are happy to talk with donors and their financial advisors to design the most advantageous ways of giving.

Our Programs Include the following:

Bequests
Outright Gifts

Gifts of Securities
Real Estate
Charitable Gift Annuity
Gifts of Retirement Assets
Life Insurance Gifts

For more information contact:
Ms. Lori Dec
Scholarship Director
American Foreign Service Association
2101 E. Street, N.W.
Washington, DC 20037
202-944-5504 or 1-800-704-2372 Ext. 504
202-338-4045 - fax
dec@afsa.org - email

Bequests
Gifts made by will are one of AFSA's most important sources of individual support. Bequests can be made in the form of a specific gift of cash or property, or a percentage of the remainder of an estate. The latter allows more flexibility in planning. The following language has been approved by AFSA's counsel as an effective bequest to either non-profit organization the AFSA Scholarship Fund or the Fund for American Diplomacy:

I give to the ____(insert organization's name)_____, the sum of $_______ (or _____%) of my estate; or the property described herein for its general purposes.

Outright Gifts

Gifts of Securities
Owners of appreciated assets can obtain substantial tax benefits by transferring those stocks and bonds directly to AFSA.

First, donors will receive an income tax deduction equal to the fair market value of the stock on the effective date of their gift. In addition, they avoid capital gains tax on the transfer.

Example:
Five years ago, Donor bought 100 shares of Universal International Co. at $50 per share. The current fair market value of the shares is $100 per share. Donor decides to dispose of the stock and make a gift of the proceeds to AFSA.

If donor sells the stock directly, donor will pay a capital gains tax on the difference between the purchase price and the current market value. If Donor transfers the stock directly to AFSA, no capital gains tax will be due on the transfer and Donor will receive an income tax charitable deduction equal to the full fair market value of the stock.

Real Estate
AFSA accepts gifts of real property from donors. Real estate gifts can be in the form of undeveloped property, a personal residence or farm, rental property or commercial property. The owner of the property is entitled to an income tax deduction based on the appraised value of the property. AFSA carefully examines each piece of real estate prior to its acceptance as a gift in order to reduce the possibility of liability issues related to the property.

Charitable Gift Annuity
The simplest gift arrangement, this is a contract between AFSA and the donor, providing for the payment of life income at a fixed rate. The donor receives an income tax deduction in the year of the gift, subject to the usual rules of deductibility.

The annuity has an attractive provision for the taxation of the income: a portion of each payment is treated by the IRS as the nontaxable return of the donor's principal; another portion is taxed as a capital gain to the donor if appreciated assets are contributed; and the balance is taxed as ordinary income.

The donor may contribute cash or securities to establish a gift annuity. The annuity may have no more than two income beneficiaries.

The minimum contribution for a gift annuity is $10,000.

Gifts of Retirement Assets
Careful planning for the disposition of retirement plan assets can help to avoid undesirable tax costs. In certain situations, gifts to AFSA of retirement account balances can improve the donor's overall tax consequences, increase the amounts passing to heirs and reduce income and estate taxes.

Life Insurance Gifts
The large cash value resulting from a relatively small premium makes a life insurance policy an attractive planned gift. A gift of life insurance may be made in one of three ways:
1. Donate a fully paid up policy, naming AFSA irrevocable owner and beneficiary. The donor is entitled to an income tax deduction for an amount equivalent to the cash value of the policy.

2. Donate a policy on which premiums are still owing, naming AFSA irrevocable owner and beneficiary. The donor is entitled to an income tax deduction for an amount equivalent to the cash value of the policy and for any additional gifts to fund premium payments.

3. Purchase a new policy, naming AFSA irrevocable owner and beneficiary. The donor is entitled to an income tax deduction for gifts made to AFSA that are designated for premium payments.