If you have questions concerning the AGA Foundation please contact Don Estes, Foundation Committee Co-Chair, at 828-738-8167 or Dianne Coffman at the AGA office, 303-465-2333.

Building the AGA Foundation
By E. Edd Pritchett, AGA Legal Counsel

The American Gelbvieh Foundation ("Foundation") was incorporated by the Board of Directors of the American Gelbvieh Association as a separate nonprofit corporation in the State of Colorado on October 19, 1991. The Foundation was formed exclusively for charitable, educational and scientific research purposes within the meaning of Section 501 ( c ) (3) of the Internal Revenue Code of 1986, as amended. The Foundation received its advance ruling from the Internal Revenue Service, May 6, 1993.

The Foundation has no members, only a Board of Directors. The By-Laws provide for the same directors as the directors of the American Gelbvieh Association with the same terms of office. The officers may be different from the AGA officers with the exception of the Executive Director who serves at the pleasure of both boards.

Prior to the Foundation being formed, several members had inquired of the AGA staff as to whether a gift to the AGA would automatically be tax deductible. These members were advised that a donation would be deductible only if the gift could be characterized as made for a legitimate business purpose, such as advertising or services. Because of this uncertainty, the Foundation was formed for the purpose of receiving tax exempt donations from members and supporters of the AGA. The impetus for forming the Foundation came from an AGA member who indicated that he would make a $5,000 donation if it could be made to a tax exempt foundation and thus be automatically treated as a tax deductible donation. The AGA formed the tax-exempt foundation, and the member made good on his promise.

The AGA also formed the American Gelbvieh Junior Foundation for the purpose of receiving tax exempt donations to the Junior Association. However, because of the high cost of obtaining the tax-exempt status and keeping separate books and records, the decision was made not to continue the Junior Foundation. Instead, a Junior Division of the American Gelbvieh Foundation was established for the purpose of overseeing the receipt and disbursement of donations made for the specific purpose of funding junior activities. The Junior Division has its own committee members including two of the junior officers, junior advisor and AGA staff.

Funds donated specifically for Junior activities are maintained by the AGA at the discretion of the Junior Division Committee and kept separate from the general funds of the Foundation. Funds of the Junior Division are used exclusively for Junior activities as determined by the Junior Division Committee unless otherwise directed by the donor.

Types of Gifts

Gifts in the form of cash and personal property such as livestock, semen and vehicles may be made to the Foundation, as well as gifts of real estate, depending on the desires of the donor. A receipt will be given for all gifts of cash for the calendar year in which the gift was made. A reputable appraiser will appraise gifts of personal property and real estate and a written receipt issued by the Executive Director. No gift is too small or too large, however, the Foundation reserves the right to refuse certain gifts.

Charitable Remainder Trusts

A popular way for a donor to fund a tax-exempt gift, and also enjoy the use of the property, is to create a charitable remainder trust. This type of gift is being used extensively by other tax-exempt organizations such as universities and local development foundations.

To create a charitable remainder trust, the donor first creates a written living trust and transfers certain real estate or personal property to the trust. The trust agreement provides that the donor may have the use of the property during the lifetime of donor and his/her spouse. Upon the death of the donor and the surviving spouse, depending on how the gift is made, the trustee will distribute the property to the Foundation. When the property is transferred to the trust, the donor is permitted to deduct the value of the property, less the value attributable to the donor’s life estate. The value of the remainder, which is usually much greater that the life estate, depending upon the age of the donor and applicable life expectancy tables, is deductible as a charitable donation by the donor at the time of the transfer of the property to the charitable remainder trust. The donor receives the income from the property during his lifetime, and yet receives the benefit of a substantial charitable deduction during his lifetime as well. The donor also avoids the capital gains tax, which would apply if the asset were sold, and the gift takes the asset out of the donor’s estate.

Gifts of Future Interest

Instead of giving a gift at the present time, a donor may give a future interest of cash, personal property or real estate to take effect upon his death. A donor may elect to devise or bequeath a gift in his will to the Foundation. To make a gift to the Foundation, the donor must designate the American Gelbvieh Foundation, Westminster, Colo., as the beneficiary in his Last Will and Testament or his Trust and direct his personal representative or trustee to distribute the property of his choice to the Foundation upon his death. The estate will be able to deduct the gift as a charitable deduction and reduce the amount of income or estate taxes attributable to the estate. The donor may want to specifically designate how his gift is to be used, such as the junior program, scholarship program and educational use by the Foundation.

Legal Assistance Provided

After a donor reaches the decision to make a present or future gift to the Foundation, he or she should contact the AGA office and let the Executive Director know of his interest. The Foundation will provide the legal assistance at its own expense to assist the donor in preparing the documents necessary to transfer the gift to the Foundation and assist the donor in preparing the documents necessary to transfer the gift to the Foundation. The Foundation will also assist in obtaining recognition of the deduction by the Internal Revenue Service. In the event of a Charitable Remainder Trust, the trust may be used for other estate planning purposes, in addition to the gift to the Foundation. In most instances, the Foundation will pay the legal expenses for the preparation of the documents and transfer of assets to the trust.