Glossary

Term

Definition

501(c)(3) status

Tax-exempt, non-profit status.

A non-profit, charitable organization that has applied and received tax-exempt status from the IRS under Section 501(c)(3) of the Internal Revenue Code does not pay federal corporate income tax, and contributions to it are tax-deductible to the full extent of the law.

Annuity

See Charitable Gift Annuity

Bargain Sale

In this type of sale, the donor sells the property to the Foundation for less than the present fair market value. A charitable deduction is allowed for the difference between the sales price and the fair market value. The donor is taxed on the capital gain between the cost basis and the sale price.

Bequests in Wills

Gifts made through a will to the Pellissippi State Foundation. Such charitable bequests, like current gifts, are fully deductible to the extent of the law.

Cash Gifts

Cash, check, or credit card for all donors, as well as the option for payroll deduction for Pellissippi State employees.

Challenge Grant

See “Endowment Challenge Grant”

Charitable Gift Annuity

In this contractual agreement, a donor gives the Foundation cash or property. In exchange, the Foundation agrees to pay the donor and/or one designee an annual income payment for life. Only part of the gift is a charitable donation because some of it is future interest.

Charitable Lead Trust

The income from an asset, not the asset, is donated to the Foundation. (“The donor keeps the tree and gives the fruit.”) At the end of the payment period, the trust property reverts to the donor (called a “grantor” or “reversionary” lead trust) or passes to the donor’s family and other heirs (called a “non-grantor” or “non-reversionary” lead trust).

Charitable Remainder Annuity Trust

This is irrevocable. A donor transfers property to a trustee (such as the Foundation) to fund a trust that will pay the donor (and a beneficiary) a fixed amount of money each year for life. The amount does not vary because the payout was determined using a percentage of the initial fair market value of the property. The remainder in the trust at the end of the beneficiary’s life goes to the Foundation (the charitable beneficiary). (This is as example of how a donor can “give the tree; keep the fruit.”)

Charitable Remainder Trust

See “Charitable Remainder Annuity Trust” (pays a fixed dollar amount annually) or “Charitable Remainder Unitrust” (pays a fixed percentage of the trust’s assets as valued annually).

Charitable Remainder Unitrust

Like the charitable remainder annuity trust (see above), this is another example of planned giving in which the donor “gives the tree” (property, cash, or stocks) and “keeps the fruit” (income). The difference is that the amount of money paid out to the donor (and a beneficiary) each year may vary, because it is based on a fixed percentage of the trust’s assets as valued annually. The remainder in the trust at the end of the beneficiary’s life goes to the Foundation.

Closely Held Stock

Non-publicly traded securities. Fair market value for certain assets can be readily determined. For example, publicly traded stock is quoted every day. However, in the case of closely held stock, such as in a family business, fair market value is not easily determined and can be subjective.

CRAT

See “Charitable Remainder Annuity Trust”

CRUT

See “Charitable Remainder Unitrust”

Deduction

An amount of money that can be subtracted from taxable income. Currently, only taxpayers who itemize deductions on Schedule A of their income tax forms can deduct charitable gifts. Deductions for charitable contributions are generally limited to 50% of your adjusted gross income, but in some cases 20% and 30% limits may apply.

DTC

Depository Trust Company

Endowed

Endowment funds are funds received by the Foundation from gifts, grants, and bequests for which the donors have stipulated, as a condition of the gift, that the principal of the fund be maintained and invested for the purpose of producing income to be applied to uses specified by the donor.

Endowment Challenge Grant

A Title III grant from the U.S. Department of Education. The grant will match every donation given to an endowment. The current grant expires on September 30, 2008, or when $362,000 in donations to endowed funds have been matched (whichever occurs first).

FAQ

Frequently Asked Questions

FMV

Fair Market Value

Fundraising

Raising funds to support Pellissippi State and its students is the main purpose of the Foundation. Methods of raising funds include hosting fundraising events, soliciting gifts from corporations and organizations in the community, and educating private citizens about the benefits to themselves and others from charitable giving. Funds are also raised through grants and through the generous donations of faculty and staff.

Grantor Lead Trusts

See “Charitable Lead Trust”

Greatest Need Fund

Gifts to the Greatest Need Fund are unrestricted assets of the Foundation that are dispersed where there is the greatest need to meet the goals of the Foundation. Because donors of unrestricted gifts do not target the use of their gifts to specific funds, these gifts provide the flexibility needed to respond to the College’s most pressing needs.

Honorary Gift

Making a donation to the Foundation in the name of an organization or living person whom the donor wishes to recognize and honor.

Income in respect of a decedent

This is the description for income someone earned but did not receive during his/her lifetime, such as residual retirement plan or employee-benefit plan distributions and professional fees or salaries. These residual assets will be subject to estate taxes.

In-Kind Gifts

All non-cash gifts are termed “in-kind gifts” or “gifts-in-kind.” There are three main categories of in-kind gifts: 1) Equipment and supplies, 2) services, and 3) all other types of in-kind (non-cash) gifts. In-kind gifts require approval before acceptance.

Internship

An opportunity for students to gain valuable work experience by working for a business or company in their field of study. Internships at the College are generally for one semester, are taken for credit, and can be either paid or unpaid.

IRA

Individual Retirement Account. See “Retirement Plan Assets.”

Lead Trust

See “Charitable Lead Trust”

Life Estate Gift

You can give the Foundation your home but continue to live there. After your death, a surviving spouse or another relative can still live there without estate taxes. Then the home passes to the Foundation.

Living Trust

See “Revocable Living Trust”

Loans

See “Student Emergency Loans”

Matching Gifts

Many employers agree to match or multiply donations to a charity made by both active and retired employees and, in some cases, employees’ spouses. Also see “Endowment Challenge Grant.”

Memorial Gift

Making a donation to the Foundation in the named of a deceased person whom the donor wishes to recognize and honor.

Named Giving

Named giving is a way to honor and thank donors for their charitable gifts or service to the College or the Foundation. The level of gift or service determines the named giving opportunities available. Named giving includes posting names of donors in a public display, publishing names in an annual report, naming a scholarship or endowed chair as directed by the donor, and naming a physical asset of the College (such as a classroom or building).

Non-grantor Lead Trust

See “Charitable Lead Trust”

PDF File

Portable Document Format. This is a file format that retains all the elements of a printed document in an electronic image that you can view or print. PDF files are created and viewed using Adobe Corporation’s Acrobat software. There is no charge to download Adobe Reader from the Internet.

Personal Property

Any property that is not real property. While state laws vary on the definition of personal property, it is generally thought of as the movable items that a person owns. They can be tangible, such as furniture and other merchandise, or intangible, such as stocks and bonds. Other examples are paintings, antiques, and other objects of arts; jewelry and gems; household goods; book, stamp, and coin collections; collections of manuscripts, autographs, signatures, and diaries; and vehicles such as cars, boats, and aircraft.

Planned Gifts

Making a gift to the Foundation through your estate, or charitable giving that is part of an overall plan to manage your assets both before and after your death.

Pledge

A pledge is a promise to make a gift in the future. Pledges may be paid in a single payment or in installments.

Real Estate

Land and the buildings and other improvements attached thereto. Examples include a personal residence, vacation home, commercial property, farm, and vacant land. All gifts of real property to the Foundation must be approved prior to acceptance.

Remainder Trust

See Charitable Remainder Unitrust and Charitable Remainder Trust

Restricted Fund

Gifts to restricted funds are targeted to a specific use identified by the donor. For a restricted fund that is endowed, the principal is maintained in perpetuity, and the investment earnings are distributed according to the donor’s wishes. For a restricted fund that is not endowed, both principal and earnings may be distributed, and they are used for the purposes specified by the donor.

Restricted Securities

Unregistered securities, investment-letter stock, control stock, or private placement stock. (The Foundation does not accept gifts of restricted securities. This is because of the difficulty of selling or disposing of such stock. According to a TBR Policy 4:01:04:00, “Solicitation and Acceptance of Gifts,” corporate stock given to the Foundation must be sold through a registered security broker within 60 days of receipt of the stock certificate.)

Retirement Plan Assets

Assets from a tax-deferred retirement plan like a 401(k), 403(b), or Individual Retirement Account. Because of tax implications, donors may want to consider passing assets from such plans to the Foundation through their estate, and using other assets to benefit heirs.

Revocable Living Trust

This is a flexible agreement whereby you transfer and manage property in a trust (this is not a charitable remainder trust). You can make yourself an initial beneficiary, with the remainder passing to the Foundation when you die. The assets can be returned to the donor upon request.

Secure Form

A method of protecting sensitive or personal information (such as a credit card number) when it is sent over the Internet. When visitors to a Web site submit information using a “secure form,” only authorized users have access to the data.

Securities

Publicly traded stocks, bonds, and mutual funds

STT

The Scholars Today and Tomorrow endowed scholarship program

Student Emergency Loans

Short-term, interest-free loans to students. The loan must be repaid by the end of the semester in which it was given.

TBR

Tennessee Board of Regents

THEC

Tennessee Higher Education Commission

Unrestricted Funds

These are gifts from donors who do not restrict the use of their gifts to specific funds. Gifts to unrestricted funds can be utilized at the discretion of the Foundation for any purpose that helps it achieve its mission. Also see “Greatest Need Fund.”