Donation Structure

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Types of Donations

Under the right financial conditions structured donations of significant vehicles can often provide a better economic result to the donor than outright sale. They also offer an important means for the Crawford to expand and upgrade its Collection. Structured donations can take numerous forms and are frequently designed to mitigate income and estate taxes.

Examples of structured donation strategies that may be considered include:

Direct Donation of a Vehicle

Donor receives a charitable deduction for the appraised appreciated value of the vehicle and no capital gains tax on the appreciation. Value is also excluded from the donor’s estate. Compared with outright sale donor avoids income tax on appreciation, sales commissions, sales related costs such as preparation transportation and storage.

Charitable Gift Annuity

Under this arrangement, the donor makes a direct contribution of a collection of vehicles to the Crawford Museum in exchange for a charitable gift annuity. The donor receives a current charitable deduction for the donation adjusted for the value of the annuity to be received. The donor’s deduction would be based upon the appraised value of the vehicles assuming they would be used by the Museum. A portion of the annuity income would not be taxed as it represents a return of capital. The donor also avoids capital gain on the appreciation of the collection and excludes the value of the collection from the taxable estate. This strategy generally applies to a collection of vehicles; however it could be used for the donation of a single vehicle of very high value.

Charitable Remainder Trust

This type of arrangement might be used by an owner that is seeking an annual income stream from reinvesting proceeds of selling a significant vehicle or collection of vehicles that has substantial appreciation. Payments are structured for life or for a specified fixed period with the remaining value transferred to the Crawford. Its benefits are current charitable tax deduction based on appraised value, avoidance of capital gain taxes and possible alternative minimum taxes, and an immediate exclusion of the donation from the donor’s taxable estate.

This differs from the charitable gift annuity above in that the vehicle(s) would be held in a separate trust and liquidated as the trustee deems appropriate to provide income. The Crawford would assist with managing the transferred vehicles, preparing for sale and selling the vehicles. The Crawford may also serve as trustee. (There are a number of variations of the charitable remainder trust that could be designed to meet a donor’s requirements the Crawford is prepared to meet with a potential donor and the donor’s advisors to review these options.)

Liquidating a Collection
The Crawford Museum’s experience working with many collectors and their estates is that there comes a time when all or part of a collection needs to be liquidated. This may be for any number of reasons including the cost of maintaining a large collection or the collectors’ changing life style and needs.

When this occurs, the collector usually seeks to dispose of several vehicles at one time. However, the options for a single sale of multiple cars are not very attractive. Often, after taxes and other costs related to the sale, less than 50% of the full value of the collection is ever realized when a collection is sold in bulk. Large sales usually take place at auctions or to buyers who are looking to buy at a discount and resell components of the collection at a profit. In addition to commissions, marketing costs, transaction costs, and preparation, maintenance and storage costs all eat into the realized value. Finally there are income and estate taxes to be considered.

The information provided is intended as a general guide. Tax laws are changed frequently and you should contact your financial advisors about the tax consequences of any intended gift.

For More Information Please Contact:

Allan Unrein,

Director, Crawford Auto-Aviation Museum

216.721.5722 ext. 258 or allan@wrhs.org

David Sunderhaft

Chairman, Crawford Auto-Aviation Museum

Advisory Committee

216.233.5848