In Your Midst


Summer 2001

In This Issue:
In a rare partnership with a local for-profit banking institution, St. James Cathedral is offering a new way for parishioners and friends of the parish to “invest in the church.” The Charitable Certificate of Deposit Program is a customized investment and gift opportunity, which takes advantage of the unique characteristics of the traditional certificate of deposit in order to benefit both you and the Cathedral. The Charitable Certificate of Deposit Program will be managed through Pacific Northwest Bank and will allow you, the donor, to control both the scope and direction of your gift without involving expensive legal documents or complicated charitable trusts.

What is a Charitable Certificate of Deposit (CD)?

A Charitable CD is a certificate of deposit where you, the purchaser, are allowed to direct the income to the Cathedral as a legal nonprofit entity.

How does the program work?

When you buy a CD from Pacific Northwest Bank, you assign the interest from the CD to the Charitable Partnership Fund (CPF). You do this by filling out an enrollment form on which you designate the Cathedral as recipient of the interest. CPF will then track your interest accumulation and distribute the interest to St. James.

Who actually owns the CD?

You do. Only the interest earned on the CD goes to the charity. You retain full ownership of and control over the CD principal (which is FDIC insured).

Can I ever change my CD to get my interest back?

To start receiving your interest again, you can redeem the CD or wait until it matures and then reinvest the funds.

Do I get a deduction for the interest going to the parish?

Under this program, a deduction is not needed because you never include the interest income on your tax return. It goes directly to the CPF for distribution.

Who receives the most tax benefit from this program?

Those who do not itemize their deductions benefit because they ordinarily don’t get any tax benefit from charitable gifts. High net-worth individuals benefit because the “alternative minimum tax” rules become more punitive as a taxpayer’s income rises; by directly reducing taxable income, other deductions become more valuable.

What about the “average” taxpayer who itemizes?

With cash gifts, you are contributing from money that has already been taxed. So in effect, you have less money to give than you would with a Charitable CD whose interest is not taxed.

Mary Ann Millican is the director of development for St. James Cathedral as well as a parishioner.

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