Presentation is loading. Please wait.

Presentation is loading. Please wait.

Provides tax deduction for donation pays investor dividends if profitable per best terms offered The Old Philanthropy Charitable Giving Model The Old “Risk”

Similar presentations


Presentation on theme: "Provides tax deduction for donation pays investor dividends if profitable per best terms offered The Old Philanthropy Charitable Giving Model The Old “Risk”"— Presentation transcript:

1 provides tax deduction for donation pays investor dividends if profitable per best terms offered The Old Philanthropy Charitable Giving Model The Old “Risk” Investment Model Investor Makes “risk” investment Charity uses assets to further its mission makes charitable donation Donor with cash or other assets Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

2 Introducing Insurance-Linked (securitization) NIMCRUT (Net Income with Makeup Charitable Remainder Unitrust) with Return on Donation - “iCRROD ™ ” or herein “CRD” What if you could make a income tax deductable donation to a charitable trust, then direct a portion of the funds to be invested in worthy businesses of your choosing, and also receive a positive IRR and the realistic potential of a double- digit IRR & a 5+X ROI from that charitable donation? Additionally, upon your death, your beneficiaries or a designated charity receive tax-free income twice that of the original donation. Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

3 The New Philanthropy Investment Platform Insurance-Linked Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT) providing a securitized “Return on Donation” - iCRROD ™ Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

4 CHARITY CHARITY Receives any assets remaining in trust when the Donor is deceased Balance of Trust CRD Invests $50K in ILS CRD Invests $50K into Businesses 1 This deduction may have to be spread over more than one year, if it exceeds certain percentage of income limitations. Receives 5% to 50% of Value Annually 3 Returns 100% 2 Pays Dividends = to % of Gross Revs. Deductable Donation $100K DONOR/Trustee  Transfers cash or Assets to CRD  Receives income tax deduction 1  Receives 5% to 50% Annual payout from CRD current value 3 CRD  Trustee receives cash and/or assets (sells) & re-invests 50% in Business & 50% in ILS  Trustee pays out 5% to 50% of CRD value each year to Donor BUSINESSES Ventures of Choice Insurance- Linked Securitization Products (ILS) 2 Protects corpus of original donation & guarantees required payouts 3 Can be a credit income to beneficiary, if a deficiency exists to pay the minimum, to be made up in later years “Net Income with Makeup (NIM) Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

5 BUSINESS Venture Enterprises NewCoLLCFormedNewCoLLCFormed Advance d NIMCRUT Design Advance d NIMCRUT Design Payout Donate Private Placement Offering Private Invests Qual. Accredited Investor Invests Returns % Dividends Returns 100% of Donations CHARITY CHARITY Receives balance of assets in trust when Donor is deceased or end of trust term End of Term Donation Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

6 NewCo LLC Donor & Income Beneficiary Incorporate LLC Entity Draft Operating Agreement Draft Reg. D 506 PPM Securities Compliance Corporate Admin Compliance Business Enterprise Draft Reg. D 506 PPM Securities Compliance Royalty Accounting Third Party Providers, Advisors & Managers ILS Professional Manager of ILS Source/Manage Portfolio (acquisition, structuring, execution, administration & ongoing management) Reserve Account Admin Asset Value Protection NIMCRUT Donor Trustee (Fiduciary decision-making, investment management, CRD administration, tax matters) & communications Draft NIMCRUT Trust Charitable Beneficiary Coordinate the Charitable Beneficiary Transfer of remaining CRD balance upon Donor death or CRD termination Confidential  Patent Pending  Copyright 2010  iCRROD, LLC iCRROD, LLC

7 Beneficial Interest Transferred Into CRD Re-Insurance Guarantee to Pay 100% of Life Insurance Benefits in 10-Year Term Secures Required Portfolio of Benficial Interest in Death Benefit of Life Ins. Policies of People 70+ Years Old Portfolio of Senior Life Insurance Policies Which Transfer Beneficiary Interest to NIMCRUT NIMCRUTNIMCRUT Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

8 Insured Dies 1 Yr $750,000 $250,000 $1,000,000$500,000 Insured Dies 18 Months Initial Donation $ -5,000,000 At End of Term Re-insurance Pays all Policies that have not Matured – 100% Guaranteed As Insured's Die Policies Pay to Beneficiary CRD Increasing Return Balance $1,000,000* $ 1,000,000 $500,000* $ 1,500,000NIMCRUT $3,500,000* $ 5,000,000 * Less premiums & administrative fees to manage and maintain ILS,s ILS Re- Insurance Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

9 Donor  Immediate Income Tax Deduction for Donation  50% of Donation goes to invest in donor selected businesses and ventures  100% of Donation is securitized & returns are directed to the CRD and passed on to Charity and become income back to Donor  Potential of life-long annual income stream & Attractive IRR & ROI NIMCRUT  Has a re-insured guarantee (via ILS) to protect corpus of CRD & payouts to donor & charity. As policies mature, a large % goes back into the CRD & a portion goes to a maintenance side account.  Funds continue to accumulate and grow through- out the life of the CRD from % of annual Gross Revenues designated from Business (as a pro-rata % of investment) Businesses of Choice  Receives 50% of a Donors contribution to the CRD  Businesses pay CRD agreed % of annual Gross Revenues, which grows tax free and pays income to Donor  No equity or debt obligation incurred, just Royalty Agreement to CRD Charity &/or Other Beneficiary(s)  Guaranteed (reinsured) donation of any remaining accumulation from the Revenue Sharing, ILS and any balance of the original donation upon the maturity of the CRD or upon the early death of the donor  Allows future contributions of cash or assets  Allows deferral of required payouts if ILS and/ or Business contributions are less than enough to pay the minimum payout of CRD annual value  Is able to direct remainder income to charity & beneficiaries of choice  May benefit from additional investments as Donors have the flexibility to contribute future cash or assets which CRD could re- invest Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

10 Q. Would investment in a Business create UBTI to the CRD? A. The Business would be taxable on its own income. Dividends paid by Business, however, would not be unrelated business income to the CRD by virtue of § 512(b)(1) of the Internal Revenue Code. (see next slide for specific code language). Q. What are the Tax ramifications on CRD distributions? A. Distributions from unitrusts are first ordinary income, then capital gain, then tax-free income and finally corpus. Q. How are the premium payments and administrative fees on the ILS paid? A. If Life Settlement maturity occurs during the term, these costs are covered out of the maturity, if not, the costs become the obligation of the CRUT (first) then Donor, or a LS is sold short or term. Q. With multiple CRD Donors, how does the Business determine the payout to each CRD? A. The total Royalty percentage is backed into from the pro forma financials and/or existing financials of the business. The business determines how much capitalization is required and what percentage of their gross revenues they are willing to pay out for that investment. That percent is then extrapolated into a percentage per thousand (or ten-thousand, etc.) of the whole of the capitalization required. This then becomes the Royalty percentage per thousand for each CRD investor. Q. How can a ILS be created for small CRD investments? A. Each CRD will be a Sub-Trust under a Master Trust which holds a large portfolio of life settlements – each CRD then becomes a pro-rata owner/beneficiary of the Master Trust assets. Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

11  A fundamental principle of a NIMCRUT design is to take full advantage of the opportunity to write your own accounting rules into the trust document, to achieve the donor's planning objectives, and to build flexibility into the investment and administration of the trust. See Advanced NIMCRUT Design for further details (see section on treatment of Zero Coupon Bonds which would also apply to a ILS).Advanced NIMCRUT Design  Section 512(b)(1) of the Code Generally Applicable Exemptions. The following are generally applicable exemptions to UBTI treatment. a. Passive Investment Income. Passive investment income is not UBTI unless it is derived from a leveraged investment or a controlled entity. §512(b). Passive investment income includes: i. Interest, dividends, and annuities. §512(b)(1). iii. Royalties. §512(b)(2).  Per the following Gift Law ruling, a CRD can freely invest in a for-profit Business without creating UBTI, if the rules are followed. This ruling sets precedent for the CRD to directly invest into, start-ups & be a shareholder in a for-profit entity and have dividends paid back to it without incurring a UBTI event. However, the CRD investment in a for-profit company may fall under SEC rules requiring it to qualify as an Accredited Investor. This can be accomplished easily enough as the CRD can be carefully structured similar to a charitable remainder mutual fund with multiple donors in order to qualify for the $5M in total assets required, and/or under a Reg. D exempt PPM, up to 35 non-accredited investors would be allowed. The Donor can also be a corporation, partnership or limited liability company formed of multiple people to meet the $5M minimum of assets required. Confidential  Patent Pending  Copyright 2010  iCRROD, LLC

12

13 The New Philanthropy Investment Platform Insurance-Linked Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT) providing a securitized “Return on Donation” - iCRROD ™


Download ppt "Provides tax deduction for donation pays investor dividends if profitable per best terms offered The Old Philanthropy Charitable Giving Model The Old “Risk”"

Similar presentations


Ads by Google