Contributed by Greg Heffron, New York Life

Many individuals share a dream of helping a nonprofit group they feel strongly about—a church, an alma mater, a cultural institution, an environmental group, a human rights crusade, or a medical or social service organization. They would love to do something that would help others, to make a significant contribution, but feel that only the rich can afford to make a sizable donation.

Through the giving of life insurance, any individual of moderate means can be a major donor. Life insurance takes a few dollars a month, and during the long-term magnifies that into thousands—or hundreds of thousands of dollars in proceeds for a favorite cause.

By making small contributions during the next several years, the power of a gift is paid for on an installment plan.

In addition to making a heartfelt contribution to a worthwhile cause, donating life insurance to a charity offers many practical advantages to the donor—possible tax deductions, nominal cost of the transaction, and simplicity.

There are many methods for using life insurance to boost a favorite charity; following are the most common:

Designate the charity as owner and beneficiary This method benefits the charity and gives the donor a bonus in the form of income tax benefits. Premiums on such a policy are deductible to taxpayers who itemize their deductions. Consult a tax professional for details.

Designate the charity as beneficiary As policyowner, you retain the right to make changes to the policy including changing the beneficiary. Premium payments with this arrangement are not tax deductible. However, when the donor dies, the estate receives a charitable deduction for the proceeds, as allowed by law.

Donating an existing policy If you own a policy whose coverage is no longer essential, you may choose to donate it to charity. The donor could irrevocably assign or transfer the policy to a charity as owner and beneficiary. This type of gift is generally not subject to gift tax, and in most cases may be eligible for a charitable tax deduction.

Set up a charitable remainder trust This is a possible solution to disposing of unproductive appreciated assets, such as real estate. If the owner keeps the asset, it may yield little or no income, if sold, it may incur capital gain taxes. A charitable remainder trust is a planning tool that can benefit the donor, the heirs and a charity. It is a complex transaction that should not be undertaken without advice of an attorney or an accountant, familiar with such arrangements.

With government dramatically reducing organizational funding, the generosity of private citizens is more important than ever. It's true that just one person can make a difference. By donating life insurance, individuals can now make a significant difference. Their support helps to continue the good works of a worthwhile endeavor, to keep helpful programs afloat.

Charitable giving also enriches donors' lives, providing the profound sense of satisfaction of doing the right thing.