If you donate a term life policy to a charity, you can deduct the cost of the premiums from your taxes. If you donate a whole life policy, you can deduct the cash value of the policy as well as the cost of the premiums. According to John Taylor, who works in the development office at Duke University in Durham, N.C., most charities would rather be able to make use of a donation right away. Chances are that such an organization's endowment fund would be better off investing the money you spent on the policy. It's a simple matter of math.
Insurance companies are in the business of making money.
By cancelling the policy, and keeping and investing the cash value, Bucknell will come out significantly ahead. So it's clear that larger charities can put that money to better use by investing it themselves. But smaller, local charities may not have those resources. And those charities are more likely to welcome any kind of contribution you offer. Still, it helps to remember that the death benefit of a life insurance policy won't be available until after you die, and most charities need the money now.