PG Calc Featured Articles

It’s definitely a new day for gift planners and possibly even the dawn of a new era, if the current economic climate persists.  Significantly, that climate features not only depressed stock values but also low interest rates, which translate into the low monthly IRS discount rates used in calculating the tax aspects of various planned giving vehicles.  Still, many donors continue to have the motivation and capacity to make large charitable gifts.  The challenge is to maximize their options, including – when appropriate – acquainting them with novel approaches.  In certai

A donor who is thinking of making certain gifts during life needs to pay attention to various requirements to ensure he can claim an income tax charitable deduction. When the same gifts are made upon death, however, these same requirements do not apply – or at least not in the same way.

Life income gifts offer solutions to a variety of donor situations that an outright gift cannot address. One situation they can address very nicely is a donor's desire to supplement retirement income with additional cash flow. From a development point of view, the techniques we are about to discuss have the added benefit of widening the pool of prospects to which your planned giving program can appeal.

So, you have a pooled income fund (PIF). How’s your fund doing? We hear a variety of stories from our clients. Some clients have PIFs that are doing well, but many others are looking for ways to close their PIF. Once upon a time, when PIFs were in favor, their attraction was in their relative simplicity compared to charitable remainder trusts. No trust document was needed because it was already in place; the documentation was a simple one or two page Instrument of Transfer. A second advantage of the PIF was the relatively low cost of administration. Charitable remainder trusts require the creation the filing of tax and informational returns for each individual trust. In contrast, the charity was required to file only one set of returns for a PIF, regardless of the number of participants. The reporting requirements to the participants involved a relatively simple Schedule K-1. A third advantage of PIFs was that they could accept smaller contributions than charitable remainder trusts. These features made the PIF arguably the most popular form of life income gift in the 1980s and early 1990s. Oh, how times have changed!

While most planned gifts are funded with a single asset, typically cash or a single block of long term appreciated securities, it is not unusual for a donor to create a planned gift using a combination of assets. The combination might be a single block of long term appreciated securities plus cash, or a block of long term appreciated securities plus a block of short term appreciated securities, or cash plus long term appreciated mutual fund shares and short term appreciated mutual fund shares.

All organizations with a planned giving program make a point of counting how many planned gifts they receive each year and totaling their face value. Most divide up this information by type of gift: realized bequests, gift annuities, charitable remainder unitrusts, etc. You can gain valuable insight into what gifts and what types of donors are driving a planned giving program from even these simple statistics.

There are a variety of ways that a donor can make a commitment to your charity of an end-of-life gift that she can modify later or cancel altogether, if necessary. This sort of flexibility can be of great comfort to a donor who is nervous about her financial future, but wants to act on her desire to support a charity.

Gift planners are frequently asked to compute the present value of a planned gift. The calculation of present value can vary widely, however, depending on its purpose. Whenever you are asked to provide the present value of a deferred gift, your immediate response should be, “For what purpose?” This article will explore four common applications of present value in planned giving. Charitable income tax deduction computation Campaign reporting Gift valuation Financial accounting The first three applications represent different ways to determine the present value of the charitable portion of the gift. The last application is a way to determine the present value of the non-charitable portion of the gift.

Gift planning professionals devote much of their time to creating attractive gift arrangements that offer significant benefits, both to the donors who provide the funding, and to the charitable organizations named in the gifts. Life income gifts, in particular, provide the donors with charitable deductions, income for life and / or a period of years, and the satisfaction of knowing they have supported a charitable organization in whose mission they believe. The amount of income resulting from a life income gift arrangement is fairly straightforward and depends on the amount of funding principal, the range of possible payout rates allowed by the IRS, the level of income appropriate for the underlying investments, and (for gift annuities) the ages of the beneficiaries.

“Virtual currencies” have been around for some time but have increasingly been in the news over the past several years. This can be at least partially attributed to the popularity of the virtual currency “Bitcoin,” which has experienced enormous growth in value since its launch in 2009. With the continued growth of Bitcoin, offers of gifts of bitcoins have inevitably followed. While still not common, charities are beginning to consider these gifts and in some cases accept them.