PG Calc Featured Articles

If there’s one piece of advice you’re probably tired of getting, it’s “always be marketing bequests.”  Of course, this is good advice because you do want your organization to be included in the wills of your donors. It is an ideal arrangement for both parties - donors are able to provide a gift to your organization after their lifetimes with little or no current financial strain, and your organization is strengthened by their gifts, whenever received. 

Here is one suggestion of a different way to carry out that marketing dictum, an approach that can be particularly meaningful and rewarding for you and your donors. Consider “ethical wills”.

A donor establishing a charitable gift annuity has the option of using the IRS discount for the month in which the contribution is made or for either of the two preceding months. Should the donor always select the discount rate that will produce the largest charitable deduction?  Not necessarily.  Making the right choice entails understanding a few details about the role played by the discount rate.

The American Taxpayer Relief Act (ATRA) passed by Congress on January 1, along with the Affordable Care Act, have inaugurated a host of changes to federal tax rules that will alter donors’ tax incentives for making charitable gifts, including planned gifts.

For the most part, there is good news to share:

• Despite consideration of a 28% limit on charitable deductions or a total dollar limit on all itemized deductions, in the end no significant new limits on the charitable deduction were introduced;
• There are opportunities for some taxpayers to save more in taxes by taking charitable deductions;
• There’s less uncertainty about the future of transfer tax rates and exemptions, making some donors more comfortable with making estate plans that include charity; and
• The charitable IRA rollover is back, at least for 2013.

Beginning on January 1, 2011, the oldest members of the Baby Boom generation celebrated their 65th birthday. In fact, on that day, today, and on every day of the next 17 years, an average of 10,000 baby boomers will reach age 65.
The Pew Research Center reports that the aging of this cohort of Americans (26% of the total U.S. population are Baby Boomers) will dramatically change the composition of the country. Currently, just 13% of Americans are age 65 and older.
Incredible statistics! With the huge number of people retiring over the next 17 years, there appears to be a golden opportunity to provide your donors with solutions for additional retirement income.
This article outlines several suggested solutions to help you help your donors find giving options that will benefit them in retirement, as well as your organization. 

Funding a charitable gift annuity (CGA) with a retained life estate (RLE) in a personal residence or a farm can be an excellent gift from a charity’s standpoint.  It can also be a wonderful way for a donor to continue living in a place he or she has come to call home while using the home’s value to generate a stream of payments for life.

Published in early 2012, The Cultivation Funnel: How Content Marketing Can Help You Move Planned Giving Prospects from Awareness to Close is intended to encourage you to add a new element to your marketing mix of technique, timing, and audience – content marketing. Content marketing begins with growing awareness of planned gift opportunities at your organization and its mission, and ends with closing planned gifts. When executed well, the process we outline in the paper can help you do just that, and contribute to more successful planned giving outcomes.

Charitable remainder trusts, as we know them today, are a creation of the Tax Reform Act of 1969. Their popularity grew steadily for the first 20 years or so of their existence, and then exploded in the 1990s. According to IRS statistics, from 1999 to 2002 the number of charitable remainder annuity trusts (CRATs) grew 14% and the number of charitable remainder unitrusts (CRUTs) grew 38%. Since then, however, interest in CRTs has cooled: the number of charitable remainder unitrusts in force in 2010 was just 4.4% greater than it was in 2002, and the number of active charitable remainder annuity trusts declined 26.2% over the same period. Although the popularity of CRTs today is not what it once was, they remain an excellent solution in a variety of donor situations. Also, there may be changes afoot that will restore some of their former luster. Why the Ebb and Flow in CRT Popularity?

When a donor wants to give real estate to a charity in return for lifetime payments, the donor typically creates a charitable remainder unitrust, probably containing a “flip” provision that allows the trust to convert to a standard charitable trust upon the sale of the property. However, if the charitable remainder unitrust value shrinks, the trust payments shrink, too. With this in mind, some donors may prefer a gift annuity because the amount of the payments is fixed. The payments also constitute a general obligation of the charity – an attractive measure of security for many donors. In addition, a gift annuity may be the only practical life-income alternative for the charity when the value of the property is too low to justify establishing a trust.

As development officers, most (hopefully, all) have experienced that wonderful emotional moment when a donor agrees to make a bequest gift to their charity.  There is perhaps a second jolt of satisfaction and joy when evidence that the donor has followed through on his or her gift intention is received, perhaps through a confirmation e-mail, a gift notification form, or even a copy of the gift instrument (or the relevant portion thereof).  Such a gift is often the result of patient persistence in working with a donor and – risking the ire of certain cousins in England who claim this word is overused by Americans – it is awesome. 

In 2011 we wrote a feature article about the step lead trust. A year before that, we wrote an article about the “shark fin” or “balloon” lead trust. In both cases, we suggested that economic conditions were ideal for setting up these types of trusts in part because of the very low IRS discount rate. Well, it was about 3% then. Fast forward to 2017, the rate is still very low, currently at 2.6%. With the IRS discount rate continuing at record lows, it seems worthwhile to revisit these gift plans.