PG Calc Featured Articles

Many of our clients end their fiscal years on June 30. If you're one of them, you may have been requested to provide a report showing the liabilities associated with your organization's active planned gifts. If not, you may be, because Financial Accounting Standards Board (FASB) guidelines require all charities to include these liabilities in their annual financial statements.

When a donor establishes a life income gift such as a charitable remainder trust, a gift annuity, or a contribution to a pooled income fund, the arrangement usually remains in effect throughout the period set forth in the gift instrument. Sometimes, however, the donor or other beneficiary of the gift’s income interest decides to end the arrangement ahead of schedule. Doing so should be acceptable from a legal standpoint, provided certain steps are taken. Charities generally welcome such terminations. Typically terminations will result from a life income beneficiary making a charitable gift of his or her interest in the remaining payments. Nevertheless, if a life income beneficiary instead wants to “cash out” his or her interest, the charity will often accommodate the beneficiary’s wish in order to receive its share of the arrangement now, rather than wait to receive what could be a smaller benefit in the future. It is even possible for an existing life income gift to be transformed or “converted” into a new life income gift. Learn from the missteps of others.

A successful planned giving program requires a sound infrastructure, an ongoing commitment to the promotion of planned gifts, and dependable and repeatable processes that support the cultivation and stewardship of existing donors. While these fundamentals can be expanded to include dozens of “must haves” for charitable organizations, PG Calc has identified seven key characteristics in particular.

Have you wondered what role charitable remainder trusts, charitable lead trusts, and pooled income funds play in fundraising nationwide? Have you wondered how much organizations like yours typically benefit from these gifts? Have you wondered how many of each are in place across the country? You can answer these and many other questions about these gift arrangements by visiting the IRS website.

Many people invest in gold. Their motivations may vary, but the important reality is that your organization likely has numerous supporters with substantial holdings of gold. In many cases, these supporters could make an excellent charitable gift with some or all of their gold. There are, however, several special considerations to be aware of when discussing a gift of gold with a donor.

Endowments are a long-term proposition.  Similarly, planned gifts often have a long-term aspect to them in that the wealth being transferred by donors in all likelihood took many years to amass.  Frequently as well, donors want their gifts to have an enduring impact.

All in all, even though planned gifts and endowments are ultimately distinct, planned gifts are generally well-suited for bolstering endowments, and many planned gifts do in fact wind up playing that role.  Furthermore, a planned giving program can provide a “home” for endowment activities.  It is not uncommon for development officers responsible for planned giving also to be charged with directing, or at least assisting, endowment efforts.

The responsibility for gift administration may be in-house or the charity may rely on a service provider to meet the many and varied requirements in fulfilling commitments to donors and beneficiaries of charitable gift annuities. Either way, the so-called “buck stops here” rests with the charity. Donors look to the charity to provide timely and accurate stewardship of their gifts no matter who performs the actual work.

This is the time when it all comes together, or should! Between December and early April the administration and reporting requirements peak.

For many donors, their home is their most valuable asset. They most likely plan to live there for many years and it would never occur to them that they could use their home to make a charitable gift. Likewise, there are many donors with a valuable second home that they continue to use regularly and have never considered giving to charity. In both cases, the retained life estate may offer the key to unlocking just such a gift.

In 2009, the financial crisis was in its infancy, the stock market was plunging, and no one was sure where it would all end.  In response, PG Calc staff devoted substantial energy to analyzing and discussing with our clients gift planning in a down economy.  Six years later, most donors no longer fear that we may be entering an economic depression, but the financial markets remain volatile and many donors remain nervous about their financial futures. 

Some bequests are more equal than others.  Although the terminology may vary a bit, there are basically three different types of bequests: pecuniary (in which a sum of money is given), specific (in which a particular asset is given), and residual (in which all or a portion of the donor’s estate is given after taking into account pecuniary and specific bequests, along with the payment of debts and expenses of the estate).

Many seasoned institutional gift planners are partial to residual bequests.