PG Calc Featured Articles

PG Calc is a pretty exciting place to work – especially if you like projects as interesting as reviewing planned giving programs of every size, shape, and maturity. We are often asked to uncover key problems that hinder the effectiveness of planned giving efforts. This article outlines a few of the more common recommendations that we give to clients. While it’s clear that all of these problems rarely exist in one place, the four categories of recommendations are the recurring themes.

A bad gift can be defined as one that leaves a charity worse off than if no gift had been made.  Some gift planners might argue that even a gift that produces some benefit for the charity can still be a bad one if either (1) dealing with it draws heavily upon resources that would clearly be better devoted to other gifts or (2) the gift simply results in a lot of headaches and hassle.

Anyone who has been involved with a bad gift is loath to repeat the experience if at all possible.  Fortunately, adopting – and adhering to – sound gift acceptance policies can go a long way toward helping a charity avoid bad gifts.

We are asked regularly by clients for help estimating the value of a known bequest intention that will occur at some unknown time in the future, when the donor dies. There are two common approaches to making this determination, the life expectancy approach and the mortality approach.

There are some situations where either a charitable gift annuity (CGA) or a charitable remainder trust (CRT) would be appropriate, and other situations where one or the other is clearly preferable. This article will explore some of the considerations that should go into making a well-informed choice between the two.

A charitable lead annuity trust is a way for a wealthy donor to pass assets on to heirs at little or no gift or estate tax cost while providing a generous gift to one or more charities at the same time. During its term, the lead trust makes payments each year to the charity(ies). Whatever assets remain in the lead trust when it terminates are distributed to individuals named by the donor, typically family members. Unlike a charitable remainder trust, which is tax-exempt, a charitable lead trust is a taxable entity, so trust investments need to be managed with this in mind.

In December 2010, Congress passed the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010. Among its numerous provisions, the 2010 Act extended the income tax rate reductions enacted during the Bush administration through December 31, 2012. This means that income and capital gains tax savings from lifetime charitable gifts of cash or other assets will remain unchanged at least until the year following the next presidential election.

In the event that Congress does not act in the meantime, on January 1, 2013 tax rates will revert to those in effect when President Clinton left office; the top income tax rate would be 39.6 percent, capital gains would be taxed at a 20 percent rate, and dividends would be taxed at ordinary income tax rates, potentially as high as 39.6 percent. These changes would increase the tax incentives for charitable giving.

PG Calc presents an excerpt from its white paper, State Gift Annuity Registration: A Primer on What It Means to Your Organization. If you have thoughts on this paper or recommendations for a white paper topic, please send them to info@pgcalc.com.

View all of our white papers, or our newest complement download: 7 Characteristics of Successful Planned Giving Programs.

Charitable bequests - charitable gifts made by will - are by far the greatest source of funds from planned gifts. It is commonly held that roughly four fifths of all funds raised through planned gifts are in the form of bequests.

If your organization has a purely “local” donor base, your planned giving program may not be affected by the laws of any state other than your own. But what happens when a key supporter moves to another state yet still wants to benefit the organization, whether through a charitable gift annuity or simply a bequest? Even charities that routinely work with donors throughout the country have to be mindful of all the ways legal and operational issues can have an impact on planned giving activity.

It’s clear – even to Congress – that donors and charities have been very pleased with the temporary IRA charitable rollover provision contained in the Philanthropy Protection Act of 2006.  Although the IRA charitable rollover expired at the end of December 2014, the gift planning community is working hard to convince lawmakers to continue, and ideally to expand and make permanent, the tax incentives for using IRAs to make charitable gifts during life.