Gift Administration

At the end of the year, donors may be frazzled by holiday planning and leave their charitable giving to the last minute. To help ensure that their end of year gifts count for the current tax year, here’s a primer on how to determine gift date. We’ve also included a digital checklist as an additional resource from our experts at Foundation Source with the most important milestones for private foundations throughout the calendar year—including key dates for year-end giving.

By their nature, life income gifts (Charitable Gift Annuities, charitable remainder trusts, and pooled income funds) are arrangements where the donor transfers assets now, but delays the charity’s use of the funds until a future date, normally the death of one or more income beneficiaries. A charitable remainder trust can be established for a term of years, but until the expiration of what can be a term of up to twenty years, the assets of the trust are unavailable to charity.

One of the most frequent challenges encountered in the administration of life income gifts is the issue of uncashed checks. The typical response to an uncashed check is to place a stop payment on the check after a specific period of time, and to reissue payment in the form of a replacement check. If the replacement check is cashed within a reasonable period of time, it is assumed that the original uncashed check was just an anomaly and no further action is required. But what happens when the replacement check, and subsequent checks are not cashed?  This article addresses what a charity should do when a beneficiary stops cashing life income payments.

The end we are talking about is the end of calendar year 2016.  Are you ready?  Most charities concentrate on year-end giving in the fourth quarter and for good reason.  A study conducted by the Center on Philanthropy at Indiana University focused on high-net worth donors found that 42.7 percent of those surveyed gave more during the holidays than the rest of the year. Nonetheless, in addition to soliciting and encouraging gifts at the end of the calendar year, it is also a time for planned giving departments to prepare and plan. 

We frequently receive calls from our clients asking how to determine the date-of-death value for a charitable gift annuity (CGA). The value of a gift annuity upon the death of an annuitant seems to be an area of particular confusion.

For gift planning offices at most not-for-profit organizations (NFPs), FASB accounting is the last thing on the list. Activities are geared towards bringing in new planned gifts, ongoing administration, and donor stewardship. The financial office asks for a FASB liability report once a year (at a few NFPs, once a quarter). Someone in the gift planning office runs off a new report using similar assumptions to the previous year. If there is an outside gift administrator, they can be asked to produce the report.