The Coronavirus Aid, Relief, and Economic Security Act, better known as the CARES Act, became law in late March. The Act includes several provisions of interest to gift planners. Arguably the most significant of these is the ability to waive the usual 60%-of-adjusted-gross-income limit on deductions for gifts of cash made to public charities in 2020. This change creates several gift opportunities that will appeal to some donors.
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At this point, we find ourselves in seemingly unprecedented times. The COVID-19 pandemic is sweeping the globe, infecting millions of people, and leaving hundreds of thousands of fatalities in its wake. The worst is likely over in China, and life is starting to return to some new kind of normal. In Europe, a few countries have reached the so-called apex, but other countries are at varying stages along the spectrum of the crisis. In the U.S., the picture changes greatly from state to state. By most accounts, New York – the first epicenter – has seen its peak of the crisis and is now on the downside, but the majority of states are still facing a significant ramping up in the coming days and weeks. The human toll is beyond anyone’s worst imagination, and it will certainly get worse before it gets better. This will define our country and modern-day societies for generations to come. We attempt to offer some perspective in a blog post entitled Peaks, Valleys, and Life In Between.
The novel coronavirus, or COVID-19, is spreading like wildfire around the globe, unsettling the stock market and causing operational disruptions to industries of every description. High schools and colleges are sending students home for the remainder of the term. Social distancing and self-quarantine are being applied by health officials. Millions of Americans are living in uncertainty and fear of what will come next.
So… Is now a good time to send that next direct mail postcard on CGAs or QCDs? Yes!
We noted 2019’s phenomenal stock market performance in the February 2020 edition of PG Calc’s eRate newsletter. The S&P 500 Price index returned 33.07% in 2019 if you include dividend reinvestment. Stock in Axsome Therapeutics, the maker of the common anti-depressant Wellbutrin, gained an astounding 3,578%!
A question for gift officers – “how much preparation goes into asking a donor for a bequest commitment?” Do you engage in the same strategic planning process you would before asking for a major gift? In many cases, a realized bequest is at a major gift level and often exceeds the total lifetime giving of the deceased donor. Asking for a bequest commitment deserves the same strategic planning as a major gift ask.
Charitable gift planners take note: BEWARE OF QUID PRO QUO! Events in Washington these last few weeks have brought the term “quid pro quo” into the national conversation. However, the IRS has long recognized that there can be a quid pro quo in exchange for a charitable gift. There are strict regulations that govern situations where the donor receives a benefit (quid pro quo) in exchange for their charitable gift. The IRS can impose penalties against charities for violations of quid pro quo regulations and donors can find their charitable deduction in jeopardy- or worse in some instances. Donors should be made aware of these regulations to avoid donor relations issues when their gift substantiation receipt is not what they anticipated.
The nature of planned gift fundraising (and sometimes outright giving as well) is that there are times when donors, gift plans, and assets present situations where there is little gift component. Even worse, some “gifts” create a net liability in terms of the asset or reputational damage. Nonetheless, there are danger signals that a gift may be problematic and procedures to prevent accepting gifts with traps.
People to continue to ask, “can’t we establish a Gift Annuity with funds from an IRA?” The short answer is that you absolutely can, and can also establish a charitable remainder trust using money withdrawn from a qualified retirement plan.
What are you planning for your year-end planned giving marketing campaign? It’s not too early to be solving this problem. While mailing to your donors is important year-round, the fall, before Thanksgiving, can be a particularly opportune time to communicate with donors. This is especially true for planned gifts, as many of these gifts are completed late in the year.
Since the Tax Cuts and Jobs Act of 2017 was signed into law, much has been written about its effect on the number of U.S. taxpayers who will itemize their deductions. The new law, which became effective on January 1, 2018, made several changes that have greatly reduced the number of taxpayers who itemize. Among the most significant of these changes are a near doubling of the standard deduction, which is $24,400 for a married couple in 2019 (add another $2,600 if both spouses are over 65), and the limitation of the deduction for state and local taxes (SALT) to $10,000. Estimates are that the number of itemizers for 2018 declined from 30% of taxpayers to just 12% of taxpayers.