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Charitable Gift Types

New Ruling from IRS Offers 5% Solution for CRATs

The persistently low IRS discount rates over the past five years has had a chilling effect on charitable remainder annuity trusts (CRATs). One reason is that these low rates have made 1-life CRATs unavailable for beneficiaries younger than their early 70s. Beneficiaries of 2-life CRATs must be even older. The roadblock has been the 5% probability of exhaustion test.

How to Get Volunteers Talking About Bequests

This document is derived from one we created for a consulting client. In conversations with that client we wanted to ensure that they were augmenting an excellent marketing effort with on-the-ground cultivation and solicitation. To add to the ranks of a bequest society, a planned giving officer often needs volunteers to help, and volunteers are more willing if they are informed enough to be comfortable. The best volunteer solicitors are ones who have made a gift, but there is still a gulf between making a gift and feeling prepared to ask another to do the same.

Gift Annuity Programs: To Start, Re-Start, or Not to Start... These Are the Questions

The decision to start a gift annuity program should not be taken lightly. With gift annuities, you are entering into a life-long relationship with your donor, and there are significant legal and financial obligations that accompany it. It is not unusual for charities that have recently launched a gift annuity program to find that the results have not met expectations due to insufficient planning or resources.

Gift Annuity Risk - Keeping On Your Toes

During the downturn in the stock market in late 2008, many charities monitored their gift annuity reserve fund balances on a weekly or even daily basis, concerned that there were sufficient reserves to meet the requirements of states with a calendar year reporting period. But the uncertainty brought by the financial turmoil of the “great recession” had at least one positive effect, prompting charities to take a more detailed look at their gift annuity programs, either through an internal review or by hiring an outside consultant. For some, this was the first time a thorough review of the program had been done.

Why Donor State and Governing Law State May Differ in CGA Agreements

Gift planners are often surprised to see that the state named in the Governing Law paragraph in an annuity agreement is not always the same as the donor’s state of legal residence. Here’s why these states sometimes differ:

Date-Of-Death Values for Charitable Gift Annuities

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.

The "Shark Fin" Lead Trust

We have responded to many more client inquiries about charitable lead trusts over the past two years than any other two year period in our 25-year history.  We have also noticed a flurry of articles on lead trusts during this same period.

A particular lead trust variation that has received considerable attention lately is what some practitioners are calling the "Shark Fin" lead trust. You may have also seen the term "Balloon" lead trust mentioned.  Two names, same trust.

Pooled Income Funds - You got to know when to hold 'em, know when to fold 'em

So, you have a pooled income fund (PIF). How’s your fund doing? We hear a variety of stories from our clients. Some clients have PIFs that are doing well, but many others are looking for ways to close their PIF.

Once upon a time, when PIFs were in favor, their attraction was in their relative simplicity compared to charitable remainder trusts. No trust document was needed because it was already in place; the documentation was a simple one or two page Instrument of Transfer. A second advantage of the PIF was the relatively low cost of administration. Charitable remainder trusts require the creation the filing of tax and informational returns for each individual trust. In contrast, the charity was required to file only one set of returns for a PIF, regardless of the number of participants. The reporting requirements to the participants involved a relatively simple Schedule K-1. A third advantage of PIFs was that they could accept smaller contributions than charitable remainder trusts. These features made the PIF arguably the most popular form of life income gift in the 1980s and early 1990s.

Oh, how times have changed!

ACGA - Managing Liability in a CGA Program

In furtherance of its mission, ACGA presents this white paper and recommendations as a resource for sponsoring organizations, allied professionals, and the broader philanthropic community. The paper is intended to provide a basis for the discussion of best practices in managing the financial liability of charitable gift annuity programs for development and finance staff, as well as board members.

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