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PG Calc Feature Articles

A Post-IRA Charitable Rollover Survival Guide

The sun has now set on the IRA charitable rollover for the fourth time. Naturally, we all hope it will soon rise again, ideally in a permanent fashion and with a new brilliance that shines not only on outright transfers but also on life income arrangements.

Nevertheless, by no means should we regard ourselves as having been plunged into darkness. On the contrary, we continue to have a number of options we can – and should – be encouraging donors to consider.

How Good Is That Gift?

Planned Giving offers donors a variety of gift vehicles to support their favorite charitable organizations in the long run; moreover, it offers donors the chance to obtain significant financial benefit for themselves in the short run. The most popular planned giving vehicles, after bequest-type gifts, are life income gift arrangements: Charitable Gift Annuities (CGAs), Charitable Remainder Trusts (CRTs), and Pooled Income Funds (PIFs). These vehicles are widely used by philanthropic individuals to achieve their charitable objectives while establishing a stream of income for life and / or a period of years. But are all planned gifts – and more specifically, are all life income gifts – truly beneficial for the nonprofit organization? Are some of these gifts better than others? And how does a charity attempt to measure the relative merit of a prospective life income gift arrangement?

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.

When Discount Rate Waters Are Shallow, Cast a Wider Net

It’s definitely a new day for gift planners and possibly even the dawn of a new era, if the current economic climate persists.  Significantly, that climate features not only depressed stock values but also low interest rates, which translate into the low monthly IRS discount rates used in calculating the tax aspects of various planned giving vehicles.  Still, many donors continue to have the motivation and capacity to make large charitable gifts.  The challenge is to maximize their options, including – when appropriate – acquai

Supplementing Retirement Income with a Planned Gift

Life income gifts offer solutions to a variety of donor situations that an outright gift cannot address. One situation they can address very nicely is a donor's desire to supplement retirement income with additional cash flow. From a development point of view, the techniques we are about to discuss have the added benefit of widening the pool of prospects to which your planned giving program can appeal.

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!

Gifts Funded with Multiple Assets

While most planned gifts are funded with a single asset, typically cash or a single block of long term appreciated securities, it is not unusual for a donor to create a planned gift using a combination of assets. The combination might be a single block of long term appreciated securities plus cash, or a block of long term appreciated securities plus a block of short term appreciated securities, or cash plus long term appreciated mutual fund shares and short term appreciated mutual fund shares.

Analyzing Your Planned Giving Program

All organizations with a planned giving program make a point of counting how many planned gifts they receive each year and totaling their face value. Most divide up this information by type of gift: realized bequests, gift annuities, charitable remainder unitrusts, etc. You can gain valuable insight into what gifts and what types of donors are driving a planned giving program from even these simple statistics.

Revocable Gifts

There are a variety of ways that a donor can make a commitment to your charity of an end-of-life gift that she can modify later or cancel altogether, if necessary. This sort of flexibility can be of great comfort to a donor who is nervous about her financial future, but wants to act on her desire to support a charity.

Present Value Depends on Your Point of View

Gift planners are frequently asked to compute the present value of a planned gift. The calculation of present value can vary widely, however, depending on its purpose. Whenever you are asked to provide the present value of a deferred gift, your immediate response should be, “For what purpose?”

This article will explore four common applications of present value in planned giving.

Charitable income tax deduction computation
Campaign reporting
Gift valuation
Financial accounting

The first three applications represent different ways to determine the present value of the charitable portion of the gift. The last application is a way to determine the present value of the non-charitable portion of the gift.