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Trends in Planned Giving and Five Easy Ways to Get Started Presented by Christy Eckoff, JD, LL.M. Director of Gift Planning.

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Presentation on theme: "Trends in Planned Giving and Five Easy Ways to Get Started Presented by Christy Eckoff, JD, LL.M. Director of Gift Planning."— Presentation transcript:

1 Trends in Planned Giving and Five Easy Ways to Get Started Presented by Christy Eckoff, JD, LL.M. Director of Gift Planning

2 Bullet information here The Community Foundation for Greater Atlanta Mission To be the most trusted resource for growing philanthropy to improve communities throughout the Atlanta region. Goals Engage our Community Strengthen the Region’s Nonprofits Advance Public Will Practice Organizational Excellence

3 Bullet information here The Community Foundation for Greater Atlanta History/background Founded in 1951 Among top 12 community foundations in country - Assets $755 million Raised $104 million in 2012; $95 million in grants Over 900 funds, 700 of which are donor advised Charitable transfers of assets– cash, real estate, stock Complex gifts Serve metro Atlanta region and 23 counties surrounding city.

4 Bullet information here 4 2010 Tax Act and 2013 Fiscal Cliff Agreement Income Tax 2010 -12 –Temporary 2 year extension of 2010 ordinary income tax rates – maximum tax rate of 35% 2013 – Maximum tax rate of 39.6% for individuals making $400k or more or households making $450k or more Payroll Tax 2010-12 - Temporary 2% reduction in withholding 2013 - Gone IRA Charitable Rollover Extended to cover 2010 and 2011 2012 – in effect 2013 – in effect

5 Bullet information here Capital Gains Tax 2010-12 - Temporary 2 year extension of 15% maximum long-­term capital gains tax rate 2013 – 23.8% maximum long-tern capital gains tax rate (includes 3.8% Healthcare Act surtax) Dividends 2010-12 - Temporary 2 year extension of 15% maximum long-­term capital gains tax rate 2013 – 23.8% maximum long-tern capital gains tax rate (includes 3.8% Healthcare Act surtax)

6 Bullet information here Transfer Tax Law Applicable Exclusion Amount: $5 million Gift Tax Exemption: $5 million Generation Skipping Tax Exemption: $5 million Estate, GST & Gift Tax Rates: – 2012 - 35% maximum rate – 2013 – 40% maximum rate Basis Step-Up OR Step-down Deduction for state death taxes Annual Exclusion: $13,000 6

7 Bullet information here 7 Summary of Impact Most married couples need to review estate plan Any person with an estate over $5 million should be actively updating their estate plans and taking action to leverage these changes in by the end of 2013 Certainty??? NOW IS THE TIME to talk to high net worth prospects about including your charity in their plans

8 Bullet information here Charitable Deduction for Current Gifts Limited by Adjusted gross Income and type of asset Deduction by artist may be very limited Deductions may be carried over for 5 years

9 Bullet information here What is Gift Planning?  Helping donors make substantial gifts through an examination of their assets, obligations, and charitable intent  It’s an opportunity for charitable giving in circumstances that may not otherwise allow a donor to make a large gift 9

10 Bullet information here Why is gift planning important?  Average major gift is 20 times an annual fund contribution  Average planned gift is 200-400 times an annual fund contribution 10

11 Bullet information here Top Donors 2008 11

12 Bullet information here Top Donors 2008 12

13 Bullet information here

14 Medical College of Georgia Foundation (Augusta) has received a bequest of $66-million from J. Harold Harrison to establish a fellows fund named after him to endow faculty chairs and student scholarships. Dr. Harrison was a cardiovascular surgeon who retired as chief of surgery at St. Joseph's Hospital of Atlanta. He was also a cattle farmer. Dr. Harrison graduated from the college in 1948 and was a former chairman of the foundation's board. He died in June 2012.

15 Bullet information here $66-million Bequest Medical College of Georgia Foundation (Augusta) has received a bequest of $66-million from J. Harold Harrison to establish a fellows fund named after him to endow faculty chairs and student scholarships. Dr. Harrison was a cardiovascular surgeon who retired as chief of surgery at St. Joseph's Hospital of Atlanta. He was also a cattle farmer. Dr. Harrison graduated from the college in 1948 and was a former chairman of the foundation's board. He died in June 2012.

16 Bullet information here Share of Donors Who Made Bequests – 2011 – Top 50 donors 16

17 Bullet information here 2011 1 Margaret A. CargillMargaret A. Cargill Family wealth $6-billion (bequest) Beneficiaries: Margaret A. Cargill Foundation (Eden Prairie, Minn.); Anne Ray Charitable Trust (Eden Prairie, Minn.) 2 William S. Dietrich II William S. Dietrich II Manufacturing $500-million (bequest) Beneficiary: Dietrich Foundation (Pittsburgh) 3 Paul G. AllenPaul G. Allen Technology $372.6-million Beneficiaries: Paul G. Allen Family Foundation (Seattle); Allen Institute for Brain Science (Seattle) and other groups 17

18 Bullet information here When to think “planned gift”  Between ages of 40-59  Within 10 years of retirement  Life altering event Divorce or remarriage Death of spouse or child Inheritance from parents Need for parents or special needs children for specialized, on-going care 18

19 Bullet information here When to think “planned gift”  Cash poor  Wants to leverage gift  Assets have depreciated greatly  Want to do something, but are afraid to give up cash 19

20 Bullet information here Yes, but…..  When to think about a planned gift? – I wish I could give, but ……. I have young kids or grandkids to think of I have kids in college I take care of my parents I don’t have the liquidity I can make more than your endowment makes I need money for retirement Other reasons 20

21 Bullet information here How do you find Planned Givers ?  Prospect Research and Cultivation Board members Large donors Consecutive year givers (10+) – even at small amounts Never married DINKs 21

22 Bullet information here How do you find Planned Givers?  Self-Identification – Check the box on pledge cards – Marketing Newsletters Postcards Emails 22

23 Bullet information here Cheapest and Simplest Way to Get Started “Remember The Community Foundation in your estate plans.” Place on every piece of donor interaction Email signature lines Letterhead Solicitation letters Stewardship reports Donor newsletters 23

24 Bullet information here How to be a success Have a way to say NO! Create and update your gift acceptance policy! 24

25 Bullet information here How to be a success Concentrate on bequests and beneficiary designations! Have a designation mechanism. 25

26 Bullet information here Most have not been approached to make a planned gift Ever been approached about making a planned gift to charity *Based on all. Multiple responses accepted, so total will exceed the 22% represented in pie chart.

27 Bullet information here How to be a success OUTSOURCE Marketing! Have a website and do monthly emails! Put your bequest language online 27

28 Bullet information here How to be a success Don’t forget younger donors!!! 43% of bequests and 35% of charitable remainder trusts are created by individuals age 55 and younger 28

29 Bullet information here Percentage of Planned Givers 31% Study by Donorpulse between 8/5/08 and 8/14/08 29 AgePercentage of Planned Givers 18-246% 25-293% 30-398% 40-4920% 50-6432% 65+31%

30 Bullet information here Bequest donors are not Elderly! 30 * Bequest pledge makers are generally between 45 and 54 years of age. …. Most first set up gifts to a charity in their wills at age 49 *The 45- to 54-year-old group accounted for 26 percent of total charitable bequest pledgers in the survey, followed by the 55- to 64-year-old group (22 percent) and the 65- to 74- year-old group (20 percent) *Individuals aged 45 to 54 years were more likely to have made provisions for a charity in their will than those aged 65 or older

31 Bullet information here How to be a success Leverage what you have! Drip, drip, drip….. 31

32 Bullet information here Concentrate on Major gift donors and prospects – triple asks, blended gifts Consistent donors Members of Alumni Association or volunteer arm Board Members Faculty and staff 32

33 Bullet information here Current Gifts  Stock – appreciated and depreciated  1035 Insurance Exchange  Virtual Endowments  Real Estate  IRA Charitable Rollover –  Up to $100,000 Way to get those funds out of the estate (subject to double taxation)  Other assets and privately-held assets 33

34 Bullet information here Estate Giving Basics  Donor enjoys benefit of asset during lifetime  Donor retains control of asset till death  Donor receives estate tax deduction but no income tax relief  Removes asset from taxable estate and may avoid probate  Donor’s good works often go unnoticed during lifetime. 34

35 Bullet information here Estate Gifts  Bequests from a Will  Life Estates  IRA/Retirement Plan Gifts  Pay (transfer) on Death Accounts – beware of Mauer case in GA 35

36 Bullet information here Basic types of planned gifts Bequests 36

37 Bullet information here Who makes charitable bequests?  People Younger Than You May Think Average age: 58 Younger ages: 43% < 55 Age of first will/living trust: 44 Age of first charitable bequest: 49 37

38 Bullet information here Younger Donors Younger donors are the least resistant to the idea of bequest gifts; older donors are the most resistant. Older Americans (aged 70 and over) with wills in place are the least likely of any age group to say they will consider adding a nonprofit at some point in the future. 64% have wills before reaching age 50. That is even truer of the most affluent, with 84% having wills before they are 50. 38

39 Bullet information here Who makes charitable bequests?  People of all wealth/income strata Average Income: $75K/year Lower Income Level: 36% < $50K/year High Net Worth Persons (Estates of $10 million+) give 3X more at death than last 10 years living Individuals with wealth concentrated in closely held businesses Religious persons (all forms of giving) 39

40 Bullet information here Bequests  68% of bequest donors do not notify the Charity of their charitable bequest  At The Community Foundation, bequest donors are eligible to join the Legacy Society and are assigned a Philanthropic Advisor – over $1 million – Center for Family Philanthropy 40

41 Bullet information here Life Estates Charity receives the property and donor gets the use of that property for their life. 41

42 Bullet information here Retirement Plans 42

43 Bullet information here IRA/Retirement Plan Gifts  Charity is the beneficiary of the IRA/Retirement Plan  IRA/Retirement Plan passes directly to the charity free of federal income tax and/or federal estate tax.  Estate receives a charitable deduction 43

44 Bullet information here Split Interest Gifts Give the asset now – but keep the benefits! 44

45 Bullet information here Charitable Gift Annuity A contract between the donor and charity where the donor transfers property (or cash) in exchange for a fixed dollar payment for life. 45

46 Bullet information here Why attractive?  Interest Rates are extremely low – 1-2% on a CD  Interest Rate on a charitable gift annuity can go as high as 8.5%  Simple 2 page contract  Current tax deduction based on age and amount of annuity 46

47 Bullet information here How can I … Support my elderly parents and charity at the same time? 47

48 Bullet information here Illustration 48

49 Bullet information here Who gives Charitable Gift Annuities?  Typical Annuitant/Donor: 77 year old female (60/40 split)  92% are “plain vanilla” CGA’s (immediate payment)  62% of CGA donors first heard about it through non-profit’s materials  Average contribution: $30,000  TCF minimum: $25,000 and at least 60 years of age and half to unrestricted fund 49

50 Bullet information here Charitable Trusts Charitable Remainder Trusts Irrevocable transfer of property by the donor Donor (and/or other beneficiary) retains a right to receive income from the trust Donor received income tax deduction in year of trust creation No immediate capital gain tax on transfer to trust and any subsequent sale of the assets by the trust At the of trust term, trust principal distributes to charity 50

51 Bullet information here Who creates CRTs? CRT donors are: Profile: Married, avg. age 62, mean income $86K/year More likely to be male Similar to high income/net worth bequest donors More concerned about taxes and planning 68% first heard about CRT’s from legal and financial advisors. 51

52 Bullet information here How Can I … Provide a college education or income to my children and still support charity? 52

53 Bullet information here Illustration 53

54 Bullet information here Charitable Lead Trust  Basically opposite of a charitable remainder trust Income from trust goes directly to charity Remainder goes to the donor or to their beneficiaries 54

55 Bullet information here Lead Trust How can I put $1,000,000 in trust, give $1,000,000 to charity, and get back $1,000,000 (or more) ten years later? 55

56 Bullet information here Illustration 56

57 Bullet information here Life Insurance  If a cash value policy, can be an outright gift. Donor receives immediate charitable tax deduction Charity can either: Cash it in Keep policy in force until death of insured 57

58 Bullet information here Life Insurance  Can also be used as wealth replacement Fund a life insurance policy with a gift annuity or charitable lead trust 58

59 Bullet information here References  Christy Eckoff – ceckoff@cfgreateratlanta.org  (404)588-3183  Marketing firms Stelter Crescendo Virtual Giving RR Newkirk 59

60 Bullet information here References  The Complete Guide to Planned Giving, Deborah Ashton  American Council on Gift Annuities  Georgia Planned Giving Council  Planned Giving Design Center  Planned Giving Today  Partnership for Philanthropic Planning 60


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