1 National Capital Gift Planning Council Planned Giving Days

2 Population Percent Share of Wealth Their Issues Motivation NinetyThirdPassionMission NineThirdTaxesTax Mitigation OneThirdControlFamily/ Legacy

3 Income bracketsIncome tax rate Cap gain rate Surtax rate $457, %20%3.8% $405,101 - $457,60035%15%3.8% $226,851 - $405,10033%15%3.8% (over$250,000) $148,851 - $226,85028%15%None $ 73,801 - $148,85025%15%None

4

5  Long-term appreciated property (a year and a day) for the best deduction  Any asset can be given to a charity  Must itemize to use the deduction  May require an appraisal  Not all assets are good gifts

6  Big business in the 1990s  Market collapse in March 2000  Two missing elements ◦ Costly capital gains tax ◦ Asset appreciation  Post recession in 2010s ◦ Tax rates are up ◦ Appreciation is back  Importance of Wealth Effect  Every day in 2014 is your birthday!

7

8  “Contributing complex assets to charity, however, can be complicated and is fraught with technical requirements and potential pitfalls.”  Never say NO for the donor

9  Investments  Real estate  Business interests  Tangible personal property  Complex assets  Other stuff

10  Publicly traded stock  Bonds  Mutual funds

11  Residential  Rental  Commercial  Raw

12  C Corp  S Corp  LLC  LLP  Partnerships

13  Art  Collectables  Jewelry  Cars, boats and planes

14  Privately held companies  Hedge funds  Restricted stock  Limited partnership interests

15  Crops, timber, oil & gas interest, MLPs, horses, life insurance, copyrights, patents, classic car, shopping mall, antique desk, etc.

16

17  If they say no, it is still good for you. ◦ You find out more detail about the donor: how to be asked, when to be asked ◦ You differentiate your self from other fundraisers  It they say yes, it is even better for you. ◦ Window into the donor’s wealth ◦ The 300% solution

18  Charitable giving is one of the few things you can do with your assets (keep, sell or give) versus giving cash (spend on anything, save or give).  You benefit in three ways when making a gift with assets: ◦ Increases your cash flow ◦ Avoid capital gain taxes on the appreciated portion of the asset ◦ Provides you with a charitable income tax deduction for the full fair market value of the asset

19  5 years ago donor bought 1000 shares of Cisco stock for $10  Today the shares are worth $30 a share ◦ What is the fair market value of the stock? ◦ What is the capital gain amount? ◦ Assuming a 18.8% capital gain tax rate, what is the tax avoidance? ◦ Assuming a 35% income tax rate, what is the tax savings?

20  In 2012 only 3% of charitable giving was done with assets.  Impediments to assets gifts: ◦ It’s a bad asset. ◦ Complexity ◦ The organization ◦ The fundraiser

21  Close you eyes and picture your CFO and Corporate Attorney ◦ Policies and approval ◦ Due diligence ◦ Accepting the gift ◦ Processing the gift ◦ Crediting the gift  Another way

22  Many DAFs now offer themselves as a conduit for asset gifts.  Resources: ◦ eCurrency - ◦ Cars - ◦ Boats - ◦ Planes - ◦ Real estate - ◦ TPP - ◦ Business interests & complex assets –

23  Make no assumptions ◦ What a donor does for work does not mean that is how they make their money. ◦ Don’t be fooled by lifestyle, either way.  Questions to begin the conversation ◦ “Have you ever made a gift of stock to a charity?” ◦ “Have you ever considered fulfilling your gift with something other than cash?”  When you are asked a tough question ◦ “I don’t know, but I know someone who does.”

24 “Before I accept this generous gift to our organization, let me ask you one question. What makes it possible for you to make a gift of (x amount) in cash to our organization?” If You Can Only Ask One Question

25  IPO  Buyout  Merger  Unit sale  ESOP Business EventsPersonal Planning  Tax  Estate  Financial  Retirement  Charitable

26  Virtual Currency  Crop  Carried interest

27  What it is? Virtual currency is a currency that is unregulated by traditional financial actors, such as central banks controlled by a sovereign government.  How is it treated? IRS says for federal tax purposes, virtual currency is treated as intangible personal property.

28  How is it valued? For U.S. tax purposes, transactions must be reported in U.S. dollars.  What’s the deduction? FMV for LTCG currency; basis for STCG.  What’s the donor’s benefit? Charitable deduction applicable to capital gain treatment.

29  What is it? A basic good used in commerce that is interchangeable with other commodities of the same type.  How is it treated? Harvested crops are deemed tangible personal property and are subject to related use rules.

30  How is it valued? As a commodity, soybeans are traded on an exchange which establishes a price on any given trading day.  What’s the deduction? None. However, the farmer will be able to exclude the value of the crop from their taxable income.  What’s the donor’s benefit? Reducing taxable income.

31  What is it? A right that entitles the GP of private equity or hedge fund to a share of the profits.  How is it treated? Investment profit taxed as capital gain.  How is it valued? Projected cash flows discounted to present value.

32  What’s the deduction? FMV for LTCG currency; basis for STCG.  What’s the donor’s benefit? Charitable deduction applicable to capital gain treatment.

33  Gifts of assets create a whole new realm for gift solicitation and fulfillment.  Fundraisers will need to raise the issue with donors to access this opportunity available through gifts of assets.  It begins with asking questions and raising the possibilities.

34 Jay Steenhuysen Steenhuysen Associates 1539 Fall River Ave., Suite 3 Seekonk, MA