Give More and Live More
By Tony Martignetti, Esq.
Everyone is living longer. Between 1900 and 2002, the Centers for Disease Control tell us life expectancy rose 30 years, to 77.3 years, for both sexes. Those of us who don’t feel we’re near the end of our rope want to know how to make it a little longer still. And men might appreciate a strategy for narrowing the life expectancy gap between themselves and womankind. In 2002 women were favored by about five-and-a-half years.
I know a time-tested and smart way to live longer: make a planned gift to a non-profit organization.
A planned gift is a charitable gift that you commit to now and that accrues cash to a non-profit at your death. Your favorite non-profit will credit you with making a gift today and wait patiently for your demise, when they will collect. In the meantime, and for the rest of your life, the organization will invite you to annual recognition luncheons and dinners. Not a bad deal for a non-profit with patience and those of us with a little rope left.
Non-profits need prolonged patience because: people who make planned gifts live longer than those who don’t.
Appreciation for this highly-regarded axiom runs throughout planned giving circles. Those of us in the practice introduce it in our 101 seminars and ponder it in advanced coursework.
Think no more of the rigorous science behind two daily glasses of red wine, low-fat or low-carb dieting, and exercise. Adopt this simple truth: those who make planned gifts live longer than those who don’t.
The easiest and most common planned gift is a charitable bequest in your will. In 2004, U.S. donors left almost $20 billion to non-profits through their wills.
More sophisticated gifts, like the Charitable Gift Annuity, known to you, perhaps, as a “CGA” if you get estate planning mail from the non-profits that have divined your age, can get you not only lifetime invitations but lifetime income. Upon your personal dissolution, the money you started your gift annuity with, plus the income your fund earned but didn’t pay back to you, will be a gift of cash to the institution.
You can make a planned gift to your alma mater, house of worship, favorite dance company, local hospital or admired advocacy or social service group. Planned gifts generally help a non-profit build its endowment. That is the organization’s savings account from which it draws only a portion of the interest, the rest being added to principal. The growing principal, largely derived from planned gifts, remains preserved and inviolate. Thus, the organization builds an increasing asset which has the potential to produce interest in perpetuity.
But what lies behind the simple truth that you will outlive your parsimonious friends if you make a planned gift? And how can men close the life expectancy gender gap by helping a non-profit?
Let’s look at the more interesting of these first—that sticky gender gap. It has been narrowing from a high of over seven years in the 1970s to mid-80s. So we see a downward trend and men could simply wait it out. But that will take decades and you may not have that length of rope remaining.
The solution for men is to make a planned gift and not include a woman.
Take the Charitable Gift Annuity as example. The lifetime income it pays can go to one or two people and most typically we have husband and wife CGA donors. If that same gift comes only from the man, he will live longer than expected and reduce the gap between his life expectancy and his wife’s. If men throughout the country take this on they can hasten the gap’s narrowing and support wonderful activities in non-profits: more scholarships, flourishing arts companies, expanded shelters and kitchens for the homeless and hungry and ground-breaking research on disease and treatment. Life expectancy equality and prosperous, thriving non-profits.
What keeps planned gift donors living longer? The income, mostly. When donors receive their quarterly or annual checks, they know that in another three months or year they will get another. We’re talking powerful incentive. If you like to plan long term then opt for the annual payment. There’s no point in going on the quarterly plan when you can increase longevity in four-fold longer increments. (Annual payments will also increase the charitable income tax deduction you earn from your planned gift.)
Improved health also keeps you, the planned gift donor, living longer. You know your estate will inure to the benefit of a not-for-profit and that makes you feel good. Your positive emotional state reduces stress and you improve physically—and you live longer.
For some, the gratis lunches and dinners induce increased longevity and keep donors climbing their rope. Who can turn down a free meal? Let us ignore the apparent conflict of interest that arises when an institution which benefits from your quietus provides you a meal and beverage.
I know a company that investigates this seriously and finds that CGA donors do outlive the national averages. Something about coming from a more affluent background with better access to health care, proper nutrition and the like.
Rubbish. ‘Tis the act of giving what keeps you living.
On the sesquicentennial of Walt Whitman’s publishing the first edition of Leaves of Grass, I quote from his Song of Prudence. “Charity and personal force are the only investments worth anything.”
There is reason to do your charity, to make your planned gift, this year. Depending upon the type of gift you give, you may qualify for higher deductibility limits afforded under the Katrina Emergency Tax Relief Act of 2005. KETRA raises the deduction limitation from 50% to 100% of Adjusted Gross Income for gifts of cash to any non-profit. Your gift need not be for hurricane relief and many of us in planned giving practice are confident a Charitable Gift Annuity would qualify for KETRA’s generosity. The other planned gifts generally will not. Seek help from the organization you intend to make your gift to.
Act quickly because this KETRA provision expires on December 31.
Consider as well the other compelling reasons to make a planned gift. You can avoid or reduce capital gain taxation if you fund your gift with appreciated property, like stock; the income you receive is often taxed below ordinary income tax rates and some may be tax free; you can choose a gift vehicle that pays fixed income for life; and you earn a charitable income tax deduction in the year you create your gift, thus reducing the out-of-pocket cost of your gift.
If extended longevity and beating the life expectancy averages sound good to you then make a planned gift to a non-profit whose work you admire. It certainly cannot do you any harm and it will do a non-profit a whole lot of good.
© Tony Martignetti, Esq.
December 5, 2005