Fact & Commentary: Charitable IRA Rollover Extended, Part II

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Yesterday I explained the nuts-and-bolts of the extended Charitable IRA rollover. That was the facts: Fact & Commentary: Charitable IRA Rollover Extended, Part I. Today I’ll spend time on how to promote this and weave it into your other fundraising channels.

Today is . . .

The Commentary

Who Are The Prospects. You need prospects over 70. If they’re on your board, send an email blast with basic information and follow-up by phone. Make it a short agenda item in your next meeting to encourage participation. Ideally, a board member who made an IRA gift to you stands up in the meeting and encourages colleagues to do the same.

For non-board members, send an email blast if you have addresses. Then follow-up with paper mail. I’d wait until just after the new year. The odds of getting one of these closed before year-end are small. You’ve got enough going on in the next two weeks–don’t kill yourself by adding this. Besides, January gifts can be dated December 31.

On the other hand, if you’re actively talking to appropriately-aged prospects about their end of year giving, bring it up with them quickly.

After the new year, look to donors with multi-year pledges. This might be a way of accelerating payment in 2011. January gifts can be dated December 31, up to $100,000. An additional 2011 gift can be made up to the same amount, so that one donor can rollover $200,000 to you in 2011 (half dated 12/31/10 and the rest dated in 2011). If your donor has a spouse, together they can rollover $400,000 next year, if they start in January.

Finally, look to other IRA gift prospects. Don’t dismiss those not at the two- to four-hundred thousand dollar level. In 2007 we had a college client achieve nearly 20 gifts in four and low five-figure amounts. Wisely, they welcomed each to their planned gift recognition society.

How To Promote. Use all your communications channels. I single out for mention, sidebars in materials that go to wide audiences. You probably don’t want to devote full blown article space to this if only a small percentage of your constituents are the right age. In your sidebar, include your legal name and federal tax ID number so prospects can convert themselves to donors without having to talk to you, but provide contact information so they can talk if they’d like to.

Can you afford printed direct mail? Do it. Those over 70 still respond to the written personal letter.

Do you talk to your elder constituents on Facebook? I covered this in my NextGen:Charity workshop, Planned Giving & Social Media. Their video isn’t up yet, but my slides are: Planned Giving & Social Media. The FB penetration rate among those 60 and over is growing steadily, but is still less than half. If you’ve engaged your elder prospects on social media properties, this is an ideal topic because it’s strictly age related. I think this is a considerable growth area for Planned Giving.

Integrate With Annual Appeal. If you send annual appeals, next year include a one-third-of-a-page buckslip with information about making the annual gift through an IRA. Include your legal name and tax ID number, and a contact name and number. Maybe a tease printed on the carrier envelope flap?

Integrate With All Giving. In whatever way you define your fundraising team members, get them all comfortable opening the door to a conversation about IRA giving. It should be standard protocol when they’re talking to prospects over 70. Many, many unassuming “middle income millionaires” are among us. They had careers as teachers, postal workers and nurses, and in their working years they put a lot of money into retirement accounts. Raise IRA giving with them over lunch in their kitchen, in seminars and on the phone.

Take the opportunity to expand the conversation. Talk about naming your nonprofit as a beneficiary of an IRA. I explained this in a 2006 newsletter when the Pension Protection Act first approved qualified charitable distributions. In this newsletter, scroll down to the “Planned Giving” heading.

Not Necessarily A Wash. Here’s something that may come up while you’re talking about this in 2011. I have been asked many times in meetings and seminars, and occasional prospects will raise as an objection to your solicitation, “Isn’t doing a charitable IRA rollover the same as making an IRA withdrawal, paying the additional income tax, making a gift, and claiming the charitable deduction? Doesn’t the deduction offset the tax, making it a (tax neutral) wash?”

Not necessarily, for four reasons.

      1. Non-itemizers. Those who don’t file Form 1040 can’t claim the charitable deduction. They accept the standard deduction.

      2. State of residence. Some states (including New York) don’t allow charitable deductions from income. The deduction’s value would be lost for state income tax purposes.

      3. Income level. The addition to income might kick the non-IRA donor into a higher marginal tax bracket, while reduced taxable income might putt the IRA donor into a lower tax rate. Wouldn’t you rather be putted than kicked? Also, there are deductions, like medical expenses, tied to taxable income. The IRA donor–with lower taxable income–will be more likely to benefit from these.

      4. 50% cash donation limitation. Charitable deductions for gifts of cash are limited to 50% of adjusted gross income. The non-IRA donor might be up against this limit, and have to carry the deduction forward into future years. The IRA donor doesn’t worry about it.

Talk about IRA giving with your constituents who are the right age. Engage your prospects where they are hanging out: board meetings; on phone calls; reading mail at home; or on Facebook.

I’m interested to hear how your IRA giving is going in 2011. Keep in touch.

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