Tag Archives: planned giving

Talk About Charitable Gift Annuities

Courtesy of Elva Keaton on Flickr.
Courtesy of Elva Keaton on Flickr
I’m doing a training series on charitable gift annuities, or CGAs, for a client so I’ll share a piece of the outline: how to talk about gift annuities with your prospects.

If you’re not familiar with these, here’s a CGA primer from SmartMoney.com.

In many states your charity has to be approved by state authorities before you can offer CGAs as a gift option to residents of the state. This is for those that have that approval, or if your prospect resides in a state that doesn’t require approval.

The American Council on Gift Annuities has an informative site that includes a summary of regulations state-by-state. (I refer to the ACGA site often, but it’s not definitive for state regs. I always check the primary source–state law–before forming a final answer on a regulation question.)

Who do you talk to?
Prospects for CGAs are typically 65 and over, with most of the gifts coming from those who are in their mid- to late seventies. You should be actively listening to prospects all the time.

Clues that reveal you’re talking to a CGA prospect:

  • I need more income
  • I’m worried about retirement income
  • I’m supporting a sibling; parent; or adult child (CGAs can be written so non-donors receive the lifetime payments.)
  • My spouse will need income when I’m gone
  • My stock dividends are low (CGA rates are higher than nearly every stock dividend.)

What do you say?
First, explain what long-term gifts do for you. Motivate prospects by feeding off what they already love: your charitable work.

Then, give your overview of the CGA features:

  • simple agreement
  • make your gift with cash or stock (or whatever state law and your gift acceptance policy say)
  • steady, fixed payments for the lifetimes of one or two people
  • what remains is a gift that supports our work

What if they’re interested in the financial features?

  • rates vary with age; the older you are the higher your rate; would you like me to do a personalized overview for you?
  • payments are steady and fixed for life (worth repeating)
  • payments are backed by all the assets of the organization; have you seen our annual report on our site?
  • assets are managed by X, with oversight by our CFO and/or board investment committee
  • CGA program is approved by the state department of insurance (as appropriate)

What’s next?
Your prospect may want to talk to their husband or wife. Offer a personalized, written overview (assuming you have software to produce one) so they’ll have more detail and their discussion can be more informed.

This will get your charitable gift annuity conversations started. What have yours been like?

Find Me On “Fundraising For Nonprofits” Blog

21842_282120324711_6001304_nI’m contributing to Hank Lewis’s “Fundraising For Nonprofits” blog. Thanks, Hank!

It’s a popular blog and I’m glad to have been invited to the party.

I’m writing about Planned Giving for small- and mid-size charities, explaining how to start a program. I just got started in January with “What Is Planned Giving?” and this month is “Why Have A Planned Giving Program?

As you can see, I’m talking basics, with simple steps you can execute written in language you can understand.

Hank and his other contributors blog on the likes of board fundraising; social media fundraising; grants; special events; and a lot of other topics. (They’re listed in the right hand navigation window on any of those sites.)

You’ll find my new posts on each third Thursday.

Check me out over there.

Charitable IRA Rollover Revived

Happy New Year!

Courtesy of Philanthropy.com
Courtesy of Philanthropy.com
Passed on January 1, 2013, the American Taxpayer Relief Act of 2012 renewed charitable giving from individual retirement accounts (IRAs) for those 70-and-a-half or older.

If you were practicing Planned Giving a few years ago, this is deja vu. All the requirements are the same as in 2010, and there are two add-ons.

This is an IRA distribution, not a rollover. A rollover is a transfer from one retirement account to another retirement account.

What we have here is a distribution to charity. I use the vernacular in my title because that’s what people search for.

From here on I’m calling this a qualified charitable distribution, the exact designation in the Act.

Please recognize that my analysis is based on my reading of the American Taxpayer Relief Act of 2012, without the benefit of IRS rulings, tax court decisions or other official guidance that has yet to come. I am not providing tax, accounting or legal advice. Donors must consult their own advisors to determine whether, and how, to make a charitable gift.

Here are the requirements for a qualified charitable distribution:

  1. Your donor is at least 70 1/2 years old on the date of gift and yours is a 501(c)(3) charity (supporting organizations are not included; nor are donor advised funds)
  2. The IRA is a traditional or Roth
  3. Maximum $100,000 per donor per year in qualified charitable distributions
  4. The distribution is direct from IRA to charity
  5. The full value of the gift would be eligible for an income tax charitable deduction if it were not a qualified charitable distribution
  6. The amount distributed would be included in gross income if it were not a qualified charitable distribution

Promotion
Numbers 1-4 are straightforward and what I recommend using in promotional materials. Also drop in these two points if you have space:

First, the amount of the gift counts toward an IRA required minimum distribution, or RMD. Lots of people (though not as many as in 2007 and years before) are required to take more from IRAs than they need. This provision helps them reduce that dilemma.

Second, the amount of the distribution to charity is not included in federal gross income, so it’s exempt from federal income tax.

Important Fine Print
Numbers 5 and 6 have nuances that are more appropriate to an article than a blog. They are the primary reasons your materials include a disclaimer that you’re not providing tax or legal advice and donors must consult their own advisors. The first four are secondary reasons for your disclaimer, because there are ins-and-outs in those, too.

I will make an important point on #5. It precludes using this to buy a ticket to your dinner or an auction item; buy anything from your charity; or fund a charitable gift annuity or charitable trust. None of these are 100% deductible for federal income tax purposes. Raffle tickets are precluded because no part of the amount paid is a charitable contribution for federal income tax purposes. (They may be deductible losses if the person has gambling winnings, but we’re not going there.)

New From 2010
The two additions from the 2010 version are (subject to 1-6 above):
— Your donors can can make qualified charitable distributions before February 1 and count them toward 2012
— If donors took IRA distributions in December, they can count any portion of them as 2012 qualified charitable distributions. Their gifts need to get to you before February 1 to grab this opportunity. (You may disregard #4 for this.)

A Download For You
Here’s an easy one-pager I put together for you to share with your board; use in promo materials; excerpt for an email blast; carve up for a newsletter sidebar; and generally use for your charity as you like.

Getting Donors Started

It’s easy. They tell their IRA custodian they want to make a qualified charitable distribution to your charity. Share your tax ID number. Donors will need it to fill out a form.

Take advantage of this immediate-cash planned gift. It’s a valuable way to start the year and gives you a timely, newsy reason to talk to prospects.

Nonprofit Radio, January 4, 2013: The Future Of Planned Giving Marketing, & Free Radio & TV To Boost Online Ticket Sales

Big Nonprofit Ideas for the Other 95%

Listen live or archive:

Tony’s Guests:

Gregory Warner
Gregory Warner
Gregory Warner: The Future Of Planned Giving Marketing

Greg Warner, the founder of MarketSmart, shares his insights on multi-channel awareness building; generating and cultivating leads; and tracking what works.

 

 

 

Amy Spencer & Kevin Russell
With Kevin Russell & Amy Spencer
Amy Spencer & Kevin Russell: Free Radio & TV To Boost Online Ticket Sales

Amy Spencer, Market Manager for Blackbaud, and Kevin Russell, Professioinal Services Manager for Blackbaud, want you to recognize that you do have leverage with the media, and that sending press releases is no longer the way to get radio and TV exposure for your event.

 
 
 


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Here is a link to the recording: 123: The Future Of Planned Giving Marketing & Free Radio And TV To Boost Online Ticket Sales. You can also subscribe on iTunes to get the podcast automatically.

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Researcher Bias In Stelter Planned Giving Report

Beware courtesy of xadrian on Flickr

Bias is apparent in The Stelter Company’s newest research report, “What Makes Them Give?” The planned giving study recommends expanding communications and outreach to younger and less loyal prospect pools than traditionally thought appropriate. Much of Stelter’s business is communications, direct marketing and outreach.

It’s in their corporate interest to encourage charities to reach out to larger pools of prospects by direct mail, email, calling and website engagement because they have business lines in all those methods.

For lots of decades, Planned Giving pros have promoted estate and retirement plan gifts to prospects in their mid-50s and over. That’s the age at which it’s been believed people generally begin to think of their long-term plans as charitable vehicles. Before then, plans are for protection of family and gifts to loved ones, for the most part.

Also, being in the will or IRA of a 40-something is less valuable than a 70- or 80-year-old because of the vastly greater likelihood that the younger person’s charitable interests will change–perhaps many times–before their death in 50 or 55 years.

Stelter’s research recommends starting promotion at age 40, claiming 60% of best prospects are age 40 to 54. That conclusion may be completely correct.

But because of the company’s bias I cannot rely on their study as evidence of trends that suggest activities that will increase Stelter’s revenue.

Along with direct and email products and campaigns, the company offers a calling program. The more people charities mail to, email and call, the more potential revenue for Stelter.

That creates researcher bias, notwithstanding the research was conducted by a different company hired and paid by Stelter.

“What Makes Them Give?” also suggests expanding Planned Giving prospect pools by setting aside beliefs about donor loyalty as a predictor of giving.

To turn prospects into donors you have to communicate with them, so larger prospect pools benefit Stelter’s bottom line.

The study includes a good number of recommendations unrelated to expanded communications and outreach, including rethinking recognition societies. Those are untainted by Stelter’s bias.

I’d love to expand Planned Giving prospecting. I really would.

We don’t yet have objective research concluding that would be a wise investment of charities’ hard-earned money and limited time.