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Davenport & Barr is Social!
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April 2012 AFR Announced
IRS Applicable Federal Rate (AFR) for April 2012 is 1.4%. This rate also known as the Discount Rate continues at its all-time low which means that charitable deductions on new gift annuities and charitable remainder trusts will remain at their historic lows.
For more information,
contact Davenport & Barr
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Meet the Team!
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Karen Davenport
President
Davenport & Barr
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Mike Davenport
Founder
Davenport & Barr
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Anastacia Barr
Director of Client Communications
Davenport & Barr
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Mike Spencer
President Spencer Group, Inc.
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Beyond Philanthropy Vol.1, Issue 7
April, 2012
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The Impact of Donor Choice
By Mike Spencer
As donors demand more control over their contributions, many organizations are adding gift designations and an option on their donation forms. When given choices, how do donors respond?
In the case of one independent school, the results shed some interesting light:
- Despite having seven specific options, an overwhelming 77% of donors let the school decide where the money should go (i.e. "where it's needed most")
- Of those who DID designate, 65% chose Financial Aid (representing 15% of all donors)
- Although only 23% of donors opted for a designation, they accounted for 44% of the total dollars raised - their average gift was 2 ½ times greater than those who did not designate a specific preference.
The conclusion: donors considering large contributions are attracted by giving choices. Plus, one might speculate that ALL donors like the OPTION to control their gift, but at the end of the day, most are willing to entrust the organization with the decision on how those donations are used.
To maximize the benefit of gift designations, we must remember the KISS (Keep It Simple, Sir) rule.
Specifically:
- Limit the number of choices to those that will attract the most interest
- Make sure all important program areas are represented
- Use succinct descriptions that are easily interpreted
In this day and age of electronic accounting, gift designations are a low-cost, simple and effective way to empower your donors, which in turn, will strengthen their commitment and value to your organization.
Want to know more about the giving patterns of YOUR donors?
Focus AnalyticsTM, our proprietary collection of analytic reports, has enabled dozens of organizations to assess annual giving performance, identify untapped opportunities and quantify short-term and long-term potential.
To learn more, contact Mike Spencer at mike@spencergroupinc.com
or call 802.865.4100 x11.
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How Much is a Name Worth? By Karen Davenport The subject of philanthropy -- and the principled issues surrounding it -- generally does not cross the mind of the average American on a daily basis. But earlier this year when country and western singer/songwriter Garth Brooks made headlines after being awarded $1 million in a breach-of-contract lawsuit against an Oklahoma hospital, suddenly people were paying attention. Apparently Brooks thought he had access to naming rights on a new women's health center. He wanted to name the building in honor of his mother, who died of cancer in 1999. But the hospital claimed his gift of $500,000 was unrestricted, and when they decided to use the money for other purposes Brooks sued and won -- the full amount of his original donation plus $500,000 in punitive damages! Regardless of right or wrong doing on the part of the hospital, the situation brings up a good question: How much should it cost to get your name on a building? Guidelines at some charities suggest "a minimum of 50% of the project cost" as desirable. It's important to be ready with an answer since many of today's donors wish to designate their charitable contributions for specific purposes or request other conditions, such as a naming right. Such conditions and restrictions are usually well-intended, as in the case of Garth Brooks, but careful thought and planning are required to ensure proper use of the gift by the charity. A recent article in Bloomberg Business Week click here discusses the surge in naming opportunities at top business schools and provides information on how donations compare by analyzing the gift's value in terms of today's dollar. Be sure to click down in the article to see how past naming gifts compare in today's market. For example the gift of $300,000 from Edward Tuck in honor of his father that founded the Tuck School of Business at Dartmouth in 1900 has a present value of $7.9 million. Chances are that Edward might have to dig a little deeper in 2012 to get the same level of recognition in today's philanthropic world! |
The Charitable Deduction Under Scrutiny
By Mike Davenport
The 2013 Budget recently put forward by President Obama includes provisions that would limit the amount of charitable deductions that may be taken by individuals and married couples in any given year. Currently, the limit is 50% of adjusted gross income, regardless of amount, in any given year. The limit is 30% of adjusted gross income, regardless of amount, when the gifts are capital gain property. For detailed descriptions of the current charitable deduction rules, see IRS Publication 526, Charitable Contributions; page 13.
The 2013 Federal Budget proposal would limit the amount of deduction to 28% for couples who earn $250,000 or more in a year. This would mean that the limit of charitable deductions would be $70,000 (28% x $250,000).
For individuals earning $200,000 or more, the limit would be 28%. The maximum charitable deduction for an individual would therefore be $56,000 (28% x $200,000).
This is not the first time such proposals have been made regarding charitable deductions, and it will probably not be the last. Such proposals will surely continue to receive significant opposition from charitable organizations.
Given increasing concern over budget deficits, we can expect that issues like the charitable deduction, which is so paramount and unique to our American culture of philanthropy, will continue to be challenged. Accordingly, we urge our clients and all charitable organizations to communicate these concerns to their donors, and seek their support by contacting their congressmen and telling them not to support changes in the charitable deduction.
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Volunteer Appreciation Week!
April 10th through the 16th is Volunteer Appreciation Week. Although, not asking for any compensation in return is what volunteering is all about, the special work these individuals do is worth recognizing.
According to the Independent Sector -- a coalition of charities, foundations, corporations and individuals that publishes research important to the non-profit sector -- Americans have come together through voluntary organizations for over 230 years! Today the estimated dollar value of volunteer time in the U.S. is $21.36 per hour -- certainly worth acknowledging!
For ideas on recognizing volunteers, click here
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