Last month we introduced the concept of additional criteria to identify potential planned gift donors -- beyond typical donor identification markers, such as older folks, people without children or grandchildren, those never married, known philanthropists, and most importantly individuals, who have demonstrated their loyalty through consistent giving to your organization. As was discussed, another indicator is people who are philanthropic and desire more predictable income for retirement needs.
Because individuals are becoming increasingly confident in the security of gift plans offered by regulated charitable organizations, non-profits have a unique opportunity to engage in conversations about charitable gifts.
For example, the charitable gift annuity is a prime example of a planned gift that has become a popular alternative to certificates of deposit and money market funds because of the rate of return it provides. Another gift plan that helps those wishing to combine philanthropy and estate planning is gifting of Individual Retirement Accounts (IRAs).
As Neal P. Myerberg offered during his presentation to gift planners at the 2010 national Partnership for Philanthropic Planning conference,"The recession has magnified the Double Tax (estate & income) that could radically reduce plan values at the death of the owner."
Let's assume an individual has an IRA totaling $100,000. Let's also assume this individual desires to be philanthropic toward their church, college, hospital, or other charitable organization they care about. Finally, let's assume this individual wishes to leave a generous amount to children and wants to minimize the potential estate and income taxes that could consume 50% or more of the total value of their IRA.
One option for this individual is to leave (specifically bequeath) these IRA assets to fund a charitable remainder trust that will pay one or more beneficiaries for life, allow the donor to take charitable tax deduction, perhaps avoid a capital gains tax, and ultimately provide a remainder interest to one or more favorite charitable organizations.
A second option is to bequeath these IRA assets to his/her favorite charitable organizations, thereby keeping less tax disadvantaged assets for transfer to family at death.The process is as simple as completing the appropriate beneficiary designation form and filing it with the account holder. As a note of caution, one's spouse will also have to sign the beneficiary designation form.
If you would like more information regarding how to identify donor prospects that fit these criteria, or to develop strategies to help your donors take advantage of these solutions, please contact us at: Davenport & Barr or email Mike Davenport .
