Monday, May 20, 2013
Are You Attending the Western Regional Planned Giving Conference in Costa Mesa?
Friday, May 3, 2013
Complementary Webinar: How to Engage Your Donors
You are invited to join us for complementary webinar that will review ultimate website and literature branding strategies to connect with your donors. Branding is designed to create two emotional responses in your donors. The first is recognition. Within a split-second of seeing any type of media – web, email, social media, print, video – your donor should recognize your organization. The second emotional response with good branding is that your donor also thinks, “I know who that is and I like them!”
In Brandraising by Sarah Durham, a perceptive discussion of the ways that good branding enables fundraisers to increase gifts, there are three general categories of branding. These are the organizational level, the identity level and the multichannel level.
The organizational level of branding involves both vision and mission. Good branding is the use of various media and inclusion of your organizational values in a way that your donors understand how your mission-related actions will collectively support the organizational vision.
The identity level of branding includes four elements. The first level is your logo. All of your electronic and print media should include a logo. The second level for many organizations is the color or colors. If you have a color that is identified with your organization, that should be used prominently on all of the media. Most educational organizations have two colors that define the organization and gain instant recognition from graduates. The third level is your pictures. All types of media should include pictures that reflect your mission. The fourth level of branding is emerging and becoming more important with every advance in eCommunication. Messaging is now a very powerful way of branding.
Click here to sign up and join us on July 11, 2013 at 9:00 PT to learn more about the six methods for implementing your branding which includes your website, eNewsletters, gift proposals, literature, social media and video.
In Brandraising by Sarah Durham, a perceptive discussion of the ways that good branding enables fundraisers to increase gifts, there are three general categories of branding. These are the organizational level, the identity level and the multichannel level.
The organizational level of branding involves both vision and mission. Good branding is the use of various media and inclusion of your organizational values in a way that your donors understand how your mission-related actions will collectively support the organizational vision.
The identity level of branding includes four elements. The first level is your logo. All of your electronic and print media should include a logo. The second level for many organizations is the color or colors. If you have a color that is identified with your organization, that should be used prominently on all of the media. Most educational organizations have two colors that define the organization and gain instant recognition from graduates. The third level is your pictures. All types of media should include pictures that reflect your mission. The fourth level of branding is emerging and becoming more important with every advance in eCommunication. Messaging is now a very powerful way of branding.
Click here to sign up and join us on July 11, 2013 at 9:00 PT to learn more about the six methods for implementing your branding which includes your website, eNewsletters, gift proposals, literature, social media and video.
Tuesday, April 30, 2013
Want to attend PPGC 2013 in Chicago, IL, but don't have the budget?
Conditions of Scholarship: Scholarships are used exclusively for registration fees for PPGC 2013, are non-transferable, and have no cash or exchange value. Scholarships are for the amount of the full conference registration fee. Any other fees or expenses, such as travel and lodging expenses will be the responsibility of the scholarship winner.
Monday, March 18, 2013
Registration has Begun for the Practical Planned Giving Conference!
Registration
has begun for Crescendo’s 10th Practical Planned Giving Conference (PPGC) on
September 23-24 in Chicago. Experience two full days of learning with 48
breakout sessions taught by leading speakers and fundraisers at the largest
user conference in the industry. This year’s conference theme is Multichannel
Marketing with keynotes by marketing experts Nancy Schwartz and Brian
Segrestano. Click here to learn more and to register for Early Bird
pricing. While you are on our PPGC homepage, be sure to click on the Like
button and share this information with your friends.
Monday, January 21, 2013
Looking for Ways to Increase Bequests?
Then be sure to sign up for the Bequest Boom Seminar! Learn how to reach your share of the 78 million baby boomers with an online wills and bequests program. Get the tools to launch an effective wills campaign in 2013. Combine the online Wills Planner with the Provide and Protect multi-media book and a nationwide network of GiftAttorneys. Make greater impact with an interactive website, newsletters, ads and brochures, and social networking. Discover how electronic and print media can boost your results. To sign up vist our website or call Lynne McGuire at 800-858-9154.
Friday, January 4, 2013
Explanation of January 2013 IRA Gifts
Section 208 of the American Taxpayer Relief
Act of 2012 (ATRA) permits individuals who have received an IRA distribution in
December of 2012 to make a cash gift prior to February 1, 2013 and still have a
qualified charitable distribution (QCD). Because there have been many
questions raised by individuals with specific circumstances, it would be useful
to examine several cases to determine whether or not a QCD is possible.
1. Partial IRA Gift
Question: Mary received her required minimum distribution (RMD) from her IRA in the amount of $22,000 on December 5, 2012. On January 15, 2013, she sends a check for $3,000 to her favorite charity. Does this qualify as a 2012 QCD?
Answer: Yes. Under ATRA Sec. 208(b)(2)(B), donors who received a December RMD may make a cash gift to charity and have that count as a 2012 QCD. The cash gift must be made after the donor took their December RMD but before February 1, 2013. The law allows a donor to transfer “any portion of a distribution from an individual retirement account” which means a donor can give less than the full amount of the RMD as a cash gift, in which case the amount of the cash gift will be treated as a QCD. Therefore, a partial gift such as the $3,000 transfer by Mary IRA is permissible and she can elect to have that treated as a 2012 QCD.
2. December Cash Gift
Question: Joe received an RMD of $10,000 on December 15, 2012. On December 18, he sent a check for $10,000 to his favorite charity. Can the cash gift be treated as a QCD for 2012?
Answer: Yes. The requirement of Sec. 208(b)(2)(B)(i) is that the cash gift must be made after a donor took their RMD but before February 1, 2013. A gift in December of 2012 meets those requirements.
3. November 28, 2012 Distribution
Question: John received his 2012 RMD on November 28, 2012. He would like to transfer $10,000 of the $41,000 RMD as a cash gift to charity in January of 2013. Is there any way that this can be a QCD?
Answer: No. The requirement of Sec. 208(b)(2)(B) is that the distribution from the IRA to the taxpayer must be made after November 30, 2012 but before January 31, 2013. Cash gifts made from distributions taken prior to December 1, 2012 are not eligible to be treated as a QCD.
4. Distribution Exceeds RMD
Question: Susan must take $16,000 as her RMD in 2012. On December 18, 2012, she received a distribution from her IRA of $20,000. Can she give the full $20,000 as a QCD?
Answer: Yes. Sec. 208(b)(2)(B) states that "any portion of a distribution" will qualify. Therefore, any amount up to the $100,000 QCD limit may be transferred to charity in January of 2013 and it may be treated as a 2012 QCD.
5. Cash Gift Before Distribution
Question: James makes a cash gift to Favorite Charity of $10,000 on December 3, 2012. On December 15, 2012, he receives his $10,000 RMD from his IRA. Can this be a QCD?
Answer: No. Sec. 208(b)(2)(B)(1) contemplates that transfers from the donor to charity are to be "transferred in cash after the distribution" to qualify as a QCD. The key here is that the donor can make the cash gift but only “after” taking their RMD.
6. Age 70½ Gift
Question: Susan was born June 30, 1942. She turned 70½ on December 30, 2012. On December 15, 2012, Susan received an IRA distribution of $20,000. Can she make a gift to charity in January of 2013 and have a QCD?
Answer: Yes. Sec. 208(b)(2)(A) states that a taxpayer may elect to have "any" QCD made in January 2013 treated as if it was made on December 31, 2012. Even though Susan received the distribution on December 15, because the cash gift is in January of 2013, she could elect to have it treated as a December 31, 2012 QCD. Because she was age 70 ½ on December 30, this should qualify.
7. Multiple QCDs in 2012
Question: Harry would like to make multiple QCDs in 2012. Because he thought that the IRA Charitable Rollover would be enacted for 2012, he had his custodian make a $5,000 QCD in October of 2012. He also received an RMD in the amount of $8,000 on December 5, 2012. Harry would like to give the $8,000 RMD on January 15, 2013 and also add a $10,000 QCD gift from his IRA to Favorite Charity on January 20, 2013. Will all three gifts be 2012 QCDs?
Answer: Yes. First, ATRA Sec. 208(a) changes the sunset date for IRC Sec. 408(d)(8) to December 31, 2013. This enables 2012 QCDs to be qualified. Second, IRC Sec. 408(d)(8)(A) states that “qualified charitable distributions” up to $100,000 in one year are permitted. The plural on “distributions” permits multiple QCDs in one year within the $100,000 limit. Therefore, ATRA Sec. 208(b)(2)(B) states that “any portion of a distribution from an individual retirement account” may be transferred to charity before February 1, 2013. The $8,000 RMD gift to Favorite Charity is a 2012 QCD. Third, Sec. 208(b)(2)(A) states that “any” QCD in January will be deemed to have an effective date of December 31, 2012. The $10,000 IRA charitable rollover on January 20, 2013 is therefore a QCD with a December 31, 2012 effective date. All three QCDs are permitted.
Copyright © 2013 By A. Charles Schultz, J.D.
Question: Susan was born June 30, 1942. She turned 70½ on December 30, 2012. On December 15, 2012, Susan received an IRA distribution of $20,000. Can she make a gift to charity in January of 2013 and have a QCD?
Answer: Yes. Sec. 208(b)(2)(A) states that a taxpayer may elect to have "any" QCD made in January 2013 treated as if it was made on December 31, 2012. Even though Susan received the distribution on December 15, because the cash gift is in January of 2013, she could elect to have it treated as a December 31, 2012 QCD. Because she was age 70 ½ on December 30, this should qualify.
7. Multiple QCDs in 2012
Question: Harry would like to make multiple QCDs in 2012. Because he thought that the IRA Charitable Rollover would be enacted for 2012, he had his custodian make a $5,000 QCD in October of 2012. He also received an RMD in the amount of $8,000 on December 5, 2012. Harry would like to give the $8,000 RMD on January 15, 2013 and also add a $10,000 QCD gift from his IRA to Favorite Charity on January 20, 2013. Will all three gifts be 2012 QCDs?
Answer: Yes. First, ATRA Sec. 208(a) changes the sunset date for IRC Sec. 408(d)(8) to December 31, 2013. This enables 2012 QCDs to be qualified. Second, IRC Sec. 408(d)(8)(A) states that “qualified charitable distributions” up to $100,000 in one year are permitted. The plural on “distributions” permits multiple QCDs in one year within the $100,000 limit. Therefore, ATRA Sec. 208(b)(2)(B) states that “any portion of a distribution from an individual retirement account” may be transferred to charity before February 1, 2013. The $8,000 RMD gift to Favorite Charity is a 2012 QCD. Third, Sec. 208(b)(2)(A) states that “any” QCD in January will be deemed to have an effective date of December 31, 2012. The $10,000 IRA charitable rollover on January 20, 2013 is therefore a QCD with a December 31, 2012 effective date. All three QCDs are permitted.
Copyright © 2013 By A. Charles Schultz, J.D.
Charitable Benefits of the American Taxpayer Relief Act of 2012
On January 1, 2013, both the Senate and House passed the American
Taxpayer Relief Act of 2012 (ATRA). The bill resolved the “fiscal cliff”
and includes a number of provisions that will be favorable for philanthropy and
charitable giving. Fortunately, some of the proposals such as caps on
charitable deductions or limits on tax savings from charitable gifts were not
enacted. Because the general trend of the bill is to create higher tax
rates for upper-income taxpayers, the benefits of charitable giving will be
readily apparent to those individuals.
IRA Charitable Rollover
Since 2006, IRA owners age 70½ and older have been able to make a qualified charitable distribution (QCD) up to $100,000 each year. ATRA extends and expands this option for 2012 and 2013. There are three categories of potential donors.
First, some individuals in 2012 made QCDs directly from their IRA custodian to charities with the hope that the law would be retroactive. These QCDs are qualified retroactive to January 1, 2012.
Second, individuals who did not make a QCD in 2012 can do so during January of 2013. This is similar to 2011, when it was possible to do a QCD for the prior year in January and a second QCD in the remaining 11 months of the year. If an individual has not made a QCD in 2012, this allows a generous person to make two $100,000 QCDs in 2013.
Third, many individuals had hoped to do a QCD in 2012, but in December of 2012 received their IRA required minimum distribution (RMD). If these individuals transfer those funds to charity during January of 2013, they will not report the IRA distribution as income. Effectively, the December 2012 RMD is converted to a January QCD that qualifies for 2012.
GiftLegacy Users – Important Opportunity! For GiftLegacy users, there is an opportunity to conduct a one or two week “IRA Special Gift” campaign. GiftLegacy users can go to Cresmanager, Literature, Campaigns, IRA Rollover Campaign and will have access to an eBlast and a postcard. The campaign should be conducted by the second week of January.
Your donors who have taken an RMD in December will be able to make a cash gift in January to the charity. The charity will want to send the donor a letter of confirmation that the donor is electing the QCD. An example letter is published in GiftLaw Pro Chapter 4.6.8, the IRA Charitable Rollover section. This is a superb opportunity to receive cash gifts this January. The opportunity will terminate on January 31, 2013, so it is crucial to move quickly. GiftLegacy users who have built large email distribution lists will find that here is a wonderful cash bonus this month for excellence in eMarketing. That large email list will produce welcome cash gifts.
Individual Income Tax Rates on Ordinary Income
The existing tax brackets of 10%, 15%, 25%, 28%, 33% and 35% will be extended. There is a new 39.6% bracket for married persons with $450,000 of taxable income, heads of household with $425,000 and single persons with $400,000 of taxable income.
Charitable Impact: Those individuals with higher incomes are now facing larger taxes. However, the tax savings from a charitable gift for individuals with state and federal tax brackets from 40% to 46% are now increased. High-income donors may make larger gifts in 2013.
Long-Term Capital Gains
The capital gains rate of 0% for those in the 10% and 15% bracket and 15% for those in most higher brackets will be extended. However, individuals who are subject to the 39.6% tax bracket will have a 20% capital gain rate. In addition, because capital gains for those with incomes over $250,000 married or $200,000 single will be subject to the 3.8% Medicare tax, the capital gains rate for upper-income persons will be 23.8%.
Charitable Impact: The top federal tax rate for sales of major assets will increase from 15% in 2012 to 23.8% in 2013. In those states that also have a state tax, the combined capital gain rate for major sales will be 28% to 32%. This will greatly increase interest in charitable remainder unitrusts and charitable remainder annuity trusts. Charities should appropriately emphasize the much larger tax savings available in 2013 for charitable trusts.
Alternative Minimum Tax
The alternative minimum tax was initially intended to cover only high-income persons. However, with the increase in incomes, AMT continued to apply to larger and larger numbers of individuals. ATRA sets a permanent indexed AMT exemption amount. For 2012, the amounts will be $78,750 for married couple and $50,600 for single persons.
Charitable Impact: The permanent indexed AMT exclusion will have fairly modest charitable impact.
Gift and Estate Taxes
Marital portability and the $5 million (with indexed increases) applicable exclusion amount for gift and estate taxes are made permanent. For 2013, the expected IRS ruling will set the applicable exclusion amount at $5.25 million. The top rate for gift and estate taxes is 40%.
Charitable Impact: The permanent gift and estate provisions will encourage many individuals to update their estate plans. This is a great marketing opportunity for bequests from estates of all sizes. For larger estates, a testamentary unitrust, gift annuity or lead trust are excellent planning options.
Itemized Deduction Limits
In prior years, there were limitations on itemized deductions that were called the “Pease” limits. The deductions over a floor are reduced by 3% of the adjusted gross income of the taxpayer. The maximum reduction for very-high-income persons is 80% of the itemized deductions.
ATRA creates new fixed limits for the 3% floor. Married couples will be subject to the reduced deductions for adjusted gross income (AGI) over $300,000. Single persons will use a floor of $250,000 of AGI.
Charitable Impact: Those donors with larger incomes will suffer a modest to moderate reduction in their charitable tax savings. This historically has not had significant impact on charitable giving. However, very-high-income persons may lose as much as 80% of their charitable tax savings.
Personal Exemption Limits
The personal exemption phase-out will be reinstated for married couples with AGI over $300,000 and single persons with $250,000 of AGI.
Charitable Impact: This will have fairly modest impact.
Various Deductions and Charitable Extenders
There are several other provisions that historically have been extended. There are expanded limits for gifts of conservation easements with a 50% deduction level and carry forwards for up to 15 years. In addition to the IRA Rollover, gifts of apparently wholesome food, property gifts by Subchapter S corporations and payments to controlled subsidiaries provisions are all extended until the end of 2013.
Charitable Impact: The enhanced deductions for food gifts will be very welcome for food banks and similar charitable organizations. Because there has been a significant growth of Subchapter S corporations during the past decade, the ability for Sub S corporations to make gifts of appreciated land or stock and flow through the deductions to owners is quite beneficial. Finally, land conservancy organizations and similar charities will appreciate the extension of the conservation gift rules.
Summary
ATRA was on balance fairly kind to philanthropy. Donors with higher incomes and larger capital gains tax bills will find new reasons to engage in charitable planning. The probable level of interest in gift planning education and concepts by donors and their professional advisors will significantly increase during 2013.
Copyright © 2013 By A. Charles Schultz, J.D.
IRA Charitable Rollover
Since 2006, IRA owners age 70½ and older have been able to make a qualified charitable distribution (QCD) up to $100,000 each year. ATRA extends and expands this option for 2012 and 2013. There are three categories of potential donors.
First, some individuals in 2012 made QCDs directly from their IRA custodian to charities with the hope that the law would be retroactive. These QCDs are qualified retroactive to January 1, 2012.
Second, individuals who did not make a QCD in 2012 can do so during January of 2013. This is similar to 2011, when it was possible to do a QCD for the prior year in January and a second QCD in the remaining 11 months of the year. If an individual has not made a QCD in 2012, this allows a generous person to make two $100,000 QCDs in 2013.
Third, many individuals had hoped to do a QCD in 2012, but in December of 2012 received their IRA required minimum distribution (RMD). If these individuals transfer those funds to charity during January of 2013, they will not report the IRA distribution as income. Effectively, the December 2012 RMD is converted to a January QCD that qualifies for 2012.
GiftLegacy Users – Important Opportunity! For GiftLegacy users, there is an opportunity to conduct a one or two week “IRA Special Gift” campaign. GiftLegacy users can go to Cresmanager, Literature, Campaigns, IRA Rollover Campaign and will have access to an eBlast and a postcard. The campaign should be conducted by the second week of January.
Your donors who have taken an RMD in December will be able to make a cash gift in January to the charity. The charity will want to send the donor a letter of confirmation that the donor is electing the QCD. An example letter is published in GiftLaw Pro Chapter 4.6.8, the IRA Charitable Rollover section. This is a superb opportunity to receive cash gifts this January. The opportunity will terminate on January 31, 2013, so it is crucial to move quickly. GiftLegacy users who have built large email distribution lists will find that here is a wonderful cash bonus this month for excellence in eMarketing. That large email list will produce welcome cash gifts.
Individual Income Tax Rates on Ordinary Income
The existing tax brackets of 10%, 15%, 25%, 28%, 33% and 35% will be extended. There is a new 39.6% bracket for married persons with $450,000 of taxable income, heads of household with $425,000 and single persons with $400,000 of taxable income.
Charitable Impact: Those individuals with higher incomes are now facing larger taxes. However, the tax savings from a charitable gift for individuals with state and federal tax brackets from 40% to 46% are now increased. High-income donors may make larger gifts in 2013.
Long-Term Capital Gains
The capital gains rate of 0% for those in the 10% and 15% bracket and 15% for those in most higher brackets will be extended. However, individuals who are subject to the 39.6% tax bracket will have a 20% capital gain rate. In addition, because capital gains for those with incomes over $250,000 married or $200,000 single will be subject to the 3.8% Medicare tax, the capital gains rate for upper-income persons will be 23.8%.
Charitable Impact: The top federal tax rate for sales of major assets will increase from 15% in 2012 to 23.8% in 2013. In those states that also have a state tax, the combined capital gain rate for major sales will be 28% to 32%. This will greatly increase interest in charitable remainder unitrusts and charitable remainder annuity trusts. Charities should appropriately emphasize the much larger tax savings available in 2013 for charitable trusts.
Alternative Minimum Tax
The alternative minimum tax was initially intended to cover only high-income persons. However, with the increase in incomes, AMT continued to apply to larger and larger numbers of individuals. ATRA sets a permanent indexed AMT exemption amount. For 2012, the amounts will be $78,750 for married couple and $50,600 for single persons.
Charitable Impact: The permanent indexed AMT exclusion will have fairly modest charitable impact.
Gift and Estate Taxes
Marital portability and the $5 million (with indexed increases) applicable exclusion amount for gift and estate taxes are made permanent. For 2013, the expected IRS ruling will set the applicable exclusion amount at $5.25 million. The top rate for gift and estate taxes is 40%.
Charitable Impact: The permanent gift and estate provisions will encourage many individuals to update their estate plans. This is a great marketing opportunity for bequests from estates of all sizes. For larger estates, a testamentary unitrust, gift annuity or lead trust are excellent planning options.
Itemized Deduction Limits
In prior years, there were limitations on itemized deductions that were called the “Pease” limits. The deductions over a floor are reduced by 3% of the adjusted gross income of the taxpayer. The maximum reduction for very-high-income persons is 80% of the itemized deductions.
ATRA creates new fixed limits for the 3% floor. Married couples will be subject to the reduced deductions for adjusted gross income (AGI) over $300,000. Single persons will use a floor of $250,000 of AGI.
Charitable Impact: Those donors with larger incomes will suffer a modest to moderate reduction in their charitable tax savings. This historically has not had significant impact on charitable giving. However, very-high-income persons may lose as much as 80% of their charitable tax savings.
Personal Exemption Limits
The personal exemption phase-out will be reinstated for married couples with AGI over $300,000 and single persons with $250,000 of AGI.
Charitable Impact: This will have fairly modest impact.
Various Deductions and Charitable Extenders
There are several other provisions that historically have been extended. There are expanded limits for gifts of conservation easements with a 50% deduction level and carry forwards for up to 15 years. In addition to the IRA Rollover, gifts of apparently wholesome food, property gifts by Subchapter S corporations and payments to controlled subsidiaries provisions are all extended until the end of 2013.
Charitable Impact: The enhanced deductions for food gifts will be very welcome for food banks and similar charitable organizations. Because there has been a significant growth of Subchapter S corporations during the past decade, the ability for Sub S corporations to make gifts of appreciated land or stock and flow through the deductions to owners is quite beneficial. Finally, land conservancy organizations and similar charities will appreciate the extension of the conservation gift rules.
Summary
ATRA was on balance fairly kind to philanthropy. Donors with higher incomes and larger capital gains tax bills will find new reasons to engage in charitable planning. The probable level of interest in gift planning education and concepts by donors and their professional advisors will significantly increase during 2013.
Copyright © 2013 By A. Charles Schultz, J.D.
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