As we enter the year-end giving season, it is important to remember the practical implications of the tax law changes made earlier this year as a part of the economic stimulus packages in response to COVID-19. The CARES Act (passed into law on March 27, 2020) contains provisions that potentially affected the planning considerations of your donors for this year.
In November 2019, the Giving USA Foundation published a special report associated with its research of planned giving donors and their motivations to give. This study, "Leaving a Legacy: A New Look at Planned Giving Donors," was based upon national survey results from more than 860 planned giving donors and an additional 40 personal interviews. The study provides information on key trends, motivations, and insights.
Here are key findings and three practical implications for your planned giving program from this valuable research:
Educating donors about the benefits of charitable IRA rollovers is a great way to uncover future planned giving prospects for nonprofit fundraising. This flexible giving vehicle provides donors a tax-free method to support their favorite causes, whether they itemize their deductions on their federal tax return or not.
Since they were first created in 1974 as a part of the Employee Retirement Income Security Act (ERISA), Individual Retirement Accounts (IRAs) have become a featured financial and tax planning tool. Some of your organization’s donors have saved for retirement for years through IRA accounts and then, upon retirement, they discover that they don’t yet need the IRA. Given a choice, these donors would simply allow their IRA funds to stay in the account and continue to grow for the future, however, IRA owners are required to begin taking minimum withdrawals after age 70 ½.
Donors don’t compartmentalize their philanthropy in the same way that an organization distributes staff responsibilities on an org chart. As organizations are cultivating their prospects and having conversations with them about potential gifts, the conversation needs to be holistic – integrating annual, planned and major gifts into the discussions when appropriate based on the donors’ needs.
Has your development operation fully integrated major and planned giving?
Charitable organizations received an early holiday present last Friday when the President signed the Protecting Americans from Tax Hikes Act of 2015 into law. Among its provisions was a renewal of the charitable IRA rollover opportunity for donors who are past age 70 ½. Although the IRA rollover has been caught in a seemingly endless cycle of expiration and reinstatement since its inception in 2006, what makes this renewal special is that this time it finally carries no built-in expiration date.