On Philanthropy / tj sudol

Charitable giving may be the missing piece in your plan

The image for On Philanthropy represents the time-tested Carpenter’s Rule for a reason.  Measure Twice, Cut Once.  Charitable gift planning has a lot in common with this simple rule.  Getting it right the first time makes all the difference.  For you, your family, and the charities you care about.

Helping individuals and families figure out the best ways to support their favorite charities and causes is what I have been doing for a long time.  What I know from experience time and again is that the best solutions are usually the simple solutions.

There are a variety of creative ways to craft just the right charitable giving strategy.  The right plan can nicely complement your overall financial and estate plans.  As a seamlessly connected comprehensive plan, you can meet your financial needs and include a tax-wise way to achieve your philanthropic aspirations – both during your lifetime and as a legacy later on.

With the right plan, you can be sure the causes and charities you care most about will continue to benefit from your support for years to come.  A charitable legacy may be the missing piece in your overall plans. Or, what you have right now may not accomplish all you’d like to do.  Finding the optimal solution is worth the time to get it right.  There are ways available to help you make your charitable giving simple and more effective right now – and, create a legacy to carry on your giving for generations to come.

If you would like to learn more about the ways you can do this, contact me and let me  know you’d like to hear about the options you have. You can reach me by calling 540.820.0246or by e-mail at tsudol@carter.global.

Ted Sudol

Whether an organization is large or small – whether it’s a large university or a small community organization – a campaign planning study plays a critically important part in revealing the organization’s likelihood to succeed in a fundraising venture.

Let’s be clear: I don’t mean answering just the ‘if’ question – “…if we start a campaign, are there enough people of means and interest who may support our cause?” I mean all the ‘how’ and ‘when’ questions too. I mean a thorough assessment of the organization’s readiness to be embark on a fundraising venture. Indeed, the focus must be all about readiness.

Does the organization have the business process in place, the infrastructure, the policies and procedures, the staff and budgetary resources? Is it ready to start down this road? And if it is not, then it does not matter that some firm has reported that its feasibility study says ‘you’re good to go.’ Because you’re just not.

My concern these days is that there are some who seem to be saying an organization can do this all on their own. And they can’t. They have neither the objectivity nor the expertise to be their own client. And I believe it is ill-advised to encourage organizations to conduct Do-It-Yourself campaign planning studies – it’s neither pound wise nor penny foolish, it’s just a bad idea.

No one wants to witness a campaign that might otherwise have been successful stall or crash shortly after launch. Such outcomes happen. Too frequently. These are outcomes that can be avoided. Launching a fundraising initiative with confidence that it’s the right time to do so and when all indicators are pointing in the right direction – that’s readiness. That’s the conditions conducive to a successful campaign. And that’s the value of a readiness-focused campaign planning study. It’s what I do.

If you would like to learn more about campaign planning studies, I welcome your contact.

Perhaps you are as troubled as I am that it’s impossible to read a newspaper or watch a news report on any given day and not see another example of a partisan divide that cripples productive thought and action. This is not the case in the voluntary sector, so why is it the case in the public sector?

I am not naive. I don’t suggest that we eliminate politics from the equation, but the poison of partisanship is another matter. It’s one thing to have a variety of views and an assortment of parties that reflect differing – even opposing – perspectives, but it is quite another to treat every statement, every idea, every proposal, every action in a negative light just because of its source.

We don’t do this in the voluntary sector. That’s not to say that everyone gets along all the time or that there are not debates about how best to tackle a problem – but, when issues arise, when problems emerge, philanthropy responds to help without checking on the party registration of whoever crafted the proposal on how to respond to the issue at hand.

Charitable organizations raise nearly one billion dollars a day in the United States alone. Money that helps volunteers and professionals tackle some of the biggest issues and problems we face as a society. When the donors who make these contributions are honored, when galas are held, when ground-breaking ceremonies take place, Democrats and Republicans stand side by side on common ground, recognized for contributing to the common good. Alexis de Tocqueville saw this about the people of America and it’s still true today.

Except when it comes to running our government.

Perhaps it’s time to bring to politics in the public sector the spirit that guides philanthropy in the voluntary sector. Perhaps it’s time to bring grace and dignity to the table of compromise for the common good of our country. After all, partisanship ain’t working so why not try something else?

The US House of Representatives this past week passed a bill that would address several important charitable priorities, including a provision to renew and make permanent the IRA Charitable Rollover. Long supported by the voluntary sector, the IRA Charitable Rollover offers a special way for those with IRAs to support charitable causes. The bill was approved by a vote of 279-137, with 39 Democrats joining the Republican majority to ensure passage by a wide margin. The bill now moves to the Senate.

Known as the Fighting Hunger Incentive Act of 2015, the bill includes the following provisions:

– The IRA Rollover.

– An extension and expansion of the charitable deduction for contributions of food inventory,

– An enhanced deduction for gifts of qualified conservation easements,

– Modification of the excise tax on the investment income of private foundations.

Unfortunately, the President has vowed to veto the bill if it reaches his desk in its present form. The House would need 290 votes to override a veto.

So, what does it all mean? Despite the time money and effort that has been expended on Capitol Hill in recent years to move these provisions into law, partisan squabbling continues to make reaching shore a greater challenge than it should be. At this point, the U.S. Senate still needs to pass the bill and then it needs to be signed by the President or, should he veto it, the House would need to garner enough votes to override a veto. In other words, the saga continues. I’ll keep you informed.

Background – The IRA Charitable Rollover has been around now for a few years.  It allows individuals 70½ and older to exclude from their taxable income IRA distributions of up to $100,000 as long as the distributions are transferred directly from the IRA to a charity. The law allowing this opportunity expired on December 31, 2013 and discussion in Washington throughout 2014 has focused on its reinstatement. The House of Representatives and the Senate each had somewhat different versions under consideration throughout the year and this delayed the passage of a Bill. That changed this week.

This Week’s Development – On Wednesday, December 17, the U.S. Senate passed a Bill that had already cleared the House of Representatives. It is known as the “Tax Increase Prevention Act of 2014” (H.R. 5771).  Its purpose is to retroactively renew many expired or expiring tax provisions commonly known as tax extenders – and, the good news is that the Bill includes an extension of the Charitable IRA Rollover – but, only through December 31, 2014. 

It is expected that the Bill will be presented very soon for the President’s signature.  The consensus among Washington insiders is that the President is likely to sign the Bill into law.  On the other hand, as a practical matter, if the Act is not signed soon it won’t be worth the ink with which it’s signed.

What To Do Next – Because there will be precious little time to act once the Act is signed, the most useful action step would be to identify the donors you have who have taken advantage of the Charitable IRA Rollover in the past and reach out to them as soon as the President signs the Bill to encourage them to take advantage of this opportunity before December 31, 2014.

Please Note – These Qualified Charitable Distributions from IRAs are not tax deductible; but, they do offer donors substantial advantages:

• The distributions are not included in the donor’s taxable income.
• The amounts distributed to charity count toward the donor’s Required Minimum Distribution amount.
• The distributions reduce the principal in the IRAs, effectively reducing the tax impact of distributions in future years.

Also, a few other things to keep in mind –

• Donors who have already withdrawn their 2014 Required Minimum Distributions cannot re-characterize those distributions as Qualified Charitable Distributions, even if they subsequently write a check for an equal amount to a charity.
• But, a donor can still make a 2014 Qualified Charitable Distribution even if the donor has already taken a 2014 Required Minimum Distribution.
• The distribution to the charity must be delivered to the charity by the IRA’s Administrator on or before December 31, 2014. If the payment is sent by mail, the postmark will determine the delivery date; if the payment is sent electronically, delivery will be determined by the date the funds reach the charity’s account.
• For some donors, the reinstatement of this law may be something they anticipated earlier in the year and already acted on. That is, if a donor arranged for a direct transfer to charity earlier in 2014 in anticipation of reauthorization by Congress, and the transfer met all the law’s requirements, it will qualify as a Qualified Charitable Distribution under the renewed provisions.
• One thing this Bill does not do is allow for distributions made in January/February 2015 to be considered to have been made in 2014.

Below is draft language you can adapt for an e-mail communication with your donors, in the event that the Bill is signed into law by the President.  If you have questions about this language, please contact me.

Sample Language for an e-mail to Donors – 

As you might have heard, the President recently signed the Tax Increase Prevention Act of 2014 into law.  Among its provisions, the law extends the Charitable IRA Rollover for 2014.  This means that individuals age 70 ½ or older are authorized to make tax-free distributions from their Individual Retirement Accounts (IRAs) of up to $100,000 to qualified charitable organizations.  While these Qualified Charitable Distributions are not tax deductible, they do offer substantial advantages. The distributions are not included in your taxable income and they can also count as the your Required Minimum Distribution for 2014.

There are several important things to know about Charitable IRA Rollover in 2014:

(1) To qualify, the distribution to charity must be delivered to the charity by the IRA’s Administrator on or before December 31, 2014.

(2) If you made a direct distribution from your IRA to a qualified charity earlier in 2014 in anticipation of reauthorization by Congress, that distribution (up to $100,000) will count as a Qualified Charitable Distribution as long as all other requirements are met.

(3) Required Minimum Distributions already withdrawn from your IRA in 2014 cannot be re-characterized as Qualified Charitable Distributions, even if you write a check to a charity in an equal amount.

If you have any questions please do not hesitate to contact us at [insert your contact information].

We wish you a happy and healthy holiday season – and, we thank you for your support!

Final Thoughts – Hope this information is helpful. If you have a question, or need more information, please do not hesitate to contact me (tsudol@bobcarterco.com).

My appreciation to my friend, Dick Kellogg, CEO of Future Focus, for his contribution to this report.

It’s time to say ‘Good Bye’ to an old term. It’s time for “Third Sector” to leave our lexicon.

You see, for many years, charities and nonprofit organizations were identified as part of the ‘Third Sector.’  The term implied an understanding that government and for-profit organizations were part of the First and Second Sectors, respectively. Seems innocent enough. Historically, it may even have begun as a self-identifying term. But, alas, the ‘third sector’ has also come to imply a bit more than what may have been once intended. Or, actually, less.

Much like Orson Scott Card’s fictional character, Andrew “Ender” Wiggin, felt the impact of being identified as a ‘third’ in a society filled with mostly just two-child households, being third in just about anything carries inescapable even if inadvertent baggage.

In positioning charitable and other nonprofit organizations within the ‘third sector’ the potential – perhaps even, the real – impact on perception – and, in particular, public policy – is that this so-called ‘third sector’ may be seen generally and by decision-makers as not on par with the other two sectors of the economy. Perhaps as something less significant within our nation’s – and the world’s – economy.  Yet, the economic impact of this sector – in terms of employment and percent of GDP is consequential.

Research conducted both in the United States and Great Britain over the past 15 years consistently reveals the growing economic impact of this sector. For example, The Johns Hopkins Center for Civil Society reported in 2013 that 7.4 percent of the world’s workforce was employed in charitable and other nonprofit organizations. In the United States, the workforce includes 10.2 percent employed in this sector. At least 6.6 percent of our nation’s GDP is derived from charitable and other nonprofit organizations – making it one of the top contributors to our national economy. Total annual revenue in this sector is fast approaching two trillion dollars.

These metrics of economic impact are not often considered when thinking about charitable and nonprofit organizations. Indeed, these organizations have historically been appreciated for their good deeds but undervalued for their economic impact. From this reality come great challenges, especially when it comes to such things as impacting national – and even state-level – public policy.

It may seem like a small thing to do in trying to make a big change, but words have meaning and words are change-drivers in the world of perception. Simply, it is time to drop “Third Sector.”   In our national and global economy, there are three co-equal sectors.  The public sector, the private sector, and the voluntary sector.  Indeed, words have impact. Perception often follows from seemingly innocuous things like labels and brands.  The Voluntary Sector, one of three co-equal economic sectors – let’s do it… now!

Perhaps you’re giving some thought to the financial resources you may have available to make a philanthropic gift.  Perhaps you’re looking for a way to fulfill a campaign pledge, or to make a year-end gift, or to just help a cause you care about in a special way. Whatever the reason you exploring the idea, one set of assets that may not come to mind quickly — if at all — is the life insurance policies you may have collected over the years. Though you may not have thought about the idea before, a life insurance policy can be an ideal asset to fund the special gift you want to make.

In fact, whether you have several life-insurance policies or just one, once you determine that the need you once had for life insurance has passed – and, for many of us the need does fade away at some point – a philanthropic gift can be the best way to put such an asset to good use.

If you have a paid-up whole or universal life policy, you can make a gift of the policy to your alma mater or any other charitable organization — and, both the accumulated cash value and the ultimate death benefit can be earmarked by you to fund a generous gift.

And, it’s easy to do.  Your insurance representative can provide you with the forms you’ll need to name the organization you wish to designate as the charitable beneficiary and owner of the policy.  Once the paperwork is completed, you would have made a thoughtful gift using an asset that you no longer need.

Even policies for which you are still making annual premium payments can be used to make a charitable gift.  When you name a charitable organization as the beneficiary and owner of such a life insurance policy, you also can make an annual charitable gift for the amount of the premium payment – and, this would ensure that your designated charitable beneficiary has sufficient funds to keep the premiums paid year after year. Turning what otherwise would be just a premium payment into a charitable contribution is an extra advantage of such a gift of life insurance.

If you have a question about ways to devise creative charitable gift plans using existing or new life insurance policies – either for yourself and your family or for a charitable organization looking to enhance its gift planning options, I would welcome hearing from you, at tsudol@bobcarterco.com.

Life insurance may be an often forgotten asset, but it’s a great way to make a special gift.