Our clients come in all shapes and sizes, so one might expect their planned giving programs to differ. It’s understandable then, that the age ranges of an organization’s audience for planned giving varies by organization and industry. Generally speaking, we suggest targeting donors between the ages of 45-90. But every once in while we hear something that contests that wisdom.
Astute gift officers recognize opportunities for giving, and then seize the day! Such is the moment in some red-hot real estate markets where prices are exceeding the highs reached prior to the Great Recession. Owners who watched as their equity evaporated during the downturn may now be thinking this is the time to cash in on their profits. This may particularly be the case for donors who own infrequently used vacation homes and investors with rental properties who no longer wish to deal with tenant idiosyncrasies. However, sellers of these properties will not receive the generous exemption from capital gains taxes afforded to those who sell a principal residence.
We hope that you’ll pardon the title of this article, which is a modification of the infamous James Carville campaign mantra in 1992 – “it’s the economy, stupid!” As was the case with the original phrase, this expression is meant to be tongue-in-cheek and self-directed. The tax legislation passed by Congress and signed by the President last December seems to have rendered the itemizing of personal deductions much less beneficial for large numbers of Americans. There has been considerable discussion among fundraising professionals that the result will be a dramatic decrease in charitable contributions. Whether or not you agree with that assertion, this article is about something else - the realization that the possible benefits of reducing taxes on realized capital gains by contributing appreciated securities for split-interest gift arrangements remain as powerful as ever.
The new tax law has prompted many articles on a variety of topics. One topic, gifts of non-cash assets, is getting a lot of attention due to the most recent research from Professor Russell James. Professor James’ report, Cash is not King in Fundraising: Results from 1 Million Tax Returns, provides proof of what many fundraisers already know, but often have difficulty communicating or acting on.
It’s simply a matter of supply and demand - when demand outstrips supply, prices rise. That is the state of today’s real estate market in many parts of the country, and therein lies the opportunity for gifts of real estate. According to statistics issued by the National Association of Realtors, in April 2018 the median already-built home price rose 5.3% over the prior year, the 74th straight month there’s been an increase in the price of already-built homes. At the same time, the number of homes for sale fell over the prior year for the 35th consecutive month. In short, supply is limited and demand is outstripping supply, causing prices to rise for already-built homes.