Planned Giving Insights and Information

Money Goes to Money: Investment Results for 2021

It is a bit of a paradox that while Americans were battling the second year of an historic pandemic in 2021, the stock market was booming, and the economy was roaring back to life. Certainly, demand for goods and services was exploding, as vaccines rolled out and millions returned to work. Unfortunately, however, with multiple waves and variants of COVID-19, the numbers of cases and hospitalizations shot back up to levels not even seen in 2020. Eventually, those numbers went down – only to rise again, in time, and reach even higher levels. And yet, despite a constant stream of supply chain disruptions, despite monumental labor shortages, and against a backdrop of hundreds of thousands of deaths, the U.S. economy managed to bounce back.

A Gift Annuity Is Not a Mortgage

We occasionally receive calls from clients regarding questions about the best way to perform internal accounting for charitable gift annuities. As a split-interest charitable gift arrangement, the CGA represents both a gift to the charity and a financial obligation to the annuitant(s). On this much, there is general consensus, but on the manner in which the charity should compute the estimated remaining liability for each CGA over time, there are two main approaches. Given that the total funding minus the charitable deduction equals the total estimated liability at the outset of the gift arrangement, some organizations choose to record the incremental changes in liability as a sort of mortgage payment plan, or straight-line depreciation schedule. This method essentially amortizes the total estimated liability at the beginning and breaks that total down into regular and consistent annual amounts (sometimes even quarterly amounts). There is a fundamental problem with this approach; A...

Beware Dramatic Increases in Estimated Gift Annuity Liabilities

[NOTE: The following is based on a true story.] Some of the numbers just didn’t make sense. It was that most wonderful time of the year for a non-profit organization – the closing of the June 30 fiscal year! Almost like Christmas in July, everyone was busy reviewing tally sheets and running various reports in an effort to provide comprehensive information about the gifts received over the previous 12 months. With outright gifts, of course, the process was fairly straightforward – whatever was received, for the most part, was counted with a few exceptions. With life income gifts, however, the process was a little more complicated, since the organization needs to report the total funding amount, the estimated liability, and the estimate of the charitable remainder.

It’s Tax Season, and Timing Is Everything This Year

Everyone knows by now that the IRS has extended the filing deadlines for 2020 federal income tax returns for individual taxpayers; the normal deadline of April 15 has been extended to May 17, giving all of us an extra month. But less widely known is that the federal tax filing deadline for trust tax returns has not been extended.