Planned Giving Insights and Information

Medaling Mortality Tables: Gold, Silver and Bronze Choices for FASB

If you’re a charity following the Financial Accounting Standards Board (FASB) recommendations for calculating the liability of your split interest agreements, you have an important choice to make at the end of each fiscal year: which mortality table to use to calculate your liabilities. While you might hope that your auditor will make a recommendation, the choice of a mortality table lands squarely in the charity’s purview. For charities looking for an opinion on which mortality table to choose, we’re happy to offer a ranking of our preferred mortality tables from bronze to gold. Why the Mortality Table Matters The liability amount is designed to be a good faith estimate of a charity’s obligation to make payments to all gift income beneficiaries for the balance of each individual gift’s term, whether that term is for measuring lives, a term of years, or a combination of the two. Underestimating life spans will deflate a charity’s liability calculation, which can lead to real world...

Why Does the IRS Always Miss My Birthday?

Have you ever had this happen? While preparing the final calculations for your donor, the numbers turn out just a little differently than those you provided in a preliminary illustration. The difference is not substantial. In fact, the deduction is a little larger, so it’s good news. Still, you wonder why. After all, numbers don’t lie. Right? The discrepancy is probably due to the difference between “actuarial age” and actual age, or it could be the historic life expectancy assumptions used for planned gift calculations. First, let’s tackle actual versus actuarial age.

BDQ #8: What Is a DAF? (Hint: ‘D’ Stands for Donor)

Donor advised funds (DAFs) have certainly had their share of headlines recently. Proposed regulations seemed designed to limit investment options and impose excise taxes. Then an extended comment period and a public hearing fueled speculation that this could spell the end of the fastest growing segment of American Philanthropy – or maybe just level the playing field for private foundations by limiting some of the advantages of DAFs. That came atop years-long – and largely baseless – fretting that DAFs are a tax shelter, somehow allowing the wealthy to warehouse vast sums of money and keep it from being used for charitable purposes, and the looming threat of legislative proposals that could radically revamp the landscape for DAFs and community foundations. With all the noise, it’s been easy to lose sight of one the most important players in the DAF story, namely, the donor. In fact, while the charitable beneficiary is the raison d'être for a DAF, the donor is the most important player...

Hey, How’s That PIF Doing Lately?

We write about pooled income funds (PIFs) from time to time. Pretty much the same old story – no one is creating new PIFs, and if you’ve got a PIF, it’s probably languishing. The income distributed each year is just a fraction of what was distributed in the heyday of PIFs – the glory days of the 70s, 80s, and 90s. Since PIFs can only distribute net income, and since interest rates have been relatively low for decades, there seems to be no appeal anymore. There have been no new gifts in years, and the participants are slowly dying off. Death by a thousand cuts, as they say. But there is still something to say about pooled income funds. For organizations that have large and robust PIFs, the benefits are significant, and they are still coming in. We took a random look at some actual PIFs and found that the charitable remainder amounts distributed to their sponsoring charities are astounding. Remainders ranged anywhere from 110% to 250% of the original gift amount. How can that be? How is...