The IRS Discount Rate (also known as the “7520 rate”) has fallen from 3.6% in December of 2018 to 1.8% in October of 2019. This dramatic decline over a relatively short period of time has significant implications for split-interest gift arrangements. The charitable deductions for gift annuities and charitable remainder trusts go down when the discount rate goes down, but the deductions for charitable lead trusts and retained life estates go in the opposite direction. (The calculations for Pooled Income Funds are unaffected, as they do not use the discount rate.) The following paragraphs illustrate the impact of declining rates on various gift types.
A gift of art to charity can be a mutually rewarding gift for the charity and the donor. However, there are numerous IRS rules that must be closely followed by the donor to protect and maximize his tax benefits. While the gift planning office should always counsel the donor to obtain his own advisor in such situations, an understanding of the basic IRS rules for gifts of art can assist in the process.
The popularity of donor advised funds (DAFs) has resulted in a national movement in charitable giving. In 2017 assets in these funds reached a record $110.0 billion according to a report from the National Philanthropic Trust. This explosive growth presents a tremendous opportunity for public charities to benefit from this pool of assets. However, unlike private foundations, there are no requirements for annual distributions from DAFs. Charities expecting to maximize DAF gifts cannot sit passively by waiting for DAF grants to arrive in the mail. Those charities that implement a proactive strategy to acquire DAF gifts will develop another stream of income likely to increase over time.
No doubt about it, Planned Giving is a fascinating area to work in. it’s right at the confluence of fundraising and estate planning, incorporating knowledge about investments and sensitivity to the life cycle stages that are part of the human experience. We’re helping organizations to raise money for causes we believe in, and we’re helping individuals to make the most efficient allocations of their income and wealth. One of the central and more difficult aspects of planned giving, however, is the dependence upon a variety of tax laws that affect every type of planned gift. Today’s gift planning professionals need to know more about the American tax system than ever before.
We’re at that point in the year when the kids are finally out of school, the fiscal year has ended for many, and we’re all more than halfway through the calendar year. The weather is finally nice, we’re taking our summer vacations, and in general, we’re starting to enjoy a slightly less hectic pace of living. But truth be told, summers aren’t as quiet as they used to be. Families don’t just pack up and head “down the shore” or “down the Cape” for the entire months of July and August. Colleges and even many primary and secondary schools now begin the “fall” sessions in the middle of August – or even earlier. And no one ever really disconnects and gets away from it all anymore, because we have our cell phones and our tablets and all of our 21st century accoutrements with us at all times.