Planned Giving Insights and Information

BDQ #6: Why Would Someone Make a Planned Gift?

Isn’t it obvious? There are as many reasons why someone would make a planned gift as there are donors. What is more – spoiler alert – if you want to know why someone makes a planned gift, just ask them!The myriad reasons a donor might make a planned gift can be arranged into categories:

BDQ #5: What Is Planned Giving?

Sometimes there are really obvious and very simple answers. Everyone knows what planned giving is, right? Not so fast. A quick web search reveals a slippery slope into a morass of ambiguity. “Planned giving involves providing a future gift to charity through your financial and estate plans,” declares one charity’s website. A financial services company broadens the definition, but only a bit: “planned giving refers to any arrangement that will result in a future contribution to charity.” Strictly speaking, a pledge for an outright gift fits both of these definitions, but such a pledge is not a planned gift.

BDQ #4: Why Is There a Charitable Deduction and How Does It Work?

The income tax charitable deduction has been around since 1917, just four years after the 16th Amendment created the modern Federal Income Tax. But why are charitable contributions deductible? And, can a donor actually save money by making a charitable contribution? First, let’s review the history of the income tax, then we’ll explore how the charitable deduction works in practice. The Federal Income Tax The Constitution limited the ability of Congress to impose taxes by requiring that “direct taxes” be levied in proportion to each State’s population. Direct taxes are those, such as the income tax, that apply directly to persons or property. However, there was no limitation on indirect taxes, those that apply to an event including duties and tariffs. As a result, during our nation’s first century, tariffs were the largest source of Federal revenue.

Surely No One Dies on Schedule: Split-Interest Gifts and Mortality Tables

Much of our work in planned giving – in particular, with split-interest gift arrangements – involves the use of mortality tables and the related estimates of life expectancy. When calculating the charitable income tax deduction for a split-interest gift, for example, we are required to use specific mortality tables dictated by the IRS. If we wish to estimate the remaining liability for a life-income gift, we must use some type of mortality data. And should we attempt to estimate the ultimate charitable remainder value for a life-income gift, the use of mortality data is critical. But what are the different mortality tables, and when do we choose to use a specific one?