PG Calc Blog

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.

We may be at the break of a new dawn for charitable remainder unitrusts (CRUTs). CRUTs exploded in popularity in the 1990s, driven in part by financial advisors who recommended CRUTs as a way to shelter donors from significant capital gains tax while enhancing cash flow and supporting their favorite charity. Then capital gains tax rates dropped, the stock market went south, and CRUT activity soon slowed. Now, stronger incentives for high income donors to contribute appreciated assets to fund a CRUT are back.