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September Newsletter Issue #2

Quotes for today: He that does good for good’s sake seeks neither paradise nor reward but is sure of both in the end. William Penn


Insured Gift Annuity program.....A gift annuity startup program is always a struggle. There are the competing interests of the charity for the largest ultimate gift residuum possible and the service providers for the largest pool of investments to invest and administer. All gift annuity agreements have longevity and investment risks.

It is my personal opinion many of the large bank service providers are pricing themselves out of the startup gift annuity market or they will administer a CGA funds if the charity provides a big additional endowment fund to manage.

Perhaps an answer is the Insured Gift Annuity program. One of my clients Good Counsel Home, New Jersey had this concept approved by the State of New Jersey Insurance Department (NJ is a highly regulated gift annuity state). The initial effort took several months for approval. They promoted the concept to their national supporters and established several agreements.

Here are the results following the death of a recent donor. The donor (dob 12-22-34, age 74) established a single life agreement on December 24, 2008 with $25,000 cash and received a $10,512 deduction and a 6.6% payment rate.

One hundred percent (100%) of the assets were placed into an insured variable annuity(VA) agreement backed by a nationally known life insurance company. Good Counsel Homes was both the owner and beneficiary of the account.

The VA made the quarterly payments to the donor directly from the diversified investment portfolio freeing the charity from this administrative tasks. The charity provided the annual 1099R report to the donor on the taxability of her payments. The donor died on August 9, 2010 before her ACGA life expectancy.

The Insured Variable Annuity accounts pays death benefit proceeds to the charity which are the greatest of 1) the current account value; 2) the initial donation reduced by any withdrawals; or 3) maximum anniversary value of the account on any year reduced by withdrawals.

Good Counsel Homes received proceeds of $34,402 or 37% more than the original gift and far above the 50% residuum build into the ACGA rate structure.

If you would like to learn more about benefits and advantages of the Insured Gift Annuity program simply send an email to me with your contact information.


26% of Fidelity Investment Clients will gift more to charity in the next 12 to 18 months to offset higher taxes..........

Less than 76 days left to educate your Professional advisors on the Charitable options when donors convert a Traditional IRA to a Roth IRA in 2010.

Connell & Associates is offering a seminar for the professional advisors in your area to take advantage of the one time benefits of IRA 2010 conversions. There will be less tax opportunity benefits in 2011.

The seminar titled: "Charitable Gift and Planning Options for Individuals Converting IRA Accounts"

Seminar includes a 1 to 1 1/2 hour presentation, slide handouts, resource materials and follow up personal proposals until the end of 2010 for interested advisors and their clients. If you are interested in a seminar presentation in your area contact me by Email and I will respond with available 2010 and 2011 dates and a presentation cost proposal.

Are you promoting the new Roth IRA conversion opportunity? Here is an example from the Office of Gift Planning at Duke University from one of their publication advertisements.


No new taxes until after November election......Following the November election Congress will return and pass budget bills and the "lame-duck" session will be very busy completing the work on the 2011 tax bills. Donors have been waiting for certanity about how the new tax rates will effect their personal and financial decisions.


New IRS Publication....The IRS has revised and released Charitable Contributions -- Substantiation and Disclosure Requirements (Publication 1771, revised June 2010). The publication explains general rules and specifications for documenting charitable deductions. It also explains new guidelines that allow charities to electronically mail documentation to donors, as well as when an acknowledgment from a charitable organization is required for the donor to claim a tax deduction.

Network for Good...."How to Raise a Lot More Money Now" is the title of the latest free download from the Network for Good. It has 50 great ideas from 11 top experts with many resource links. Some ideas are very basic and some you will not be able to implement but worth the effort to review these ideas within the context of your total fund raising program and social media efforts. They also provide an e-donation service for charities as they originally started as a part of AOL.


No Social Security Increase?.....There will be no benefit increase for the 58 million retirees and disabled Americans who receive Social Security. This is the second year without an increase since the automatic inflation adjustments were adopted in 1975. (source: Investors Business Daily, 10/12/10)

Seniors seeking increased income might consider one or more charitable gift annuity agreement if their ultimate objective is to ultimately help charity.


News and Notes....A Princeton University study found that in most of the country, people fee comfortably middle class if they earn $70,000. But in New York City, the figure was $165,000, while the median income in NYC is $55,980 according to the Census Bureau.

In 1970, someone earning $37,000 had the buying power of a $200,000 income today. There were 25 income tax brackets and a $37,000 taxpayer was taxed at the middle of the scale, 13 brackets charged higher rates to those with higher incomes.


Planned Giving a Recipe for Success.... (this article will appear on the Jerold Panas, Linzy & Partners web site shortly)

The Senior Epoch has arrived and charities better start taking it seriously. Organizations without an active planned gift program will miss countless opportunities as the largest wealth transfer in our nation’s history unfolds.

Charitable estate and gift planning is increasingly important as charities search for alternative sources of support within their overall fund raising strategy. Only 7% of the wealth of Americans is in cash, whereas 93% of wealth is in other assets and property. Especially during these challenging economic times fund raisers need to have a comprehensive donor centered approach to securing major support.

Robert F. Sharpe Jr. defines planned giving as “a voluntary gift, of any kind, in any amount, for any purpose (operations, capital or endowment), either current or deferred, that requires the assistance of a qualified volunteer, professional staff person, or the donor’s advisor to help complete the gift.”

Planned giving is a process which involves helping donors expresses their charitable intent using the most appropriate strategy consistent with their desires, lifestyle and financial needs. It provides structure to the gifting process and suggests the most appropriate methods to help donors maximize personal and financial benefits.

Planned giving is a service to make donors aware of the opportunities for charitable support. It focuses on donor assets not income. Some planned gifts will be current gifts of cash or other assets. These gifts will generate an immediate charitable income tax deduction. Other gifts will be for future support such as a bequest from a will, trust, life insurance or retirement plan. Future gifts may take the form of split-interest life income arrangements where donor’s receive lifetime payments from a gift annuity or charitable trust. Oftentimes it is a combination of both current and future gifts that will allow donors to complete their ultimate gift.

In marketing planned gifts begin with the basics. Educate your board and establish solid policies. Explain how donors may structure a bequest in their will, revocable living trust, life insurance policy, or retirement plan. Many revocable beneficiary designations do not cost donors anything to complete. Create a Legacy Society to encourage and recognize donor commitments.

As you build the program add the more complicated life income arrangements. Charitable gift annuities are popular as they provide donors with a stable life income often greater than other investment alternatives. Charitable remainder trusts are personally tailored to fit the financial and estate planning needs of donors. Expand your program into an “Agents of Wealth” effort by involving area professional as your partners and advocates in the charitable estate planning process.

Marketing planned gifts you must be consistent and persistent to be effective. Your message must be presented to loyal probable donor when they are weighing priorities about their lifestyle, financial circumstances, and charitable objectives.

The real question is not if you should have a planned gift program but how to effectively implement one, and if your leaders are willing to commit the necessary resources.


Kudos Corner

This is a new section where I will be highlighting some gift expectancies and gift program elements I think will be helpful and informative, not all gifts are included.

Kudos Corner will return next issue.


James E. Connell and Associates is a national consulting service devoted to increasing resources for charities using the power of charitable estate and gift planning techniques.

Pinehurst office: PO Box 3335, 15 Pinewild Drive, Pinehurst, NC 28374
Phone: 910-295-6800

Northeast office: 20982 Bayside Avenue, Rock Hall, MD 21661

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