Use It Or Lose It: Charities that Limit Giving Options Limit Donations
A few weeks ago, I was approached by a charity with a donor who, at the end of 2021, had just retired from farming. That means he has a harvested grain crop in the bin, which has yet to be sold to produce taxable income. But because he is no longer farming, he will not receive tax deductions this year for expenses such as seed, fertilizer, and fuel. As a result, he will have a pile of taxable Ordinary Income to report for tax purposes when he sells the grain, with no offsetting deductions. He really doesn’t need the income this year because he sold some machinery. He would like to spread the grain profits out over his lifetime for tax and cash flow purposes. I offered to help him set up a CGA funded with 45,000 bushels of corn. At a market price of about $6 per bushel for corn, that translates into about $270,000 of funding for a CGA. At his age (80), that will produce a 6.5% income ($17,500 per year) which will be taxed as Ordinary Income as he receives it annually. This means it will be taxed in a much lower bracket than if he had sold all the corn outright in a lump sum. The donor was ecstatic at being able to repurpose his grain to produce a nice retirement income stream for himself while also creating a future legacy gift for one of his favorite charities. Farmers are traditionally “land rich and cash poor,” so this strategy really came in handy for him. The unique thing about this case is that the farmer had been trying for eight months to work with another charity that accepted only cash and marketable securities. They had no clue how to fund a CGA or a CRT with grain, so he became very frustrated. What’s my point? As Baby Boomers continue to retire, there are several charitable planning tools that can help them in their planning to solve problems and create substantial planned gifts for their favorite charities, rather than enhance the government’s coffers. The charities that “get it” and have the capabilities to implement these charitable tools will flourish. The ones that don’t will suffer. Johnne Syverson, CFP, AEP, CAP, is the executive director of the Charitable Giving Resource Center. Category: Sustainability
Online Will Planners
We recently interviewed Jordan Cassidy, Co-founder & Head of Business Development of LifeLegacy, about nonprofits using online will planners for their constituency. Here’s what he had to say. Q: Is a will really an effective way to get planned gifts? A: A bequest giving tool like our free online will is great for engaging everyday donors. You can offer this complimentary service to your donors, track engagement and use it as the beginning, not the end, of the conversation with them. Q: How is this different from others? A: Our donor experience is fully customized to our nonprofit partners; most others have inflexible platforms that do not offer this. In addition, we have seamless integrations — nonprofits can get set up with our platform within minutes using a co-branded link. Here’s a demo of the co-branded online will experience for one of our partners, the American Brain Tumor Association. Q: Your competitors online will service prices are very expensive. What gives? Why are your services more reasonable? A: LifeLegacy’s price point enables organizations to effectively use our tools and, most importantly, maximizes long-term ROI. Small- to medium-size nonprofits simply can’t afford the high annual subscription prices that our competitors charge. We believe that marketing, coupled with technology, is the key to success in planned giving. Using that extra budget toward third party marketing companies like PlannedGiving.com is the one-two punch nonprofits need to increase success rates. Q: Does your online will service allow users to leave digital assets like cryptocurrency? A: It may seem “small,” but the ability to leave crypto assets as a planned gift in a will was a frequent request (and selling point) for charities. Crypto assets, including cryptocurrencies and NFTs, now make up a sizable portion of people’s estates — but they also present complex challenges to securing, transferring, protecting, and gifting that wealth. Many elements of traditional estate planning are rendered obsolete in the realm of digital assets. We’re the first and only to offer a cryptocurrency component in our Last Will and Testament to meet the needs of this growing cohort. Q: How does this product help a fundraiser know more about donors and their intentions? A: There’s a common saying in the nonprofit world, “You only know one out of every four planned gifts you receive.” This showcases how fragmented planned giving data is. We aggregate donor insights within our proprietary dashboard to enable nonprofits to identify/track gifts, spot trends, and enhance their fundraising campaigns. Q: Some providers allow users to make a trust online, in California and possibly some other states soon. Why don’t you offer online trusts? A: Great question. Here’s how we look at it: Would you feel comfortable setting up a trust on your own, online? If so, maybe it’s right for you. We personally don’t believe this level of complex estate planning is something you should do on your own, without the guidance and opinions of a professional. In fact, we are not even sure if it is truly possible. Regardless, estate planning attorneys should be used for complex estate planning needs. Q: Other providers talk about using traffic from their nonprofit partners as a way to promote planned gifts for any nonprofit. Is this something your service does? Why or why not? A: There are two sides to this. It may sound nice that you receive unexpected and unsolicited planned gifts from a random donor, but say a donor comes to our site from your organization to leave a planned gift, but then they are presented with an option to leave part of their bequest gift to another charity. Would you want that experience for your donors? Could that potentially take away from the amount of the gift they were going to leave to you? Our co-branded wills are programmed to be pre-selected with your charity for bequests, in order to maximize donors leaving planned gifts to your organization. We don’t want to promote specific charities; we don’t want to take away from the reason (your nonprofit) that they came to our site in the first place; and more importantly, we don’t want to take away from the gifts they were going to leave to you. Q: We’ve heard that some of your competitors will reach to a nonprofit about a planned gift that a donor wants to make, but will not reveal any further details unless the nonprofit signs up and pays for access to their products. Is this something you do as well? A: We share all gifts with all nonprofits, no questions asked. There is no reason to hold that information hostage. As long as the donor has agreed to share that information, we pass it along to the nonprofit accordingly, whether they are a paying partner or not. Q: I’ve heard good things about using online will makers, but is this the answer for all my needs? A: The short answer is “no.” Planned Giving requires a variety of approaches. There is no one answer and no one solution that fits all. Combining our technology and marketing with a nonprofit’s own team, and getting that team well-versed and confident will create what you need to make yourself ready for the Great Wealth Transfer. Category: Sustainability
