Charitable giving incentives decline at month’s end

As December’s calendar pages are torn off each day, two opportunities to encourage charitable giving are slipping away.

One, the IRA charitable rollover, is likely to be extended by Congress, but it is due to expire Dec. 31, 2011. After that day, also, rates of return on charitable gift annuities will decline by 0.5 to 0.8 percent.

Nonprofits have an opportunity in the remaining days of December to suggest to donors that there are advantages to making their gifts before the month is out.

Each year for the last four years Congress has extended the IRA charitable rollover, but that hasn’t happened yet. The rollover allows holders of individual retirement accounts (IRAs) to direct transfers of funds to nonprofits without incurring additional taxable income. Before the featured was enacted, IRA withdrawals were taxable; now they are not.

“Since the provision was first enacted, Americans have made millions of dollars of new contributions to nonprofits — including social service programs, religious organizations, arts and cultural institutions, schools, and health care providers — that benefit people every day,” said Independent Sector.

Charitable gift annuities are contracts between donors and nonprofits in which donors make gifts and receive a guaranteed return from the nonprofits for the rest of their lives. The American Council on Gift Annuities (ACGA) recommends rates of return on gift annuities.

At its meeting last month the ACGA recommended reduced rates of return beginning Jan. 1, 2012. In the new rates, for example, a 70-year-old donor would receive 5.1 percent of her gift annually, down from the current 5.8 percent. Similarly, an 80-year-old would receive a return of 6.8 percent, down from the current 7.5 percent.

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This entry was posted in charitable gift annuity, charitable tax deduction, donors, fundraising, IRA charitable rollover, major gifts, philanthropy, planned giving, Uncategorized. Bookmark the permalink.

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