“Update on Planned Giving Tax Strategies”
Hampton Roads Gift Planning Council
January 8, 2015
Jennifer Pierson, Manager
Estate, Gift and Trust Services
Items to cover
Comparing Planned Giving Techniques – 2013
Charitable Stats from 2013 and 2014 (mid year)
Charitable Giving Trends
Impact of “NEW” tax law on Planned Giving
Planned Giving Techniques
Number of Vehicles Established and the % Change over 2012
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Donor Advised Fund – 217,367 [5.7%]
Charitable Remainder Unitrust – 90,380 [-1.0%]
Private Foundation – 84,350 [7.3%]
Charitable Lead Trusts – 6,480 [-.3%]
Charitable Remainder Annuity Trusts – 13,660 [-6.5%]
Pooled Income Funds – 1,230 [-7.2%]
Source: IRS and National Philanthropic Trust
Planned Giving Techniques – cont.
Value (in billions) of Charitable Vehicles and the % Change over 2012
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Donor Advised Fund – $53.7 [19.8%]
Charitable Remainder Unitrust – $88.1 [3.4%]
Private Foundation – $614.9 [5.7%]
Charitable Lead Trusts – $26.8 [13.2%]
Charitable Remainder Annuity Trusts – $6.2 [-3.7%]
Pooled Income Funds – $1.2 [-2.4%]
Source: IRS and National Philanthropic Trust
Charitable Giving 2013 (billions)
Individuals Foundations Bequests Corporations -
$241.32
50.28
26.81
16.76
Total -
$335.17 100%

Source: IRS & Giving USA Foundation
72%
15%
8%
5%
Charitable Giving 2013 – Change over 2012
Individuals
Foundations
Bequests
Corporations
Overall
- 4.2%
- 5.7%
- 8.7%
- (1.9%)
4.4%*
 Source: IRS & Giving USA Foundation
*3.0% increase adjusted for inflation
Charitable Giving Sectors (Billions) - 2013
Religion$103.89 [31%]
Education$53.62 [16%]
Human Services$40.21 [12%]
Public Society/Benefit$23.46 [7%]
Health$33.51 [10%]
Arts, Culture, and Humanities- $16.75 [5%]
International Affairs$13.40 [4%]
Environment/Animals$10.05 [3%]
Individual Giving – % of Disposable
Income (40 years)
Disposable Income – As defined by Bureau of
Economic Analysis (US Department of Commerce)
1972 - 2.2%
1982 - 2.0%
1992 - 1.8%
2002 - 2.2%
2013 - 2.0%
 Source: Giving USA Foundation
Individual Giving – 2013 Giving Trends
Last 4 Years – 12.3% increase since 2009 (end of
recession)
Key Factors



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95.4% of households give to charity
Per capita by individuals - $1,016
Per US household - $2,974
As financial situations improve…so does giving

Source: Giving USA Foundation
Corporate Giving – 2013 Giving Trends
Decline – Slower growth in pre-tax profits
Corporate Giving as % of pre-tax profits = .8%
 Source: Giving USA Foundation
2013 Giving Trends – Gift Recipient
Educational gifts – most growth
Religious giving remains slow
 Declining affiliations
 Increase in religious-oriented charities
International affairs slowed
 Fewer disaster-relief contributions
Public-society benefits, arts, environment/animal,
and health orgs
 All experienced growth

Source: Giving USA Foundation
Charitable Receipts – Mid 2014
Percentage or responding organizations reporting change in
charitable receipts, mid-2014 compared with mid-2013
What Lies Ahead?
Substantial growth in Donor Advise Funds (DAF)
gifts in 2013
 +9.9% to Community Foundations
 Consistent with prior years
 Grant payouts continue to be HIGH >20%
Projections – DAF “will” continue to grow
 DAF grant-making at $10 to $53 billion in assets
 Private Foundations at $54.7 to $614.9 billion in assets

Source: NPTrust.org
Comparison of DAF and PFs
Donor Advised Fund
Private Foundation
Start-up Costs
Nominal; Services
provided by custodian
Substantive legal,
accounting & admin.
Income Tax Deduction
Limitation
Cash: 50% AGI
Securities: 30% AGI
Cash: 30% AGI
Securities: 20% AGI
Estate Tax Deduction
100%
100%
Excise Taxes
None
2% of annual income
Required Distribution
None
5% of average FMV
annually
Donor’s Responsibilities
Recommend charitable
beneficiaries
Manage assets, keep
records, prepare federal &
state filings, select
charities, administer grants
& verify non-profit status
Public Exposure
Donor may remain
anonymous
Form 990-PF is public
record
What Lies Ahead? – cont.
 Gifting of Different Types of Assets
 Not been a common practice
 Non-Traditional Assets

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Private equity interest
Closely held entities
Illiquid
Hard to value
 Real estate/Tangible property
 More frequently
 Organization are advancing strategies

Source: NPTrust.org
2013 Estate Tax Return – Charitable Bequests
# of Returns - 10,568
# Charitable Bequest - 2,527
# of Virginia residence - 266
# of Charitable bequest - 63
 Source: IRS
Estates and Trusts – 2001 to 2013
 Total income increased
 $58 million (2003) to $175 million (2008)
 Declined to $87 million in 2010
 $161 million in 2013
 Types of Returns
 2001 to 2013
•
•
•
•
•

Complex trusts - 1.2 to 1.5 million annually
Simple trusts – 700,000 annually
Estates (Form 1041) – 400,000 annually
Grantor trusts – 600,000 annually (largest decline)
Bankruptcy estate, charitable trusts, etc. – 37,000 annually
Source: IRS (SOI)
Impact of Charitable Giving - Estate & Gift Tax
$14,000 Gift annual exclusion
Exemption
 $5.34 million for 2014
 $5.43 million for 2015
Top Rate
 40%
Portability
 Allows Surviving Spouse to use Deceased Spouse Unused
Exemption
 Many estates (2011, 2012 and 2013) filed returns in order
to obtain decedent’s exemption
Tax Rate Changes – “Continue” to
Impact on Charitable Giving
 Discretionary Trusts
 2013 returns caught fiduciaries “off guard”
 Top Rate 39.6% - > $ 12,150 Taxable Income (2014)
 Net Investment Income Tax – 3.8%
 Big impact for capital gains
 65 Day Rule
Individuals – 2015 Rates
New 39.6% rate applies…
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MFJ > $464,850 AGI
Singles > $413,200 AGI
HH > $439k AGI
MFS > $232,425 AGI
Medicare 3.8% Surtax * applies…
 Taxpayers MAGI > $200k/$250k
 Net Investment Income
Supplemental Medicare Tax * .9% applies…
 Taxpayers MAGI > $200k/$250k
 Part of FICA (Hospital Insurance Tax)
* The Patient Protection and Affordable Care Act
Charitable Organizations
 2013 – 1,536,084 charitable organizations in US
 Public charities in 2012
 Reported over $1.65 trillion in revenue
 Over $3 trillion in total assets
 Source of revenue
 73% - Program services
 21% - Contributions, gifts & government grants
 6% -Dues, event income, rental income, etc.
 Foundations in US
 86,192 in 2012
 5.3% increase over prior year
 Online giving
 2013 increased by 13.5%
 Of all 2013 charitable giving – online giving represented 6.4%
Conclusion
Charitable giving on the rise
Tax law continues to impact charitable giving
Focus on planning for the 3.8%
Thank you!!