Transcript Steenhuysen - Planned Giving Days

National Capital Gift Planning Council
Planned Giving Days
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Population
Percent
Share of
Wealth
Their
Issues
Motivation
Ninety
Third
Passion
Mission
Nine
Third
Taxes
Tax
Mitigation
One
Third
Control
Family/
Legacy
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Income brackets
$457,601 +
$405,101 - $457,600
Income tax
rate
36.9%
35%
$226,851 - $405,100
$148,851 - $226,850
$ 73,801 - $148,850
33%
28%
25%
Cap gain
rate
20%
15%
15%
15%
15%
Surtax rate
3.8%
3.8%
3.8% (over$250,000)
None
None
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100
80
Business equity
Residential
60
Cash & other
40
Domestic bonds
20
Foreign stocks
Domestic Stocks
0
Full Portfolio
Cash & other
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Long-term appreciated property (a year and a day) for the
best deduction
Any asset can be given to a charity
Must itemize to use the deduction
May require an appraisal
Not all assets are good gifts
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Big business in the 1990s
Market collapse in March 2000
Two missing elements
◦ Costly capital gains tax
◦ Asset appreciation
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Post recession in 2010s
◦ Tax rates are up
◦ Appreciation is back
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Importance of Wealth Effect
Every day in 2014 is your birthday!
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“Contributing complex assets to charity, however, can be
complicated and is fraught with technical requirements and
potential pitfalls.”
Never say NO for the donor
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Investments
Real estate
Business interests
Tangible personal property
Complex assets
Other stuff
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 Publicly
traded stock
 Bonds
 Mutual
funds
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 Residential
 Rental
 Commercial
 Raw
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C
Corp
 S Corp
 LLC
 LLP
 Partnerships
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 Art
 Collectables
 Jewelry
 Cars,
boats and planes
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 Privately
held companies
 Hedge funds
 Restricted stock
 Limited partnership interests
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 Crops,
timber, oil & gas interest, MLPs, horses,
life insurance, copyrights, patents, classic car,
shopping mall, antique desk, etc.
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If they say no, it is still good for you.
◦ You find out more detail about the donor: how to be asked, when to be
asked
◦ You differentiate your self from other fundraisers
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It they say yes, it is even better for you.
◦ Window into the donor’s wealth
◦ The 300% solution
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Charitable giving is one of the few things you can do with
your assets (keep, sell or give) versus giving cash (spend on
anything, save or give).
You benefit in three ways when making a gift with assets:
◦ Increases your cash flow
◦ Avoid capital gain taxes on the appreciated portion of the asset
◦ Provides you with a charitable income tax deduction for the full fair
market value of the asset
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5 years ago donor bought 1000 shares of Cisco stock for $10
Today the shares are worth $30 a share
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What is the fair market value of the stock?
What is the capital gain amount?
Assuming a 18.8% capital gain tax rate, what is the tax avoidance?
Assuming a 35% income tax rate, what is the tax savings?
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In 2012 only 3% of charitable giving was done with assets.
Impediments to assets gifts:
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It’s a bad asset.
Complexity
The organization
The fundraiser
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Close you eyes and picture your CFO and Corporate Attorney
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Policies and approval
Due diligence
Accepting the gift
Processing the gift
Crediting the gift
Another way
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Many DAFs now offer themselves as a conduit for asset gifts.
Resources:
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eCurrency - http://www.siliconvalleycf.org
Cars - http://www.donateacar.com/charities.php
Boats - http://www.actiondonation.org/DonateBoat.html
Planes - http://www.cardonationonline.org/donateaircraft.htm
Real estate - http://www.realestateforcharities.org/services/
TPP - http://idonate.com/in-kind/
Business interests & complex assets –
www.Nationalcommunityfoundation.org
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Make no assumptions
◦ What a donor does for work does not mean that is how they make their
money.
◦ Don’t be fooled by lifestyle, either way.
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Questions to begin the conversation
◦ “Have you ever made a gift of stock to a charity?”
◦ “Have you ever considered fulfilling your gift with something other
than cash?”
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When you are asked a tough question
◦ “I don’t know, but I know someone who does.”
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“Before I accept this generous gift to our
organization, let me ask you one question. What
makes it possible for you to make a gift of
(x amount) in cash to our organization?”
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 IPO
 Buyout
 Merger
 Tax
 Estate
 Financial
 Unit
sale
 ESOP
 Retirement
Business Events
Personal Planning
 Charitable
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Virtual Currency
Crop
Carried interest
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What it is? Virtual currency is a currency that is unregulated by
traditional financial actors, such as central banks controlled
by a sovereign government.
How is it treated? IRS 2014-21 says for federal tax purposes,
virtual currency is treated as intangible personal property.
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How is it valued? For U.S. tax purposes, transactions must be
reported in U.S. dollars.
What’s the deduction? FMV for LTCG currency; basis for STCG.
What’s the donor’s benefit? Charitable deduction applicable to
capital gain treatment.
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What is it? A basic good used in commerce that is
interchangeable with other commodities of the same type.
How is it treated? Harvested crops are deemed tangible
personal property and are subject to related use rules.
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How is it valued? As a commodity, soybeans are traded on an
exchange which establishes a price on any given trading day.
What’s the deduction? None. However, the farmer will be able
to exclude the value of the crop from their taxable income.
What’s the donor’s benefit? Reducing taxable income.
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What is it? A right that entitles the GP of private equity or
hedge fund to a share of the profits.
How is it treated? Investment profit taxed as capital gain.
How is it valued? Projected cash flows discounted to present
value.
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What’s the deduction? FMV for LTCG currency; basis for STCG.
What’s the donor’s benefit? Charitable deduction applicable to
capital gain treatment.
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Gifts of assets create a whole new realm for gift solicitation
and fulfillment.
Fundraisers will need to raise the issue with donors to access
this opportunity available through gifts of assets.
It begins with asking questions and raising the possibilities.
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Jay Steenhuysen
Steenhuysen Associates
1539 Fall River Ave., Suite 3
Seekonk, MA 02771
508-336-4544
[email protected]
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