From the Blog

Here are the PG Calc Blog posts since the last eRate newsletter.

Pitfalls to Avoid When You’re New to Your Planned Giving Office

If you’re new to your role in planned giving, either because you’re covering for someone on leave, you’ve had planned giving added to your major gift responsibilities, or you’re new to the field – welcome aboard! PG Calc is invested in your success and we’ve gathered together a list of planned giving pitfalls we hope to help you avoid.

Read the blog post . . .

BDQ #2: I Don’t Have an RMD, So Why Would I Want a QCD?

“I prefer the large confusion to the small certainty,” said poet John Ciardi. That’s a healthy approach when thinking about Qualified Charitable Distributions (QCD) and Required Minimum Distributions (RMD). There is a confusing array of initials – RMDs and QCDs, QRPs and IRAs, to name a few. There are different ages – 70½, 72, 73, 75.

But here’s the small certainty: a Qualified Charitable Distribution (QCD) from an Individual Retirement Account (IRA) is a great way for anyone age 70½ or older to make a charitable contribution. If your donor happens to have Required Minimum Distributions (RMD) too, there’s good news: a QCD gift can help satisfy their RMD without creating taxable income.

Read the blog post . . .

Delay Creates Risk for Commuted Payment Gift Annuities

A commuted payment gift annuity (CPGA)* is a deferred gift annuity that gives the annuitant the right to exchange the lifetime annuity for an immediate lump sum payment or series of payments of equivalent value. While the annuity agreement must make commuting the payments strictly optional, the annuitant typically is expected to commute the payments. The timing of the commutation is up to the annuitant. It is also critical to the amount of the commuted payment.

The longer the annuitant waits to commute payments, the more risk there is that the commuted amount will differ widely from what was anticipated at the time of the gift. It will be much smaller if the IRS discount rate at the time of commutation is substantially greater than it was at the time of the gift. This is the case for annuitants of CPGAs funded within the last few years who commute payments now. They may be disappointed by the amount of their commuted payments as a result. A decline in the IRS discount rate between gift date and commutation date would have the opposite effect.  

The value of the annuity and, hence, the commuted amount, also increases as the time until the scheduled date of first payment shrinks. This happens for two reasons: 1) it becomes increasingly likely the annuitant will live to start receiving payments, and 2) the annuity is discounted for fewer and fewer years of deferral. For example, the commuted payment for a $100,000 CPGA funded for a 60-year-old with payments deferred ten years would be $56,528 if commuted immediately and $84,092 if commuted nine years later. Should the IRS discount rate decline from the current 5% to 2% during those nine years, the commuted amount would increase to $104,849, nearly double what the charity expected to pay.

To minimize the risk posed by IRS discount rate fluctuations and consumption of the deferral period, the charity should encourage the annuitant to commute the payments soon after the gift is completed.

* The IRS has approved this arrangement in a series of private letter rulings (PLR 9042043, PLR 9108021, PLR 9527033, and PLR 200233023) and a general counsel’s memorandum (GCM 39826).

NY Max Annuity Rates Decline in Q2 2023 But Still Mostly Higher than ACGA Rates

New York’s maximum annuity rates for gift annuities completed in Q2 2023 are a little lower than they were for annuities completed in Q1 2023. Nevertheless, no one-life New York maximum rate is lower than its corresponding rate from the American Council on Gift Annuities (ACGA). We also haven’t found any two-life rates where the New York maximum is lower than the ACGA rate, although there could be cases we haven’t tested where the New York maximum is lower. We have found one-life and two-life cases where New York’s maximum rate for a deferred gift annuity is lower than the corresponding ACGA rate.

If you are working with a New York donor who wishes to fund a two-life immediate gift annuity, or a one-life or two-life deferred gift annuity, contact our Client Services team at 888-474-2252 or support@pgcalc.com. We will determine the maximum annuity rate New York will allow you to offer your donor. Go here to learn more about our New York Rate Calculations Service or to submit a calculation request form.

NY Reviewers Clarify QCD Agreement Requirements 

In late March, a New York reviewer clarified what language New York wants to appear in agreements for gift annuities funded by QCD. A few days later, we updated the gift annuity agreements in PGM Anywhere to include this language in specific and prototype agreements. We have since heard from a second New York reviewer who has requested that the brackets be removed from around “together with Schedule A attached hereto” in the Entire Agreement paragraph of prototype QCD agreements because this text is always the same in these agreements. This change affects New York prototype agreements only. We expect to update PGM Anywhere for this second change within the next few days.

Free Recording: Our Latest Planned Giving Marketing Q&A

Listen to the recording of PG Calc's latest planned giving marketing Q&A. PG Calc Director of Marketing Services Andrew Palmer answered questions on marketing strategies, direct mail and email, the best ways to find and engage prospective donors, social media, segmentation, and more!

Next Stop: Boston – PG Calc’s Upcoming Training Sessions

PG Calc is rolling out a limited series of in-person training classes this year, with the next sessions occurring just before the Planned Giving Group of New England's all-day annual conference in May. We will be conducting PGM Anywhere Introductory and Advanced sessions on May 10 and 11, respectively, in Boston, Massachusetts. Our clients have responded enthusiastically to the return of in-person classes after being confined to virtual sessions for most of the past 3 years. These classroom-style courses always encourage a lively exchange of ideas and questions among the planned giving professionals in attendance.

On the other side of the tracks, PG Calc will be offering two online classes in June. On Tuesday, June 13, and Wednesday, June 14, we will be offering our once-a-year Planned Giving by the Numbers class. This is a dynamite course that delves into all the details of the numbers and formulae underlying our planned giving calculations. And on Thursday, June 22, we will be offering a brand-new online class entitled Computing FASB Liabilities with GiftWrap. This shorter session will cover the basics of using GiftWrap to estimate future liabilities for payment obligations.

You can view the complete listing of our remaining 2023 training sessions – both in-person and online – here.

PG Calc Is Coming to a Conference Near You

• The Planned Giving Group of New England All-Day Conference on May 12th. 
  
  
• The Los Angles Council of Charitable Gift Planners Western Regional Planned Giving Conference on May 16th.
  
  
• The Philanthropic Planning Group of Greater New York Planned Giving Day on May 18th.
  
  
• The National Capital Gift Planning Council Planned Giving Day on May 23rd.
  
  
• The Chicago Council on Planned Giving Annual Symposium on May 25th. 

Natural Lands Relies on PG Calc's Planned Giving Expertise

“It’s been WONDERFUL working with PG Calc over the years. You have put up with countless questions...Thank you for your patience and for doing such a thoughtful job of hand-holding. It gave me confidence having PG Calc as my copilot. There’s a reason I sent the company (and my planned giving donors) a New Year’s card every year… I appreciated your professionalism and support. PG Calc staff were an extension of my office. Many, many thanks.”

--Suzanne Barton,
Director of Planned Giving
Natural Lands

Learn more about Natural Lands.

Learn more about PG Calc’s Client Services.