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eRate Newsletter | October 16, 2023

IRS DISCOUNT RATE: NOVEMBER 5.6%

Measuring the Success of Your CGA Program: The Case for Maintaining Current Market Values for All Charitable Gift Annuities

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When a charity has a robust gift annuity program, there can be enormous financial rewards from the ongoing stream of CGA terminations. But we’ve all heard the other side of the story as well. There are far too many examples where the gift corpus becomes completely used up, and in fact, the charity ends up kicking in money from general funds to continue making payments to an annuitant who lived beyond their original life expectancy. We call these “underwater gift annuities,” and they actually end up with negative dollar benefits.

So, what is the sum total benefit of this gift annuity venture from the charity’s perspective? Put simply, how does the charity even begin to measure the success of their CGA program?

           READ THE FULL ARTICLE        PRINT THE FULL ARTICLE

WEBINAR October 26

Gifts From Your Donor's Other Wallet – A Primer on Gifts of Non-Cash Assets

Your donors keep the majority of their wealth in illiquid assets, not in cash, so fundraisers should be ready to discuss these asset types with their prospects. Please join Karen Johnson, Senior Director of Complex Asset Gifts for Harvard University, and Kara Morin, Director of Client Services for PG Calc, for an overview of gifts of non-cash assets and how to help your donors unlock the philanthropic power of these assets.

Presented by
Kara Morin

and
Karen Johnson

Thursday,
October 26, 2023
1:00 - 2:00 pm ET


REGISTER

UPCOMING TRAINING

GiftWrap Advanced Reporting

October 18-19, Online (4 hours over 2 days)

Gift Planning with PGM Anywhere

October 31, Introductory, In-person (Chicago)
November 1, Advanced, In-person (Chicago)

PGM to PGM Anywhere – FREE!

November 9, Online (90 Minutes)

PGM Anywhere and Gift Annuities

November 14-15, Online (4 hours over 2 days)
VIEW

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Quick Tip: Illustrating a Flexible Deferred Gift Annuity in PGM Anywhere

A flexible deferred gift annuity (FGA) is a deferred gift annuity in which the annuitant can choose the payment start date after the gift is made. Since it was first approved in a 1997 private letter ruling, the FGA has become a staple offering of many gift planning programs: over half the respondents to the latest ACGA Survey of Charitable Gift Annuities (2021) indicated that they have issued FGAs.

It is easy to illustrate an FGA in PGM Anywhere.

  1. Open Gift Options and choose Flexible Gift Annuity under Add a Gift Option.
  2. Enter the Payment start date to show as elected. This is the start date assumed for the calculations that appear in projection charts, graphs, diagrams, and narratives. It also establishes the month and day of all the elective payment start dates.
  3. Enter the first and last year in the range of years for the elective payment start dates. There will be one elective payment start date in each year of the range.
  4. Click Next to see all the elective start dates and annuity rates. Each default annuity rate matches the default rate for a deferred gift annuity with that same date of first payment.
  5. If a donor expects to start payments later than the first year in the range of possible start dates, consider selecting “Yes” to Optimize deduction for target start year and entering a target start year. Doing so will very likely increase the donor’s deduction by reducing the annuity rates in start years earlier than the target year.
  6. Choose the Summary of Benefits, Taxation of Gift Annuity Payments, or Actuarial Calculations chart to see the charitable deduction and a schedule of elective payment start dates and annuity rates.

Contact Client Services at support@pgcalc.com or 888-474-2252 if you have any questions or need help.

Things We Are Following:

Crypto Giving Rules

Guessing what legislation will be passed and when is a fool’s errand, especially with Congress in its current state of disarray. Beyond keeping an eye on how Congress is functioning, we draw your attention to legislation reintroduced in July to address a range of crypto asset issues. One provision would allow donors of “actively traded” crypto assets to qualify for a charitable deduction without a qualified appraisal. While unlikely to pass as part of a stand-alone bill, this provision could get tacked onto a year-end tax package. Were that to happen – again, we have no idea if it will – it would remove a significant barrier to gifts of crypto assets, which ought to encourage crypto gifts.

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Rise in Gift Annuities Funded by QCDs

Our Gift Administration team has noticed a recent uptick in gift annuities funded by qualified charitable distributions (QCDs). This giving technique became available at the start of this year. As we enter the year-end giving period, we will be watching to see if the upward trend in these gifts continues. Under the current rules, a donor who funds a gift annuity with a QCD this year won’t be able to do it again in future years, so we will also be watching for what happens next year with these gifts. Will they plummet because all the likely donors made their QCD for a CGA gift this year, increase because more willing donors will become aware of this new technique, or something in between? Only time will tell.

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NY Max Annuity Rates Legislation Sent to Governor for Her Signature

As we reported in June, New York has passed legislation that should greatly reduce the likelihood that any of its maximum annuity rates will be lower than the corresponding maximum rate suggested by the American Council on Gift Annuities (ACGA). On October 13, this non-controversial legislation was sent to Governor Hochul for her signature. She has 30 days from that date to sign the legislation. For now, the old rules for computing New York maximum annuity rates still apply. The new law will go into effect 90 days after it is signed, so the New York rates computed using the old method will continue at least through the end of 2023.

New York’s maximum annuity rates for gift annuities completed in Q4 2023 are a little higher than the rates applicable to annuities completed in Q3 2023. Once again, then, all one-life New York maximum rates are higher than their corresponding immediate annuity rates from the ACGA, as are all two-life immediate annuity rates we have tested.

It is a different story for deferred gift annuities. We can still find two-life female/female cases where New York’s maximum rate for a deferred gift annuity is lower than the corresponding ACGA rate. There may be other two-life and one-life cases that we haven’t found where this is true. In all these cases, the maximum rate you can offer a New York donor is limited by the New York maximum 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 us. We will determine the maximum annuity rate New York will allow you to offer your donor. Learn more about our New York Rate Calculations Service or submit a calculation request form here.

Fundraising for Endowment Q&A: Free Recording Available

How do you make sure you have best practices in place for raising money for endowments? What are some common mistakes to avoid?

PG Calc President Gary Pforzheimer answered these questions and more during this hour-long Q&A webinar about endowment fundraising and sub-accounting. Watch the free recording.
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  Watch the Free Recording  

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Sweet Home Chicago: Sign Up for Gift Planning Training with PGM Anywhere Before the 2023 CGP Conference

On October 31 and November 1 we are offering in-person gift planning training ahead of the 2023 CGP Conference in Chicago. Join your planned giving colleagues and PG Calc's experienced instructors and further develop your planned giving knowledge as you use our PGM Anywhere software to gain hands-on experience that will help you close more gifts.

Introductory Session
Tuesday, October 31

Learn to use PGM Anywhere to create persuasive gift proposals. This session will use case studies to introduce planned giving concepts, covering immediate and deferred gift annuities, remainder trust basics, and gifts made utilizing the new IRA QCD provision.

Register for Introductory

Advanced Session
Wednesday, November 1

Explore advanced gift plans, including flip CRUTs, retained life estates, charitable lead trusts, and gift plans using funds from traditional IRAs (QCDs and other models). This session will utilize both PGM Anywhere and PGM desktop.

Register for Advanced

Download PG Calc’s Free 2024 CGA Annual Filing Calendar

If your charity is issuing gift annuities, use our free compliance calendars for 2024 to keep track of key deadlines in the states in which you are registered.

We’ve developed two versions of the calendar, depending on whether your organization’s fiscal year ends in June or ends in December.

Download the Calendar
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CGA Manual Updated for 2023

We have completed the 2023 update of Charitable Gift Annuities: The Complete Resource Manual (CGA Manual). We sent an email to our electronic subscribers on October 5 with a link to the update. The print version of the update is in production and should be in the mail within the next two weeks.

Whatever your gift annuity question, the answer is in the CGA Manual. The manual includes 50 prototype letters and documents that you can adapt for use in your work. The 2023 edition includes:

  • A section on the new option to fund a CGA with a QCD
  • New sections in the Best Practices chapter on pre-gift planning, securing the gift, and stewardship
  • An updated discussion of New York maximum annuity rates
  • Numerous other additions and clarifications

For just $150 plus $75/year, you can have the electronic CGA Manual at your fingertips and be on your way to an exceptional gift annuity program.

Learn more about the CGA Manual or order your own copy on our website.

PG Calc’s Gift Administration Staff Is Part of the Team for The College of New Jersey

“I have worked with PG Calc at two schools for over 18 years. I know when I have a challenge or a question – PG Calc is there to provide guidance, insight, directions and the answers! Being a one person planned giving shop – I feel that with PG Calc, I am on a huge team. The staff is great (hooray Helene), and the service is exceptional.

Our accounting records were not being calculated correctly. PG Calc worked with me and our sub-accounting records to ensure that when a person passed, we had an accurate amount to withdraw to create endowed scholarships and even an endowed Dean’s position.”

-- Jim Spencer, CAP®
Director of Development & Planned Giving
Office of Development & Alumni Engagement
The College of New Jersey

Learn more about The College of New Jersey.

Learn more about PG Calc's Gift Administration services.

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Sales: info@pgcalc.com 888-497-4970
Support: support@pgcalc.com 888-474-2252