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In this issue:
Featured Article: Analysis of the New ACGA Annuity Rates
On April 3, 2008, the American Council on Gift Annuities (ACGA) announced new recommended gift annuity rates at its bi-annual Conference. The new rates apply to gift annuities established on or after July 1, 2008, but a charity may follow the new rates immediately if it wishes. For an analysis of the new rates and their implications for your charity, click on the link below.
 Learn more...
Quick Tip: Plunge in IRS Discount Rate Causes Deduction Surprises
We've received a spate of support calls recently from customers who are worried that they've done something wrong in calculating a gift annuity or remainder annuity trust deduction. They explain that they did the same calculation for the same prospect late last year, and now the deduction is coming out to be about two-thirds the amount it was then. Can the drop in the IRS Discount Rate be the whole explanation?
Yes! The highest rate available last November was 5.8%. April's rate is 3.4%. The deduction for a $10,000 gift annuity with a 65 year-old annuitant has decreased from $3,949 to $2,612 as a result of this plunge from 5.8% to 3.4%.
The effect is less dramatic with older beneficiaries. When comparing deductions for a $10,000 gift annuity with an 80 year-old annuitant, for example, the decrease is from $5,101 to $4,470, a significant, but much smaller decline.
HelpClip: The 5% Test for CRATs
Charitable remainder annuity trusts (CRATs) that will last for the lives of one or more beneficiaries are subject to a 5% probability of exhaustion test. The odds these days of a CRAT failing the 5% test are about as high as they have ever been because the IRS discount rate is about as low as it has ever been. (In last month's HelpClip, we noted that a similar situation exists with the 10% remainder value test.) The consequences of failing the test are dire. Fortunately, Planned Giving Manager (PGM) will warn you whenever a CRAT calculation fails the 5% test, and PGM's Online Help gives you the detail you need for understanding why.
See how...
BatchCalcs Can Help You Close Gift Annuities Before the Rates Go Down
The gift annuity rates recommended by the ACGA will decrease as of July 1, 2008. In response, some of our clients are planning to do special gift annuity promotions before then that will encourage their prospects to fund a gift annuity before the ACGA rates decrease. (See our analysis of the new rates for a discussion of some important considerations before you do this kind of promotion. (http://www.pgcalc.com/news/tip.htm))
If you are one of these clients, consider taking advantage of PG Calc's BatchCalcs Service. This service lets you insert personalized planned gift calculations, such as a prospect's annuity rate before and after July 1, into each letter in a mailing. All we need from you is a file of IDs or names, and birth dates. For more information on our BatchCalcs service, go to http://www.pgcalc.com/services/batchcalcs.htm or call Dyke Tilt at 888-474-2252.
"Marketing Planned Gifts: Benchmarking & Beyond" on April 29
Our clients are loving the convenience, affordability, and high-quality content of the monthly Webinars in our "Planned Giving Essentials" series that we started in January. Delivered by recognized planned giving experts, PG Calc Webinars support individual professional enrichment, the training of development staff, and are an excellent source of planned giving content for board members and professional advisors. Visit http://www.pgcalc.com/training/webinars.htm today to register for the next session in our Essentials series: “Marketing Planned Gifts” on April 29, presented by Gary Pforzheimer.
PG Calc Adds Three Webinars for Experienced Gift Planners
Our Webinars are going so well that we've decided to add three more for 2008. The new sessions are designed specifically to address topics of particular interest to experienced gift planners. We have picked three topics that we think are especially timely.
May 7: Strategic Responses to the Reduction in Gift Annuity Rates
In this Webinar, Frank Minton, outgoing Chair of the American Council on Gift Annuities (ACGA) and former Chair of its Rates Committee, will discuss the rationale underlying the new lower ACGA rates that will become effective July 1, 2008, analyze their effect on charitable remainders and annuity payment taxation, consider strategies charities might adopt to promote successful gift annuity programs going forward, and more.
Register now...
July 10: Charitable Lead Trusts: A Golden Opportunity
Learn more...
Register now...
October 9: Complying with State Regulation of Gift Annuities
Learn more...
Register now...
Time to Update Your Disclosure Information
The disclosure statement for gift annuities in our Planned Giving Manager (PGM) software fulfills all of the requirements of the Philanthropy Protection Act of 1995 regarding the disclosure of information to potential gift annuity donors. This statement should be provided to each gift annuity donor prior to the completion of his or her annuity agreement.
If you have been using or plan to use the Gift Annuity Disclosure Statement included in PGM, you should review and update the organization information that appears in this statement. To review and update this information:
- Select Customize - Organization Information in the Menu Bar.
- Select your organization, then click Edit.
- Use the Next button to advance to the Gift Annuity Disclosure Statement screens, and then update your organization information as needed.
- When done, choose File - Save Configuration in the Menu Bar to save your changes for use in future PGM sessions.
PG Calc on the Road
See PG Calc experts on both coasts and everywhere in between as we make our way to 14 conferences and speak at 11 venues this spring.
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Upcoming Group Training Sessions
We will be conducting our group training classes several times in the coming months. Our group training sessions provide a solid foundation for individuals who are new to planned giving. These classes may also serve to reinforce the skills and knowledge of experienced gift planners.
- May 7
Gift Planning with Planned Giving Manager
Introductory
Cleveland, OH - Northern Ohio PG Council
- May 12 – 13
Gift Planning with Planned Giving Manager
Introductory/Advanced
Boston, MA
- May 27-28
Gift Planning with Planned Giving Manager
Introductory/Advanced
Costa Mesa, CA - Western Regional PG Conference
- Jun. 18
Lead Trust School
Boston, MA
- Jul. 16
Planned Giving by the Numbers
Boston, MA
Classes are $295 per day.
Learn more and register...
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