IRS Applicable Federal Midterm Rate for October 2011 is 1.4%.

The Valuation Rate for New Pooled Income Funds in 2011 is 2.8%. See an expanded explanation of how this rate is calculated.

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In this issue:

• Featured Article: Appreciating Residual Bequests
• IRS Discount Rate Hits All-Time Low
• Help Clip: GiftWrap’s FASB Calculations Explained
• Quick Tip: Bequests – What Is the Value to Your Charity?
• Marketing Corner with Ann McPherson: Different Strokes for Different Folks
• Upcoming Webinar: Appealing to Cautious Donors, September 22
• Westminster Canterbury, Lynchburg Finds Planned Giving Manager to Be “Invaluable”
• Come See Us at NCPP!
• Upcoming Training: Group Training Sessions in Texas and Minnesota

Appreciating Residual Bequests
Some bequests are more equal than others. Although the terminology may vary a bit, there are basically three different types of bequests: pecuniary (in which a sum of money is given), specific (in which a particular asset is given), and residual (in which all or a portion of the donor’s estate is given after taking into account pecuniary and specific bequests, along with the payment of debts and expenses of the estate).

Many seasoned institutional gift planners are partial to residual bequests.  While they are definitely happy to have their organizations receive a fixed amount of money or a certain asset, there can be some drawbacks associated with either of these two types of bequests.

Learn more...

Past topics...

IRS Discount Rate Hits All-Time Low
October’s IRS Discount Rate of 1.4% will be the lowest rate ever, putting further downward pressure on charitable deductions for gift annuity and charitable remainder annuity trust gifts. At 1.4%, an annuitant must be at least 59 for a gift annuity to be able to pay the American Council on Gift Annuities (ACGA) suggested maximum rate. Two annuitants must both be at least 66. For deferred annuities, a 55 year-old annuitant who defers payments until 65 will need to accept a rate below the ACGA rate. In contrast, a 60 year-old who defers payments until 65 or 70 will still be able to get the ACGA rate. Of course, donors will still be able to use August’s 2.2% for October gifts and September’s 2.0% for November gifts, so these minimum age thresholds will remain a little higher than the ones quoted above for at least the next two months. What’s more, it is worth remembering that an all-time low IRS discount rate also translates to all-time high deductions for retained life estates and charitable lead annuity trusts.

Help Clip: GiftWrap’s FASB Calculations Explained
In order to satisfy the requirements of the Financial Accounting Standards Board (FASB), charities must include in their annual financial statements the liabilities attributable to their planned gifts.  Fortunately, PG Calc’s GiftWrap gift administration software makes it easy to produce these liability calculations for all standard, and some not so standard, types of planned gifts.  In addition to providing guidance on how to produce a FASB liability report, GiftWrap Help explains the considerations that go into performing FASB liability calculations and how to handle computing them in special situations, such as for flexible gift annuities or step lead trusts.

Learn more...

Quick Tip: Bequests – What Is the Value to Your Charity?
Planned gifts come in many forms, but bequests continue to represent about 80% of the planned gifts received by charities. The most common form of a bequest is a commitment through a donor’s will. However, when a donor names a charity as the beneficiary of a life insurance policy, a POD (payable on death) account, or a retirement plan, then the gift is similar to a bequest.

How can you calculate the present value of a future bequest or bequest-like gift?  Planned Giving Manager version 6.5 has a calculator tool that makes it easy.

1. Select Tools – Present Value of a Future Bequest on the Menu bar.
2. Choose the mortality table and interest rate you want to use in your calculation and complete the entries specific to the gift you want to value.
3. Click Calculate. The value will be displayed in the Present Value of Bequest field.
4. If you wish, you can then view or print a presentation of the results.

Marketing Corner with Ann McPherson: Different Strokes for Different Folks
All planned giving prospects are not created equal, which is one reason why accurate prospect data and segmentation are such critical components of a successful marketing program.  Prospects in different stages of relationship with your organization require different strategies.  One easy way to think about this is to envision your database as a dart board where your best prospects represent the “bull's-eye,” but hitting the outer segments can improve your overall score, too. 

Start at the center and work your way outward, using numbers that work for your individual organization.

Upcoming Webinar: Appealing to Cautious Donors, September 22
Many donors want to make a planned gift, yet hesitate for one reason or another.  For some, a primary worry may be the economy.  Others are just plain cautious by nature.  This session will offer fruitful ways to work with donors who express these sorts of concerns, and suggest a variety of giving arrangements well-suited to their situations.

Date: September 22, 2011
Time: 1:00 – 2:30 pm ET
Presenter: Bill Zook

Register

Westminster Canterbury, Lynchburg Finds Planned Giving Manager to Be “Invaluable”
Joseph P.L. Payne, Senior Vice President of Westminster Canterbury, Lynchburg reports that “I’ve been using Planned Giving Manager (PGM) since 2000 and can’t imagine our development program without it. In addition to supporting our charitable gift annuity program, I often use it for reference information about planned giving. I know that when a potential donor calls, I will be able to respond to their questions with accurate, reliable information that is easily available in Planned Giving Manager. I am a satisfied customer!”

More than 25 years ago, PG Calc introduced PGM, a calculation and proposal software package that instantly became a leader in the planned giving software arena. Today, many updates later, PGM and its streamlined counterpart, Gift Annuity Manager (GAM), remain the calculations and proposals software of choice for the majority of planned giving programs around the country.

Learn more about PGM and GAM

Learn more about Westminster Canterbury, Lynchburg

Come See Us at NCPP!
PG Calc will exhibit again at the National Conference on Philanthropic Planning this October 4-6 in San Antonio. We hope you’ll stop by to say hello and see what’s new. Plus, you’ll have two opportunities to see PG Calc Senior Advisor Dr. Frank Minton, renowned expert on gift annuities, present: “Gift Annuities: Creative Applications and Challenging Issues.”

Upcoming Training: Group Training Sessions in Texas and Minnesota
We will be offering our Gift Planning with Planned Giving Manager (PGM) and Gift Administration with GiftWrap group training sessions in San Antonio, TX on October 3-4 prior to the National Conference on Philanthropic Planning (NCPP). We will also offer our PGM classes in St. Paul, MN on November 3-4 following the Minnesota Planned Giving Conference. These sessions provide a solid foundation for individuals who are new to planned giving and gift administration. They may also serve to reinforce the skills and knowledge of experienced gift planners and administrators. We hope you’ll join us!

October 3-4
Gift Planning with Planned Giving Manager
Introductory & Advanced
San Antonio Marriott Rivercenter, San Antonio, TX

October 3-4
Gift Administration with GiftWrap
Basics & Reporting and Analysis
San Antonio Marriott Rivercenter, San Antonio, TX

November 3-4
Gift Planning with Planned Giving Manager
Introductory & Advanced
Crowne Plaza St. Paul Riverfront, St. Paul, MN

For more information or to register

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