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November 18, 2011
IRS Discount Rate: December 1.6%

IRS Applicable Federal Midterm Rate for December 2011 is 1.6%.

The Valuation Rate for New Pooled Income Funds in 2011 is 2.8%. The rate is 1.8% for pooled income funds established in 2012. See an expanded explanation of how this rate is calculated.

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In this issue:

It’s a Great Time to Consider Retained Life Estates
For many donors, their home is their most valuable asset. They most likely plan to live there for many years and it would never occur to them that they could use their home to make a charitable gift. Likewise, there are many donors with a valuable second home that they continue to use regularly and have never considered giving to charity. In both cases, the retained life estate may offer the key to unlocking just such a gift, especially in this low discount rate environment.

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ACGA Announces New Annuity Rates, Effective 1/1/2012
On November 18, 2011, the American Council on Gift Annuities (ACGA) announced new suggested maximum gift annuity rates to replace the rates that became effective on January 1, 2012. The rates will apply to gift annuities established on or after January 1, 2012, although a charity may follow the new rates immediately if it wishes.

The new suggested maximum rates are significantly lower than the ones they replace, which went into effect on July 1, 2011. Importantly, the new rates for immediate payment annuities result in a contribution value of at least 10% of the funding amount at all ages down to an IRS discount rate of 1.4%. 

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PGM 6.5A Released Today!
We were pleased to release PGM 6.5A today.  This release updates Planned Giving Manager (PGM) and Gift Annuity Manager (GAM) with the new ACGA rates that go into effect on January 1, 2012. We sent an email with a link to the download page for PGM 6.5A to all PGM and GAM clients.  Please contact Client Support at 888-474-2252 or support@pgcalc.com if you have questions about the update or did not receive your PGM 6.5A release email.

See also our analysis of the new ACGA rates immediately above.

Get Calculations on Your Smart Phone – Free! 
Need quick calculations when visiting donors? GiftCalcs Mobile is available on your cell phone at no cost.

HelpClip: Adjusting Narrative Margins in PGM
Planned Giving Manager (PGM) can produce a wide variety of documents that we call narratives. These narratives include gift annuity agreements for every state, gift descriptions, acknowledgment letters, and many others. We’ve also created custom narratives for many clients. In each case, PGM allows you to set the margins for the text. It’s easy to do!

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Quick Tip: Automatic Adjustment of Annuity Rate to Pass 10% Deduction Requirement
We have recently received calls from clients asking why gift annuities are failing the 10% deduction requirement more often. The reason is this: the monthly IRS discount rate is the lowest it has ever been. The discount rate directly affects the charitable deduction: the lower it is, the lower the deduction for a gift annuity. The American Council on Gift Annuities (ACGA) set its current rates so that they would create a charitable value of at least 10% at every age down to an IRS discount rate of 3%. Now that this rate has dropped to 1.4%, gift annuities more often fail the 10% deduction requirement.

There is a solution to this dilemma. Planned Giving Manager (PGM) issues a warning message whenever the deduction computed for a gift annuity of any type is 10% or less of the funding amount. It also asks whether you wish to reduce the annuity rate so that the charitable portion of the gift exceeds 10% of the gift amount. If you select “Yes,” PGM determines the annuity rate that yields a deduction of just over 10% and uses this rate in its calculations.

Note: The new and lower ACGA rates that will go into effect on 1/1/2012 (see details above) will greatly reduce the likelihood that gift annuities will fail the 10% deduction requirement.

Marketing Corner with Ann McPherson
I was reading the latest copy of Garden Design when I came across an article that hit home on many levels. The real takeaway was its advice pertinent to any successful marketing program – be it for planned giving or development. The Garden Design staff was donating time to the James Beard Foundation to update a garden that it uses primarily for fundraising events. As part of that project, the staff was able to share the evolution of the property through a series of Web posts.  

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Updated Version of Planned Giving for Canadians Now Available
For several years, we have been publishing this comprehensive reference work.  Revised annually by PG Calc Senior Advisor Frank Minton, Planned Giving for Canadians is valuable for gift planners on both sides of the border, particularly those affiliated with U.S. colleges and universities.  Included in the 2011 edition are:

  1. An overview of what could become the Canadian version of the U.S. charitable lead trust;
  2. New text in the chapter on marketing planned gifts, much of which is just as applicable in the U.S. as in Canada; and
  3. Information on current requirements for donation receipts relied upon by Canadian donors in claiming tax credits for charitable gifts (even certain gifts made to U.S. charities).

We sent the 2011 version to current subscribers via email on August 31.

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Upcoming Webinar: Gift Annuity Administration - Operations and Compliance, December 15
Thousands of charities issue gift annuities. But closing a gift annuity is just the beginning of a lifetime relationship with the donor and state regulators. Successful gift annuity programs have to get right the many details that come into play after the gift is complete. Learn how to incorporate first-rate administrative and state compliance practices into your gift annuity program so that your past gift annuity donors remain your best gift annuity prospects.

Date: December 15, 2011
Time: 1:00 – 2:30 pm ET
Presenters: Jeffrey Frye and Edie Matulka

Learn More Register

Upcoming Group Training Sessions: PGM Training in New York City, January 30, 31
PG Calc is heading back to the Big Apple! We will be offering our Gift Planning with Planned Giving Manager group training sessions in New York City on January 30 and 31. These classes provide a solid foundation for individuals who are new to planned giving or our software. They also serve to reinforce the skills and knowledge of experienced gift planners.

January 30 and 31
Gift Planning with Planned Giving Manager
Introductory and Advanced
New York City, NY

Learn More For more information, to register, or to view our entire 2012 group training schedule

Reminder: Client Services Support Hours
The Client Services team is ready to help you with your gift planning and software questions between 8:00 a.m. and 7 p.m. ET, Monday through Friday. Call toll-free 888-474-2252 or email support@pgcalc.com.

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This publication is designed to provide information in regard to the subject matter covered. It is understood that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.
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