IRS Applicable Federal Midterm Rate for June 2012 is 1.2%.

The Valuation Rate for New Pooled Income Funds in 2012 is 1.8%. See an expanded explanation of how this rate is calculated.

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In this issue:

• Featured Article: Best Practices in Terminating Life Income Arrangements
• HelpClip: Calculating the Value of an Income Interest in PGM
• Quick Tip: Bequest Documents in Upcoming Release of Planned Giving Manager 6.6
• Planned Giving Manager New Release Coming Soon!
• Marketing Corner with Ann McPherson: Messaging Made Simple
• ACGA Confirms Existing Rates
• IRS Final Regulations Establish Character of Lead Trust Distributions to Charity
• Recent Amendment to Tennessee’s Gift Annuity Law
• PG Calc’s Monthly Webinars Serve as “Great Asset” for University of Redlands
• Multi-State Discount Extended to Any State Registration Engagement
• Upcoming Webinar: The Science (and Art) of Planned Giving Marketing, featuring guest presenter Anne Melvin, May 29
• Lead Trust School & Planned Giving by the Numbers, June 18-19

Best Practices in Terminating Life Income Arrangements
When a donor establishes a life income gift such as a charitable remainder trust, a gift annuity, or a contribution to a pooled income fund, the arrangement usually remains in effect throughout the period set forth in the gift instrument. Sometimes, however, the donor or other beneficiary of the gift’s income interest decides to end the arrangement ahead of schedule. Doing so should be acceptable from a legal standpoint, provided certain steps are taken.

Read this article...

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Past topics...

HelpClip: Calculating the Value of an Income Interest in PGM
We are often asked by clients how to compute the value of an income beneficiary’s interest in a life income gift. The need to do this typically arises in either of two situations:

1. An income recipient wants to sever his income interest in a life income plan and assign it to the charity. In this case, the income recipient has made a charitable contribution equal to the value of the income stream he has given up.
2. An income recipient of a life income plan is not the donor or the donor's spouse. In this case, the donor has made a taxable gift to the income recipient equal to the value of the recipient's income interest.

Planned Giving Manager’s online Help provides all the guidance you need to make either of these calculations in PGM for any type of life income gift and up to four income beneficiaries.

Learn more ...

Quick Tip: Bequest Documents in Upcoming Release of Planned Giving Manager 6.6
Included among a number of enhancements in soon-to-be-released Planned Giving Manager 6.6 is the ability to generate proposal documents for a bequest. We have included excellent documentation language you can generate for your donors including:

• Summary of Benefits chart
• Summary of Benefits - How it Works and Summary of Benefits - Numbers Diagrams
• Proposal Letter
• Description and/or Example and Long Description and/or Example

We’ve also added bequest modeling to Life Income Projections, enabling you to illustrate a bequest of retirement plan assets or present a bequest in the context of an estate plan.  You can compare making a bequest to funding a life income plan, as well.

New Customize fields let you maintain sample bequest language, the name of your legacy society, and how your organization should be identified in a bequest. This information can be included in the Proposal Letter, Description and/or Example, and Long Description and/or Example narratives.

Planned Giving Manager New Release Coming Soon!
We expect to release a meaty update of Planned Giving Manager (PGM 6.6) by early June. Among the enhancements included in PGM 6.6 will be presentations for bequests, projections for grantor, super grantor, step, and balloon (“shark fin”) lead trusts, automatic updating of the monthly IRS discount rate via the Web, and diagrams for bargain sales and retained life estates. We have also updated the format of PGM’s Help system to be fully compatible with Windows 7 and Vista. PGM clients should expect to receive an email with update instructions within the next few weeks.

Marketing Corner with Ann McPherson: Messaging Made Simple
In last month’s Marketing Corner, I discussed three sacred rules of marketing - personalization, consistency, and using multiple channels. Now I want to turn my attention to messaging, the content of your communications. When it comes to messaging, the most effective approach is streamlining. Of course, you need to take the prospecting cycle into consideration; are you identifying, cultivating, soliciting, or stewarding? For example, when producing a mailer, postcard, or letter that is focused on identifying planned giving prospects, keep the message simple. Stress just one main point.

These are the most common themes I see in gift planning messaging:

• Mission - Why give to your organization?
• Why a planned gift?
• Benefits to the recipient and/or your organization
• Gift options
• Donor testimonial

But when it comes to communicating a message, the offense I see time and again is messages that try to address every one of these points. Instead, focus on one message and repeat it consistently for a specific period of time; then change it. Break up the messaging into bite size portions. Not only will simple messages be easier for your organization to produce, they will be easier for your prospects to understand.

ACGA Confirms Existing Rates
The American Council on Gift Annuities (ACGA) announced at its recent biannual conference that there will be no changes to the rates that went into effect on January 1, 2012.

IRS Final Regulations Establish Character of Lead Trust Distributions to Charity
On April 9, the IRS issued Treasury Decision 9582, which is relevant to the taxation of charitable lead trust income. The final regulations contained in TD 9582 state that unless there is “economic effect independent of income tax consequences…the payments (will be) deemed to consist of the same proportion of each class of the items of income of the estate or trust as the total of each class bears to the total of all classes.” As a practical matter, therefore, and despite what many practitioners have argued for years, an ordering provision in a lead trust instrument will have no effect on the tax character of the trust’s charitable distributions. As a result, the tax character of the income retained by the trust must be determined accordingly.

These regulations confirm a longstanding position of the IRS.

Recent Amendment to Tennessee’s Gift Annuity Law
Certain aspects of Tennessee’s gift annuity law, relating to reserve fund requirements and submission of annual financial information, have been amended effective April 16, 2012 (Public Chapter No.  743, House Bill 3781).

Further information regarding the practical implementation of the changes is expected shortly, and we will provide more details in a future eRate.

PG Calc’s Monthly Webinars Serve as “Great Asset” for University of Redlands
Ray Watts, CFRE, Associate Vice President for Development at University of Redlands, writes:

“The PG Calc Webinar series has been a great asset to our entire Development team. We feel that each member of the Development team is a planned giving officer, so we have used these sessions as an economical way to provide group training, and our team has grown collectively in our planned giving awareness and professional capacity. As Associate VP and Director of Planned Giving, I have found the more technical sessions very helpful as well. These sessions are well worth the resources we spend on them, and I plan on continuing to subscribe for the entire series again next year.”

PG Calc’s monthly Webinars focus on important topics in gift planning and are delivered by experts in the field. Each Webinar includes a 60-minute presentation accompanied by PowerPoint slides, followed by a 30-minute live question and answer period, as well as a detailed outline. Registrants may invite as many attendees to their site as they wish, and continuing education credits are available for attendees. 

Learn more about PG Calc’s Webinars

Learn more about University of Redlands

Multi-State Discount Extended to Any State Registration Engagement
Lack of compliance with state regulations leads to unease – not only concern about potential action on the part of regulators, but also about potential damage to public and donor relations. Issuing gift annuities outside of compliance simply isn’t worth the risks. Let PG Calc assist you with registering in the necessary states so you can focus on marketing gift annuities with confidence. With over 15 years of experience, we’ll save you time and headaches by knowing exactly which information needs to be gathered, eliminating hours of interpretation of complex material. Contact us today to save 10% when we assist you in registering in one or more states.

Learn more...

Upcoming Webinar: The Science (and Art) of Planned Giving Marketing, featuring guest presenter Anne Melvin, May 29
Guest presenter Anne Melvin, Harvard University’s Deputy Director of Gift Planning will review the entire planned giving marketing process from capturing prospects’ attention to closing gifts. Learn what you can change so your planned giving marketing is smarter, better, less expensive, as well as better able to reach more good prospects.

Anne has directed the planned giving marketing program for Harvard’s Faculty of Arts and Sciences for the past nine years, tripling its lead generation in that time and revamping entirely the way it does marketing.

We highly recommend this Webinar to organizations that are starting a planned giving marketing program from scratch or enhancing an existing marketing program.

Date: May 29
Time: 1:00 – 2:30 pm ET
Presenter: Anne Melvin, Deputy Director of Gift Planning, Harvard University

Register

Lead Trust School & Planned Giving by the Numbers, June 18-19
We will be offering our Lead Trust School and Planned Giving by the Numbers seminars in Boston on June 18 & 19, respectively. Lead Trust School attendees will learn how to create illustrations that will engage lead trust prospects and inspire them to action. Planned Giving by the Numbers helps gift planners build their confidence by strengthening their understanding of common planned gift calculations.

This pair of classes is the perfect opportunity to take your gift planning knowledge to the next level. Register for either session or for both!  

Lead Trust School
Boston, MA
June 18

Planned Giving by the Numbers
Boston, MA
June 19

For more information or to register

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