1. Gift Planning for the Future of the Parish

2. Disclaimer
This presentation is designed to provide an overview of certain charitable gift instruments. It is not intended to provide legal, tax, investment, or other professional advice. Please obtain the services of a competent attorney or other professional advisor when developing your own charitable giving plans.

3. Learning Objectives What is a gift that is “planned?”
The most common types of planned gifts
Gift planning that can actually produce Income for the giver
Gift planning that can be used for reducing the giver’s taxes
During this workshop, participants will learn:
A basic definition of planned gift, including that they are not always “at death” and that they might be of importance to parishioners for purposes of 1) increasing income during lifetime; and/or 2) tax savings.
The most common types of planned gifts, and those that do not necessarily require hiring an attorney or other professional advisor:  simple bequests, life insurance ownership or beneficiary designations, retirement plan beneficiary designations
The basics of income-producing gifts, using Charitable Gift Annuities as an example, expanding that into more complex types of income-producing gifts (CRT’s).
Other, less-common types of gifts that might be used strategically for tax purposes:  life estates, charitable lead trusts., etc.

4. What is Gift Planning? In reality, every gift is in some way “planned”
The ‘annual’ pledge
Other gifts might also be planned:
Special-purpose gifts: a building campaign
Gifts made to the parish over time, or through one’s estate
Our focus today: to learn more about planning for these “other” types of gifts
In reality, every gift we make to our parish is in some way “planned” – our annual pledges are planned each year
Other kinds of gifts, however, might also be planned; these include:
Special-purpose gifts (for example, to support a building campaign)
Gifts made to the parish over time, or through one’s estate
Our focus today: to learn more about planning for these “other” types of gifts

5. Understanding Planned Gifts
philanthropic gifts made to the parish that the parish receives at some future date
Often called “estate” gifts or “bequests”
not limited to happening only at death
Capital campaign commitments
Special purpose pledges (scholarship, etc.)
Planned gifts are philanthropic gifts made to the parish that vary in type and size but are contributed after considerable thought and planning.
Often provided for from a donor’s assets, they may be called “estate” gifts but are planned for in one’s lifetime.
May be given from current resources for current uses.

6. There is an old saying that there are two best times to plant a tree:
The first best time to plant a tree is twenty to twenty-five years ago. For by now the tree would be in full, and one could benefit from its beauty, its shade, and perhaps its fruit, if it produces fruit. So the first best time to plant a tree is twenty years ago.

7. However, the saying, continues, the second best time to plant a tree is now—today. Before another day passes. Because when you are trying to grow things, every day counts.

8. Planting for the Future from God’s Blessings Today
Quoting Albert Einstein, financial planners have said for years that the Eighth Wonder of the World is compound interest. The reason is that with enough time, an initial investment of resources, and a regular return that gets reinvested, your resources will grow, and continue to grow.
Like a tree, with time—that passes day by day anyway—your endowment resources will grow. And if you make additions to the initial investment, it will grow even more; like planting more trees to enable more of a future harvest.
Planting for the Future from God’s Blessings Today
“Compound interest in the eighth natural wonder of the world…”
Albert Einstein

9. Planting for the Future from God’s Blessings Today
Starting an endowment for your parish, and inviting people to leave planned gifts to the endowment, or make a planned gift of current appreciated assets, will enable any parish to grow its endowment, the income from which can keep a church free of deferred maintenance, among other goals a parish endowment might have as its focus.
Start today, and let time and the power of investment interest grow your endowment into a strong resource for keeping your parish a vital center of life transforming ministry in your community.

10. Understanding Planned Gifts
Over 50% die without a Will or Trust
Of those who plan, only 6% leave money to church/charity
Planned gifts (bequests) = $32B annually
~9% of all charitable giving in 2015
Unfortunately, studies have show that more than 50% of Americans die without a Will.
Of those with a Will, just 6% leave money to their parish or to another charity on their own volition, without being asked.
Nonetheless, total planned gifts to charity = $30 billion annually (approx) – about 10% of all charitable giving

11. Why Should Anyone Leave a Gift?
To make a significant impact on the parish and its mission
To possibly lower taxes at death
For potential tax savings during one’s lifetime
To increase income in lifetime
To make an impact on family:
When my Will is read,
what will my children and grandchildren
learn about my values?

12. Gift Purposes Annual pledges are generally considered “unrestricted”
parish leadership uses those funds as most needed throughout the year.
Some make “restricted” gifts to annual fund
–important to designate any such gifts for items included in the parish’s annual operating budget.
(e.g.: “My gift is to be used to support the Sunday School.”)
Our pledges to the annual campaign are generally considered “unrestricted” – that is, parish leadership can utilize those funds as most needed throughout the year.
Some choose to make “restricted” gifts to the annual fund – it is important that those gifts be designated for items that are part of the parish’s annual operating budget. (Example: “My gift is to be used to support the Sunday School.”)

13. Restricted Planned Gifts
Planned gifts can be “restricted”
The most common restriction: parish’s Endowment Fund
An Endowment Fund = a permanent savings account that cannot be spent
Only the Fund’s annual earnings can be used
Planned gifts can also be “restricted” for a particular purpose – the most common restriction being for the parish’s Endowment Fund.
An Endowment Fund can be thought of as a permanent savings account that cannot be spent; in general, only the Fund’s earnings can be used each year.

14. Restricted Planned Gifts
Endowment contributions can only be made by the giver—a person/estate
parish leadership (i.e., the Vestry) cannot “put money into endowment”
Unrestricted gifts may go into a “reserve fund” and be treated as endowment
These Funds are not ‘true’ endowment
Sometimes called ‘quasi-endowment’ or ‘the Bequest Fund,’ etc.
Endowment contributions can only be made by the giver – parish leadership cannot “put money into endowment,” for example.
Sometimes parishes receive planned gifts that are not restricted for endowment. When that happens parish leadership may move it into a “reserve fund” and treat the money as endowment, but it is not ‘true’ endowment. Reserve funds are sometimes called ‘quasi-endowment’ or called ‘the Bequest Fund’ etc.

15. Restricted Planned Gifts
Bequest Fund (or ‘quasi-endowment’) can be used at any point in the future by parish leadership, unlike “true endowment”
Ideally, parish has three separately accounted funds:
Annual Operating Fund (from the annual campaign)
Operating Reserves/Bequest Fund/‘quasi- endowment’ (from unrestricted bequests)
Permanent Endowment (from restricted gifts and restricted bequests)
Unlike ‘true’ endowment (which has been designated as such by the givers) the Bequest Fund (or ‘quasi-endowment’) can be spent at any point in the future by the leadership of the parish
A parish ideally has 3 funds, each of which is accounted for separately:
Annual Operating Fund (from the annual campaign)
Operating Reserves/Bequest Fund/‘quasi-endowment’ (from un-restricted bequests)
May develop sub funds for specific purposes. (Ex: Major Maintenance Fund).
Permanent Endowment (from restricted gifts and restricted bequests)

16. Planned Giving for You and Your Parish
How does this work in real life?

17. Gifts We All Can Give “Estimate of Giving” According to a plan
$ per week/month
% of income
Electronically/ACH
Out of gratitude, generously, and joyfully

18. Gifts We All Can Give
“Did you know that you can make a gift to our church that costs you nothing during your lifetime?”
Simple bequest in will or in a trust
Most common (85% of all planned gifts)
Specific $ amount
Certain % of Your Estate
Add a “codicil” to existing Will
“…to The Endowment Fund of [Church name and address].”
85% of all planned gifts are in the form of a gift left to the church in one’s will. This can be done either at the creation of the will, or by adding a codicil to an existing will.
The bequest can be restricted or unrestricted.
The amount left can either be a fixed dollar amount, such as “I leave $10,000 to the Endowment Fund of my parish church, St. ________.” Or one could leave a fixed percentage amount, as in “After gifts to beneficiaries have been satisfied, I leave 50% of remainder to the Endowment Fund of my parish church, St. ________.”
NOTE: Bequests are revocable. Good stewardship of the parish can help maintain the donor/church relationship.

19. Gifts We All Can Give
“Did you know that you can make a gift to our church that costs you nothing during your lifetime?”
Change of beneficiary
Traditional IRA’s
Keough, 401(k) plan
403(b) plan
Life Insurance
Accounts beneficiary (POD)
Brokerage
Money Market, etc.
Did you know that making your church the contingent beneficiary on an IRA account will allow the total balance of the account to transfer to your church? Non-spousal contingent beneficiaries will see much of that account depleted due to ordinary income taxes on the estate of the one who died. (Spouses receive IRA proceeds without tax.) A single–person or widow/er might consider this option.
If you have paid up life insurance, the policy could be given to the church for a tax-savings, and/OR make your church a beneficiary, or partial beneficiary, or contingent beneficiary, and your church will receive a portion or all of the proceeds of the policy upon your death—tax free!
You could also donate the policy itself [if not “term” insurance] and receive a possible tax-deduction for the present cash value.
For some people, making the church a beneficiary, or partial beneficiary, or contingent beneficiary, of other accounts—such as brokerage, money market, or other savings vehicles) and your church will receive a portion or all of the balance payable upon your death. Talk to your bank, credit union, or brokerage house for information about Payable On Death (POD) designations.

20. Gifts We All Can Give
“Did you know that gifts of stock can be more beneficial than giving cash?”
Appreciated Stock gifts
Deduct full value
Avoids Capital Gains tax
Provides immediate gift to your church
Helpful for annual tax planning
RELATED: Annual IRA Minimum distribution

21. Income Gifts basics
“Did you know that you can make a gift to our church and receive an income that you cannot outlive?”
Basic Characteristics:
An irrevocable gift
Donor receives charitable deduction in the year of gift
Receives income for life
Of these types of gifts, the most common are those that are income-producing. They all work basically the same way:
Assets (funds) go into the annuity or trust
You (or you and your spouse) receive income for life
At the end of your life (lives) the parish gets the remainder (generally calculated at about 50% of the amount you contributed initially)

22. Income Gift Types
“Did you know that you can make a gift to our church and receive an income that you cannot outlive?”
Charitable Gift Annuity
The older the Donor, the higher the return
2 to 3 times current Interest income of CDs
Min. age: 55
$5,000 minimum when using ECF
Easy to establish  a simple contract between individual/couple and issuing nonprofit
Offered by:
The Episcopal Church Foundation
Large institutions like Fidelity, Schwab, etc.
Community Foundations
All offer the same rates, established by national committee
Minimum contribution amounts vary from institution to institution

23. Charitable Gift Annuity: One Life
This slide shows that when Jonathan Sample makes a $50,000 gift to a charitable gift annuity, and makes the endowment fund of his local Episcopal Church the beneficiary, the following things happen:
Jonathan receives a sizable tax deduction in the year of the $50K gift; in this example, the savings may be around $6,750, more or less.
At his age, the annuity pays income at 5.8% quarterly, so Jonathan will receive a guaranteed income of $2,900 annually ($725/quarterly) for as long as he lives. Plus, a portion of that income will be tax-free as well, boosting his effective payout rate to 9.4% on his planned gift to the church. Upon his death, the church’s endowment fund will receive the remainder balance of the account, whatever that may be—typically, approximately 50% of the original gift.
Because it is a charitable gift annuity, the CGA account balance passes directly to the church without going through probate, nor being subjected to any estate tax.

24. Charitable Gift Annuity: Two Lives
Like the previous slide, this slide shows how the CGA works when covering two lives—that of Jonathan and his spouse. While the annuity rate drops slightly to 5.0%, to $2,500 annually ($625/quarterly) the total payout will likely increase, as it is covering two lives—Jonathan and Ingrid’s.
While the effective payout rate falls to 7.8% in this example, the total estimated payout increases to $44,500, because of the longer time period of payments.

25. Income Gift Types
“Did you know that you can make a gift to our church and receive an income that you cannot outlive?”
Charitable Remainder Trusts
Minimum: $100,000
Payments set by trustee with donor input
 Fixed Annuity (CRAT)
Variable based on performance (CRUT)
Charitable Remainder Trusts (CRT’s)
function basically the same as charitable gift annuities; assets placed in trust; giver receives tax-deduction in the year given, and income goes to giver, based on the terms of the trust. Upon death, assets pass to church according to terms of the trust.
minimum contribution amounts are higher (usually $100,000+)
Two types of CRAT Fixed annuity, where the income is at a fixed rate; or a variable rate of return, paid out in a Charitable Remainder Unit Trust (CRUT)

26. Review: No Help Needed to…..
Add a Codicil to an existing Will (the attorney who drafted the Will can do it easily)
Change a retirement account beneficiary designation
Traditional qualified charitable roll-over – minimum distribution directly rolled over to charity (no income tax, no charitable deduction)
Change a life insurance policy beneficiary designation
Add a Codicil to an existing Will (the attorney who drafted the Will can do it easily)
Change a retirement account beneficiary designation
Change a life insurance policy beneficiary designation

27. Review: Some Help Needed to…..
Set up a Charitable Gift Annuity or contribute to a Pooled Income Fund
Make a gift of a universal or whole life insurance policy
Make a gift of real estate or other tangible property

28. See an Attorney to…. Establish a new Will Set up any type of Trust
Establish more complex gifts, such as a Life Estate (gift of your primary residence or family farm)

29. Disclaimer
This presentation is designed to provide an overview of certain charitable gift instruments. It is not intended to provide legal, tax, investment, or other professional advice. Please obtain the services of a competent attorney or other professional advisor when developing your own charitable giving plans.

30. Th The Future is Purchased by the Present Samuel Johnson Thank You!