1. PG Calc | Invested in your mission ©2013 PG Calc Planned Gifts That Appeal to Younger Donors Planned Gifts that Appeal to Younger Donors Jeff Lydenberg Vice President PG Calc 617-497-4997 jeff@pgcalc.com

2. PG Calc | Invested in your mission Agenda Defining the market Factors motivating younger donors Engaging the younger donor Planned gifts appropriate for the younger donor Case studies

3. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Defining the market Those under age 70 are “younger” More time Same factors motivate young and old Tax savings affect amount, how, and when they give

4. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Capital Gain Taxes Capital gains tax rate up from 15% to 20% for taxpayers with AGI’s over: –Married filing jointly $450,000 –Single $400,000 –Head of Household $425,000 3.8% Medicare surtax on net investment income for taxpayers: –Married filing jointly $250,000 –Married filing separately $125,000 –Head of households and single taxpayers $200,000

5. PG Calc | Invested in your mission Capital Gain Taxes George and Ann, Married filing jointly $450,000 wage income $250,000 stock with $50,000 basis –$200,000 of capital gain income 20% capital gain tax rate + 3.8% surtax $47,600 capital gain tax due Planned Gifts That Appeal to Younger Donors

6. PG Calc | Invested in your mission Capital Gain Taxes Bill and Susan, married filing jointly $200,000 wage income + $50,000 dividend income 28% tax on wages, 15% on dividends $1,000,000 asset, $100,000 basis –$200,000 of gain taxed at 15% –$700,000 of gain taxed at 20% –$900,000 of gain taxed at 3.8% Total tax of $204,200 Planned Gifts That Appeal to Younger Donors

7. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Qualified plan limits Limits on tax-deferred savings –$17,500 for most in 2013 –$5,500 catch-up if 50 or older Buskens –$400,000 family income –$46,000 to qualified plans –Just over 10% tax-deferred savings

8. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Engaging younger donors Can’t “afford” planned giving Meet current commitments & make gift Extend marketing Targeted messaging Electronic communication Venues for younger prospects

9. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Bequests Flexible Both modest and wealthy can participate Donor retains control

10. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Bequest Prospect Profile Two primary age groups: –Late 40s to late 50s, and 65-78 Loyal donors, lower amounts Mid-to-upper middle income Charitably inclined Volunteers

11. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Forms of Bequests Pecuniary –A named dollar amount Specific –A gift of specific property Residuary –A gift of the remainder after satisfying pecuniary and specific bequests Contingent –Only takes affect on certain conditions

12. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Bequest Substitutes Payable on death accounts Insurance product designations Savings bonds IRAs, qualified plans

13. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Supplementing retirement income Avoid traditional life income gifts Deferred annuities Laddered annuities Flexible annuities Commuted annuities Flip unitrust

14. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Charitable gift annuities Immediate payment annuities –Not appropriate for those under 60 Deferred annuities –Appropriate for younger donors –Supplemental pension for mid-career professionals ACGA rates effective 1/1/2012

15. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Charitable Remainder Trusts Financially savvy donor Willing to take risk Experienced investor Annuity trusts –Gift annuity v. Annuity trust Unitrusts –Regular v. Flip unitrusts

16. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Pooled Income Fund Trust maintained by sponsoring charity Pays net income to beneficiary Remainder to sponsoring charity Disfavored due to interest rate climate

17. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Build-up deferred gift annuity Mr. and Mrs. Denton –Ages 56 & 59 –$20,000 a year for 8 years to create 8 DGAs Laddered start dates –5.2% for annuity starting in 2020 –5.7% for annuity starting in 2026 $140,000 in contributions $176,220 income to Denton's

18. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Flexible deferred annuity Mr. Jasper –Age 56 –$100,000 stock with $60,000 basis –Choice of start dates from 2022 to 2032 $6,200 annuity in 2022 at age 65 $10,600 annuity in 2032 at age 75 –Longer he waits, higher the payment –Lowest deduction –Flexibility to choose first payment date

19. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Commuted payment gift annuity Mr. Thomas –Age 58 –Retiring at age 59 ½ –Wants to preserve his IRA until forced to withdraw –Needs $70,000 a year for 10 years –Funds with $670,678 in 2013 –Pays $70,000 annuity until age 70 ½ –Remainder to charity at 70 ½ $212,000 to charity at 5% return $434,000 to charity at 8% return

20. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Retirement Flip unitrust Mr. and Mrs. Binstock –Both age 55 –5% CRUT with flip provision, flips at age 65 –Contribute $50,000 a year to CRUT for 10 years –Beginning at age 65 $41,063 income –Ten years after flip $55,185 income (assumes 8%!) –$1,431,027 total before-tax income –$1,669,450 for charity

21. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Life Income for Another Parent Employee Family friend Gift annuity v. CRT Capital gain tax issue with CGA Gift tax issues

22. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Life Income for Another Mr. Gomez –Age 55, 33% tax bracket –Must earn $746 to give Mom $500 –Gift annuity for Mom paying 6.8%, partially tax-free Funded with $300,000 stock with $70,000 basis ($230,000 gain) –Some capital gain tax due at funding Reduced capital gain income- $122,606 income Offset by deduction- $140,079 –Gift tax issue

23. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Reducing current taxes - Lead trust Only 6,617 charitable lead trust tax returns filed with IRS in 2011 Pays income first to charity Remainder to heirs Generates gift/estate tax deduction not income tax deduction Primarily a tool for the ultra-wealthy

24. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Reducing current taxes - Lead trust Mr. and Mrs. Thomas –Both ages 55 –Children 29 and 27 –$4,000,000 to 5.5416% 20 year term CLAT –100% gift tax deduction –$4,443,280 to charity over 20 years –$8,491,008 to children in 20 years now ages 49 and 47 Assuming 8% return

25. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Bargain Sale Sell property to charity at reduced price Deduction for gift portion Gain on gift portion forgiven Gain on sale portion reportable

26. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Case Study: Bargain Sale Ms. Sawyer –Age 52 –Married filing jointly –35% income tax bracket –18.8% capital gain tax bracket –Rental property worth $575,000 –$350,000 basis; no mortgage –Willing to make a gift –Wants a zero tax solution

27. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Case Study: Bargain Sale Options Sell for $575,000 –$42,300 capital gains tax –Net to Ms Sawyer $532,700 –No gift Sell to charity for $475,133 –Charitable deduction of $99,867 saves $34,953 –Capital gains tax due of $34,953 –Net proceeds to Ms Sawyer of $475,133

28. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Life Insurance Gift of paid-up policy Gift of policy with premiums due Gift of new policy Charity named as beneficiary, not owner

29. PG Calc | Invested in your mission Planned Gifts That Appeal to Younger Donors Questions and Answers