The year is winding down and with two weeks left, if you are a planned giving officer or fundraiser that deals with out of the box gifts, it is time to remind ourselves of some of the interesting challenges we might experience.
Here is a potpourri of new and old ideas/rules to consider:
- Mail box rule – interesting rule since it means that the date of gift is the day the donor puts the check in the mailbox, not necessarily the date stamped by the post office on the envelope. My approach – for checks received in early January that are dated with a December date on the check – I would give the donors the benefit of doubt, regardless of the postmark. By the second or third week of January, I might not be as easy going.
- Credit card gifts – I just heard an attorney mention that technically, a credit card gift is not completed for charitable income tax purposes until the date of the donor’s next statement. Yikes – that means that year end credit card giving is problematic? My advice is to ignore you read this paragraph. We are usually talking about small gifts? (ok – remember my rule – bigger the gift, bigger the precautions – so think twice on this one for gifts in the thousands and above).
- Last second of the year gift annuities – I just heard the smartest, toughest attorney in the Planned Giving world actually say that he could see the last second – “hey stock is on the way for a new CGA just before new year’s eve” (even WITHOUT a written contract yet) – actually work. His reason – if the donor had done CGAs previously, a donor’s verbal announcement and transfer, coupled with the donor’s knowledge of these gifts, sounded like a “meeting of the minds.” My advice: I would take whatever steps possible to make the donor happy and give them their 2011 CGA. If a stock transfer is initiated in 2011, I would probably figure it out to make it a 2011 gift. We are not talking about serious crimes here. Just my approach.
- Last second CRTs – To me, there is a limit to what can be done quickly and unless the donor’s attorney is making this happen, I would recommend not guaranteeing anything to your donor.
- Last second Real Estate gifts – Ok, these are really hard. What about two weeks notice? Get the donor’s attorney involved. I just heard that the IRS is generally fine with Single Member LLCs, charity being the single member, receiving a risky gift and limiting liability (until you can figure out what to do with it). LCCs are easy and quick to set up. I would only recommend this last second approach on a clear good deal, from a clearly good/friendly donor – who has counsel taking care of it.
- Last second Lead Trusts – not possible.
- Last second direct IRA gifts – this is a tough one. If the transfer doesn’t happen until early January, your donor might be facing income tax on the gift (with an offsetting charitable deduction as long as you give him a proper gift acknowledgement). That result isn’t so horrible but your donor better be informed of the possibility. Try to find out from the IRA custodian how the transfer will appear in the account of the donor. If it can show up as a 2011 transfer, even if charity gets it in 2012, I wouldn’t be so concerned.
Please comment and ask your end of year questions!