At this point – with only 3 business days left in the year and the country headed towards what I coined “Tax Doomsday” in March this year (when very few others were concerned) – there is not much left to say.
On donors advancing their gifting, clearly donor advised fund (DAF) programs benefited from all of the talk about capping deductions. My friend Bryan Clontz at the Dechomai Foundation (a DAF dedicated to accepting non-cash/unusual assets) reported that they tripled their best year with over $75 million in DAF contributions this year. Fidelity and Schwab DAFs already reported their stellar years to the Wall Street Journal.
So, if you are one of the few working – as I am (not sure how planned giving fundraisers can justify taking off at this time of the year) – and you have donors talking to you about these issues, here is what I think the advice is:
For those considering $1 million or greater sized gifts (or anywhere near that level) in 2013 and beyond, you may want to advance those gifts in any way you can. The top tax bracket donor will easily lose over $40,000 in deduction rebates (actual cash loss) if they tamper with deduction caps. In a worst case (for the donor) scenario, a donor loses over $100,000 in deductions on such sized gifts (if a 28% cap on deduction is passed). See what I have written about over the past few weeks: capping deductions still is an attractive option to Congress if they actually hammer out a new tax deal.
For everyone else, donors should feel free to gift this year (and get the tax benefits now) and/or plan on gifting next year (when it may or may not be worth more). There is no way to guarantee what will be with the Fiscal Cliff – that is why those wavering on their year-end gifts should go ahead and at least receive the benefits they know are available.
For all of the build up on these issues, I feel a bit of a let down. There is nothing exciting to report – just encourage your donors to stay the course and see what happens in 2013. Once 2013 kicks in though, and all of the doomsday tax scenarios become a reality, I am sure I will be back with more exciting posts! And, reasons why fundraisers need to get their planned giving houses in order!
Anecdotes from the trenches (so to speak). At my charity, usual flow of repeat annuity gifts (maybe a few fewer this year) and even some IRA transfers made so that they will qualify if the “rollover” provision is reinstated (retroactively at this point). And annual fund in general doing well: our broad base of support is strong and based on our mission, not changes in the tax law. But more than one donor has told me that they are parking funds in DAFs to distribute in future years, which makes perfect sense (especially if they have completed their annual gift to my charity for this year!).
On estate side, have had several request for advance payments of commissions, presumably so that these are subject to less tax. And some major partial distributions from larger estates, but nothing out of the ordinary or directly tied to the “fiscal cliff” (rather, tied to estate’s tax year and requests for advance commissions).
Finally, outside work, have been involved in and/or know of a handful of large intra-family transfers and one large transfer into trust, all designed to leverage the $5.12 million exemption amount. In fact signing documents related to one of these today: I expect some county recorders’ offices will be busy in the next two business days recording new deeds and such all over the country, not to mention the lawyers and paralegals handling this work.