Trump

Planned Giving in 2017?

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I refuse to jump to any conclusions regarding this year in planned giving (or any year!).

Will Congress/President somehow waterdown or eliminate the charitable deduction?

Possibly but it’s possible that the charitable deduction will be more valuable to your donors than ever before if they limit other deductions but not the charitable one.  (Treasury Secretary Mnuchin already said there will be no tampering with the charitable deduction contrary to Trump’s campaign “tax plan”)

Will there be anything new and exciting for fundraisers to bring to donors?

This doesn’t look like a great year for creative charitable legislation. Let’s see if they really “fix” Obamacare or the tax code.

But, there are a few things I can guarantee will happen: the oldest baby-boomers start turning age 71 this year, the age when required minimum distributions (RMDs) from IRAs and other qualified retirement accounts start.  There are a lot more boomers than their predecessors, with a lot more IRA funds – IRA charitable rollovers and beneficiary designations should be high on every fundraiser’s wish list.

Bottom line: Planned Giving is turning a corner, Boomers are finally and officially Planned Giving Prospects. Maybe it’s time you and/or your organization realized that it is “now or never” for the Boomers? Train up the staff, invest in the Planned Giving program.

Oh, and check out our 3-part Planned Giving Boot Camp for Major Gift Officers! Next sessions start March 15, 2017 – click here to see how affordable it is to train up to 15 staff members in planned giving!

Charitable Deduction OK?

Treasury Secretary Steven Mnuchin speaks at a press briefing at the White House in Washington, U.S., February 14, 2017.  REUTERS/Kevin Lamarque

Finally a hint as to the potential fate of the charitable deduction under any tax reform: NO CHANGE – at least that is what U.S. Treasury Secretary Steven Mnuchin said yesterday.

Not that the media wants to cover such a mundane topic that doesn’t involve Russian espionage and various nefarious stuff.

Also, he said it looks like August is when we’ll have a tax reform so relax for awhile .

Pick your poison – Trump or Ryan tax proposals

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I hate jumping into tax policy debates too early – Trump isn’t President yet and we really have no idea how things will shake out with him and Congress, or whether Democrats will somehow block things (hard to see that as they are not in majority!).

But, a big but….  I just took a look at a good article on CNN/Money (looks pretty nonpartisan to me) comparing Trump’s tax reform ideas with Paul Ryan and House’s – pretty fascinating and a little scary for nonprofits.

I point you to one huge impact area for nonprofits – here is the direct quote from the article:

Kill most itemized deductions

The House plan would eliminate all itemized deductions except those for mortgage interest and charitable contributions.

Trump’s plan, by contrast, keeps itemized deductions, but caps their total value at $100,000 for singles or $200,000 for joint filers, a more costly proposal.

Wow. Read that carefully.  The House plan would be AWESOME for nonprofits! Charitable deduction left along with mortgage interest!!!  No other deductions!

But, then read the second paragraph carefully (Trump’s idea): ouch!!  Capping deductions? What a DISASTER that would be for nonprofits. Remember: the rule of thumb is 80% of charitable funds come from 20% of the donors (or something like that).   Maybe this would be good for planned giving (sorry nonprofits, I know you don’t want to exchange today’s $ for tomorrow’s planned gifts)?

Here is another quote from the article that deserves some attention:

Cut investment income taxes

Today, individuals pay up to 20% on their long-term capital gains and dividends. And their interest is taxed at ordinary income rates — so, up to 39.6%.

House Republicans want to change that. Under their plan investors would deduct half of their gains, dividends and interest. That effectively reduces the top rate on that income to either 6%, 12.5% or 16.5%, depending on one’s tax bracket.

Trump would largely leave the current investment income tax rates in place.

Cutting capital gains taxes is not good for planned giving, plain and simple.  That extra incentive – especially when it was at 20% or more in the 1990s – fueled planned gifts like CRTs and CGAs.  The rates have been low since 2001 and both types are on the downslide.

I’ll take Trump on this one!

Lastly, what about the estate tax?

Kill taxes Republicans rail against

House Republicans want to repeal the estate tax, the Alternative Minimum Tax and key Obamacare taxes.

Trump is on board with all three repeals, but his plan would tax people’s capital gains above a certain amount when they die.

I’m fine getting rid of the AMT and Obamacare. Not fine getting rid of the estate tax.  It is the easiest tax to avoid.  If it affects you, you are forced to think about whether you want to leave a charitable legacy (and still leave your heirs fabulously wealthy) or a legacy of a large payment to the IRS after death.  The incentive is still important to move people in the right direction.

If you are political junky like me – on tax and other issues – you have to be waiting anxiously for this inauguration to finally be over.