Charitable IRA Giving Small So Far
The number of gifts is dwarfed by the potential

Charitable IRA Giving May Be Extended
There are bills and lobbying groups

Consulting News
New gifts and more speaking

Your Feedback
I’m interested in your opinion

“Perhaps older Americans are less inclined to part with their retirement nest egg than we thought.”

The Pension Protection Act of 2006 created the "qualified charitable distribution" for those 70 1/2 or older. Here's my article on it if you'd like to brush up.

When I read InvestmentNews.com's article wherein the National Committee on Planned Giving reports there have been 4,193 such gifts reported through June 4, the number seemed small to me. So I did some research.

Based on my calculations, that number is quite small.

To be the requisite age, a donor would have been born in 1936 or earlier, making them 71 years old this year. From 1909 to 1936 there were 77,067,000 births. (Centers for Disease Control and Prevention, Live Births, Birth Rates, and Fertility Rates, by Race: United States, 1909-2000.)

In 1909, the death rate was 14.4 percent (Bureau of the Census, Mortality Statistics 1909, page 10). The death rate has declined considerably since then (in 2006 it was 8.1%) but to be conservative, I applied the higher rate to all births between 1909 and 1936. That leaves 11,098,000 (rounded) living who were born in those 28 years.

The rate of traditional IRA ownership in households is 32.8% (Investment Company Institute, Fundamentals, Volume 14, Number 1, February 2005). I suspect a higher rate for those 71 and over, and many households have more than one IRA owner, but I applied that rate for conservatism. Doing so means there are approximately 3,640,000 IRAs available for gifts to charity.

Roth IRAs are technically eligible under the PPA, but highly unlikely because standard distributions from them are not generally included in taxable income. My article provides more detail.

Comparing 3.64 million potential gift IRAs with NCPG's 4,193 gifts gives us an IRA usage rate of .0012 (rounded up) or twelve-tenthousandths of the total. That's quite low.

My clients have had some success with PPA gifts, but it hasn't been the boon that many predicted. I don't have an explanation, only a hypothesis.

Perhaps older Americans are less inclined to part with their retirement nest egg than we thought. Sure, there are trillions in IRAs, but that's the grossed up number. The decision to part with IRA money is made by the individual who owns it, and they're not looking at trillions on their most recent statement. The six- or even seven-figure balance they have may not seem like much in the face of rising medical costs, their personal medical issues, a presidential election looming, an unstable international political landscape, the likelihood of domestic terror attacks and rising long term care costs.

Look what happened to stock prices and bond yields during the week of July 23rd. That possibility makes older Americans nervous (even though that particular loss of wealth had nothing to do with gifts through June 4th).

Many of the people I'm talking about lived through the Great Depression and remember it rather vividly. I've had thousands of conversations with older Americans and few have told me "it can't happen again." Given market protections and banking and brokerage laws maybe it can't. But the belief it can, coupled with personal, national and global affairs, may be leading many to preserve their precious IRA funds.

Non-profits should keep on promoting PPA gifts. They shouldn't be disappointed if the results are not extraordinary.

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“The PPA distribution period will end on December 31, 2007.”

If you want to see the Pension Protection Act of 2006's "qualified charitable distribution" extended, track the progress of the Public Good IRA Rollover Act of 2007 in the Senate (S. 819) and House (H.R. 1419). The PPA distribution period will end on December 31, 2007.

The Public Good IRA Rollover Act would remove the PPA's $100,000 limit; allow distributions into charitable remainder trusts, charitable gift annuities and pooled income funds; and, reduce the minimum age for distributions into split-interest gifts (the remainder trusts, gift annuities and pooled income funds) to 59 1/2.

Curiously, the Act requires the remainder trusts be exclusively funded by qualified charitable distributions. It does not require that for charitable gift annuities.

No one can have any idea what the final act will look like or whether it will become law.

If you want to put your support behind it, the Association of Fundraising Professionals and the Council on Foundations are lobbying for it.

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• New gifts
  Our inaugural mailing at St. Francis Hospital, The Heart Center, has so far revealed nine new bequest expectancies and a trust gift. There has also been a life insurance commitment. A September recognition and cultivation event is planned.
  
  At Baruch College a $65,000 Charitable Gift Annuity has closed.
  
  Four bequest expectancies will form the initial membership of the Planned Giving recognition society we are creating at Ronald McDonald House. We will learn of many more after our inaugural mailing in September.



• Speaking engagements
  I will deliver a program at the Support Center for Non-profit Management in New York City on October 26 from 9:30 to 12:30 on Planned Giving basics: revocable gifts; irrevocable gifts; charitable trusts; charitable gift annuities; best prospects; and, integrating Planned Giving into your other fundraising. You can register online.
  
  Also in October, I will deliver a seminar for parish priests of the Diocese of Rockville Centre on Long Island, NY. In "Demystifing Planned Giving," I will explain fundamentals in plain language so that the diocesan priests feel comfortable opening planned gift conversations with their parishioners.

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I am always interested in your opinion of The Martignetti Report. You can reach me through the company website

Best regards,

Tony Martignetti, Esq.
Managing Director
Martignetti Planned Giving Advisors

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