The document provides an overview of planned giving, including its significance, types, and tax implications in the U.S. and Canada. It details various planned giving activities, the role of charities, and the benefits of donating appreciated assets through different charitable trusts and funds. Additionally, it highlights key statistics on the magnitude of planned giving, such as the number of private foundations and charitable trusts and their respective assets and distributions.

1. Planned GivingOverview and MagnitudeRussell James, J.D., Ph.D., CFP®Director of Graduate Studies in Charitable Planning Texas Tech University

2. Planned giving: Any charitable giving other than a simple, immediate gift of money to charity. Often involves tax and legal planning.Gifts where the transfer to charity is deferred.

3. Gifts where the donor receives income or other financial benefits.

4. Gifts of appreciated assets.The U.S. planned giving industryThe Partnership for Philanthropic Planning (National Committee on Planned Giving) is the largest professional association.12,000 members including planned giving fundraisers, lawyers, accountants, and financial planners.

5. The Canadian planned giving industryThe Canadian Association of Gift Planners is the largest Canadian professional association.1,300 members including planned giving fundraisers, lawyers, accountants, and financial planners.

6. Example planned giving activity in the U.S. 77,457 private foundations holding $518 billion 123,659 charitable trusts holding $115 billion122,500 donor advised funds holding $28 billion120,000 charitable bequests annually $23 billionPrivate foundation and charitable trust data from “Split interest trusts, filing year 2007”, Lisa Schreiber, IRS Statistics of Income; Donor advised fund data from National Philanthropic Trust; Charitable bequest data from Giving USA 2009.

7. Planned giving: The charactersThe employeeThe companyThe charityThe government

8. Employees pay income taxesWages$$$$$$$$$$$$$$$$$$Taxes$$$$$$

9. Gifts to charity receive a tax deductionWagesGift$$$$$$$$$$$$$$$$$$$$$Taxes$$$$$$Tax Deduction

10. The charityWagesGift$$$$$$$$$$$$$$$$$$$$$TaxesWho can be a charity?$$$$$$$$$$Tax Deduction

11. The charityPublic charity: 501(c)3Operated for charitable purpose

12. No private benefit

13. Start with IRS Form 1023 and $750 fee*

14. Continue with IRS Form 990 annually (no fee)**not required for churchesGift$$$Who can be a charity?

15. Simple creation = More charities501(c)3 public charities in the U.S. in 2008974,337(Excludes all churches choosing not to file tax forms)

16. 974,337 public charities in the U.S.More Charities = More Donation Requests and More Donor ChoiceMore Choice & More Requests = More GivingMore Choice & More RequestsMore Donations

17. Companies pay taxes and distribute some earningsReinvested earningsEarnings to shareholders$EarningsTaxes

18. Charities pay no taxes and distribute no earningsReinvested earningsEarnings to shareholders$EarningsTaxes

19. If a charity sells appreciated property, it pays no taxes on the saleReinvested earningsEarnings to shareholders$EarningsTaxes

20. Normal Capital GainsBuys for $1,000 Sells for $11,000 Capital Gain of $10,000 $7,070 Profit$2,930 TaxNote: All taxation examples are given based upon a California resident paying the highest marginal tax rates. Other states and incomes will generate less tax.

21. Giving Property Avoids Capital Gains TaxBuys for $1,000 Gives when worth $11,000 Charity sells stock

22. Charity pays no capital gains taxDonor receives income tax deduction of $11,000 reducing taxes paid by as much as $5,516.

23. Large tax benefit from giving appreciated propertyDonor gives propertyCharity sells propertyCharity pays no capital gains taxDonor pays no capital gains taxDonor receives tax deduction for full value of property

24. Some planned giving devices combine this tax benefit with other benefitsCharitable Remainder TrustCharitable Leads TrustPooled Income Funds

25. End of Life or Set YearsDuring Donor Life or Set YearsCharitable Remainder TrustGiftPayments from income or assets

26. End of Life During Donor LifePooled Income FundGiftsPayments from shared pool of income and assets

27. End of Life or Set YearsDuring Donor Life or Set YearsCharitable Lead TrustDonor’s familyGiftPayments from income or assets

28. Charitable trust types by numberSource: Split interest trusts, filing year 2007, Lisa Schreiber, IRS Statistics of Income

29. Charitable trust types by asset valueSource: Split interest trusts, filing year 2007, Lisa Schreiber, IRS Statistics of Income

30. Charitable Remainder Trusts(US in 2007)Total number: 115,754 Total assets: $97,307,466,000Annual charitable distributions: $1,547,930,000Annual share of assets to charity: 1.59%Source: Split interest trusts, filing year 2007, Lisa Schreiber, IRS Statistics of Income

31. Pooled Income Funds(US in 2007)Total number: 1,528Total assets: $1,607,555,000Annual charitable distributions: $81,229,000Annual share of assets to charity: 5.05%Source: Split interest trusts, filing year 2007, Lisa Schreiber, IRS Statistics of Income

32. Charitable Leads Trusts(US in 2007)Total number: 6,377Total assets: $18,690,926,000Annual charitable distributions: $956,154,000Annual share of assets to charity: 5.12% Source: Split interest trusts, filing year 2007, Lisa Schreiber, IRS Statistics of Income

33. Later(Distribute 5% or more assets per year)Now(Immediate tax deduction)Non-operatingPrivate FoundationGiftTax Deduction

34. A private foundation may be managed by donor and donor’s friends or familyGiftTax Deduction

35. Non-operating Private Foundations(US in 2007)Total number: 77,457Total assets: $518,384,930,000Annual charitable distributions: $41,267,947,000Annual share of assets to charity: 7.96% http://www.irs.gov/pub/irs-soi/07pf01ta.xls

36. Comparative share of total assets held

37. Comparative share of charitable distributions made

38. A private foundation is created by the donor and follows his rulesGiftTax Deduction

39. A donor advised fund is held by a charity to give to other charities with donor’s adviceGiftTax Deduction

40. Donor advised fundPrivate Foundation(non-operating)Contributions receive immediate tax deductionMoney held by foundationMoney later given to other charities based on board decision and donor’s original rulesSome expense to create and maintainAverage size $6,692,551Contributions receive immediate tax deductionMoney held by a charityMoney later given to other charities on advice of donorVery little expense to create and maintain (.5% annually)Average size $200,000

41. New Era in DAFs1991 first mutual fund DAF (Fidelity) Investment advisors earn commissions for managing client’s assets in the DAF, thus have financial incentive for charitable planningMinimum initial contribution $5,000Largest mutual fund DAFs FidelitySchwabVanguard

42. Donor Advised Funds: FidelitySource: Chronicle of Philanthropy

43. Donor Advised Funds: SchwabSource: Chronicle of Philanthropy

44. Donor Advised Funds: VanguardSource: Chronicle of Philanthropy

45. Donor Advised Funds: FidelitySource: Chronicle of Philanthropy

46. Donor Advised Funds: SchwabSource: Chronicle of Philanthropy

47. Donor Advised Funds: VanguardSource: Chronicle of Philanthropy

48. Donor Advised Funds Charitable DistributionsCharitable distribution averages for mutual fund DAFs (2001-2009)Fidelity: 25.3%Schwab: 19.0% Vanguard: 21.9%Compare distribution averages (2007)Charitable Remainder Trusts 1.6%Charitable Leads Trusts 5.1%Private Foundations 8.0%

49. Donor Advised Funds(US in 2007)Total number: 122,500Total assets: $27,700,000,000aAnnual charitable distributions: $5,877,940,000bAnnual share of assets to charity: 21.22%ba Source: National Philanthropic Trust; bWeighted estimate from three largest DAFs and 19.36% reported for community foundation DAFs by Council on Foundations survey including $8.7 billion in assets

50. Comparative share of total assets held

51. Comparative share of charitable distributions made

52. Planned GivingOverview and MagnitudePictures from istockphoto.com