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October Newsletter 2012

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Planned Giving Mentor

Of Counsel: Winton C. Smith, Jr., JD

Professional Partnerships: Hospice Philanthropy Group L.L.C.

Quotes for today: How wonderful it is that nobody needs to wait a single moment before starting to improve the world. ~Anne Frank

We can do no great things, only small things with great love. ~Mother Teresa

As of publishing date December 4, 2012 there are only 27 days to receive a charitable contribution deduction this year.

November was National Hospice and Palliative Care Month. I am always profoundly touched by the amazing outreach efforts of all hospice staff for all you do for those in the last stages of their life.

Holiday Greetings to all and I am pleased to honor my clients with a gift in their honor to Habitat for Humanity of the NC Sandhills for their Midway Gardens project to bring 22 new homes to our community.


Past issues of the Newsletter are available in the Newsletter Archives __________________________________________________________________________________

"Emerging best practices are causing gift planners to structure plans tailored to meet the estate planning, retirement income and lifestyle needs of aging real estate owners."

CGA for gift annuity the results.....In the October newsletter I gave a detailed case study of a gift of a Florida home for a charitable gift annuity agreement for Chapters Health System.

The home appraised for $180,000. After taking appropriate discounts for the value of the home and the gift annuity rate, the annuity was written for $164,250 with a 7% payment to an 86 year old donor on August 27, 2012.

The property was listed for sale and an agreement for purchase was received on September 29th with closing on October 15th.

The home sold for $190,000 and after commissions and transaction fees, Chapters received a net of $174,845. There was a total of 50 days from listing agreement to closing.

Do not overlook real estate as a valuable planned gift asset. Properly structured, real estate makes a excellent gift.


Fiscal Cliff and Philanthropy.....The impact on charitable giving is estimated to be $5.9 billion if the cliff is not addressed or changed. I have designed a Power Point to explain how and why the Fiscal Cliff may effect haritable giving. Use it with your boards and leadership. Print out in Notes format to get the commentary for each slide. You will need the latest Power Point software to download. If you can't download send me and email and I will send you a PDF of the presentation.


New Client: Santa Fe Opera......I am please to welcome as a new client the Santa Fe Opera, Santa Fe, New Mexico, Brian F. Dailey, Senior Major Gift Officer and Planned Giving Manager and Carole Ely, Director of Development. Aria! "The gift that sings" is their planned gift society. Check out their great donor stories in the planned gift section of their web site.


My State Will....."You are a Michigan charity with a Florida donor who has no will!!!!! Do you really know what happens to your donors when they die without a will? explains the reality of the distribution of intestate property depending upon where you live. Each state has its own unique laws. Find the complexity of each state explained in the intestate calculators examples.


Fidelity Gift Fund Grows.....Fidelity reports record giving in advance of the Fiscal Cliff. Four out of five (81%) American donors plan to give the same or more in 2013. As of September 30th gifts were up 63% for 2012 as individuals paid forward their charitable gifts to make maximum use of the charitable deduction before the Fiscal Cliff may reduce their benefit. See Smart Giving in Uncertain Times.


What Does It Take to earn $1,000.....It took $24,000 invested in a taxable money market earning +4.18% (the national average yield 5 years ago at Thanksgiving 2007) to generate a yearly return of $1,000. It now takes $5 million invested in a taxable money market earning +0.02% (the national average today) to generate yearly taxable income of $1,000 (source: BTN Research).

Commentary: One of the major advantages of a charitable gift annuity for those individuals who have charitable intent is to increase their income and decrease their taxes. Prime candidates for CGAs are those individuals who have remembered your charity in their will.


Laminated Gift Annuity Rate Charts.....The American Council on Gift Annuities has announced new gift annuity rates for 2012. This is the result of the decreasing return on the fixed income bond component of the ACGA investment return assumption. If you would like a laminated rate chart for the 2012 rates simply request one using the following E-mail request.


News and Notes....THANKS DAD - Bill Gates is ranked # 1 as the richest American today ($61 billion), but the 6 living heirs of Sam Walton (who died in 1992) are worth a combined $103 billion today (source: Forbes).

TAXES - The highest marginal tax bracket in 2012 is 35%. The highest marginal tax bracket 50 years earlier (1962) was 91% (source: Tax Foundation).

SAVING MORE - The national personal savings rate was 3.7% as of 8/31/12. Five (5) years ago (8/31/07), the national personal savings rate was 1.7% (source: Commerce Department).

DOUBLE FOR ALL - Individual income taxes would have to increase by +96% for all American taxpayers in order to eliminate our $1.089 trillion deficit from fiscal year 2012. Total individual income taxes collected were $1.132 trillion (out of $2.449 trillion of total tax receipts) for the latest fiscal year (source: Treasury Department).

HOMES - The average value of a single family home in the USA as of 9/30/12 is essentially unchanged (actually down 1.6%) from the average value nationwide as of 9/30/04, i.e., flat over the last 8 years (source: FHFA).

WHAT IF DEDUCTIONS ARE LIMITED? - Only 32.5% of the 141 million tax return filed by American taxpayers for the 2009 tax year (latest info available) claimed itemized deductions (67.5% do not itemize)(source: Internal Revenue Service).

TOP THREE PERCENT - For tax year 2010, 142.9 million tax returns were filed in the USA. 3% of those returns reported adjusted gross income (AGI) of at least $200,000. Those high income Americans received 28% of all AGI in the country and paid 52% of all federal income tax for the year at an effective tax rate of 22% (source: Internal Revenue Service).

NOTHING - For tax year 2010, 142.9 million tax returns were filed in the USA. 41% of those filed returns (58.4 million returns) legally paid zero federal income tax through exemptions, deductions and credits (source: IRS).

NOT BIG EARNERS - 84% of the 58.4 million tax returns filed in 2010 that did not pay any federal income tax reported less than $30,000 of adjusted gross income (source: Internal Revenue Service).


Kudos Corner

In this section I periodically highlight some recent gift expectancies and gift program elements I think will be helpful and informative, not all gifts are included.

Kudos to Roxanna Tinsley, Development Officer McLeod Medical Center Foundation, who secured a $25K, deferred CGA (age 49), and a $9,865 stock funded two-life immediate annuity (ages 68/78), plus additional members of their Dr. F.H. McLeod Legacy Society.

Kudos to Mark Rank, Senior Director Principal and Planned Gifts York College of Pennsylvania, who secured a $60k single life immediate CGA (age 65), a $100,000 two-life stock and cash funded CGA (ages75/79), and a $16,227 stock funded single life immediate CGA.

Kudos to Sharon Jones VP Development and her team of John Wilbur and Amanda Maynor Chapters Health System, they secured a $164,500 immediate CGA (age 86) for real estate(see results above) plus a $15,500 outright gift from the same donor, a $30,204.58 stock fund immediate CGA (age 85), a $100,000 five year pay life insurance policy on female life (age 65), a 15% interest in estate estimated value $30,000+, a $20,000 immediate CGA (age 81), a $10,000 immediate CGA (age 78), and a $75,000 immediate CGA (age 72), plus a $500,000 outright endowment gift in memory of a deceased spouse.

Kudos to Greg Poe, Director of Planned Gifts Gardner-Webb University, who secured a $25,000 single life immediate CGA (age 84).

Kudos to Terry W. Mohr, Chief Executive Officer Bon Secours Richmond Healthcare Foundation, who secured a structured gift of land valued at $300,000 to build Richmond's first community hospice house. Check out their video and web pages devoted to this $10,000,000 capital campaign effort.




James E. Connell and Associates is a national consulting service devoted to increasing resources for charities using the power of charitable estate and gift planning techniques.

Pinehurst office: PO Box 3335, Pinehurst, NC 28374
Phone: 910-295-6800

Northeast office: 20982 Bayside Avenue, Rock Hall, MD 21661

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