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Quote for today: For everyone to whom much is give, from him much will be required; and to whom much has been committed, of him they will ask more....Luke2:48

HOW THIS RECESSION STARTED....The problem with the recession and the recent market volatility actually began several years before 2008. Real estate prices soared and banks began issuing larger mortgages to homeowners. Lenders sold those mortgages to other banks and financial companies. The mortgages were then bundled together and financial institutions sold bonds based on them. Essentially, the bonds gathered payments from thousands of mortgage holders and used the money to pay interest to investors.

Companies from around the world invested substantial sums in these mortgage-related securities. At the same time, they build up enormous debts of their own – relying heavily on income from mortgage-related securities to make their own debt payments.

But when real estate prices fell in much of the U.S., they system began to unravel. Defaults rose as overextended homeowners became unable to meet their payments. The credit crunch was the result. The increase in mortgage defaults reduce the value of the securities backed by mortgages, dramatically diminishing the assets of the companies that had invested so heavily in them. Eventually, lenders couldn't determine which firms were on solid financial ground, so they stopped extending credit to businesses altogether– putting the brakes on the economy.

How will this major downturn change the lives of donors? I predict the glory days of planned giving are just ahead. Why? Giving has always been a priority for Americans who give on average 2% of their income and they will be forced to look deep into their assets and decide not only what to share but how to share it. Planned Giving allows donors to increase their income and decrease their taxes. It can not replace lost market value but it can sure make it be more productive during their senior years. Planned gifts also work on the feel good aspect of giving, as well as, the financial aspect. Don't market your program on fear or anxiety about the future but emphasize your major social qualities._________________________________________

400 RICHEST IN 2006 MADE AN AVERAGE OF $263 MILLION....Income of the 400 wealthiest soared nearly 23% from 2005 to 2006 according to the IRS. The gains for the richest took place amid a booming economy and during the sub-prime lending machine went into high gear. They paid 1.8% of all Federal taxes. Capital gains income jumped 58% from the previous year. Charitable gifts accounted for 5.19% of their itemized deductions.


REQUIRED MINIMUM DISTRIBUTIONS SUSPENDED FOR 2009..... The Worker, Retiree and Employer Recovery Act (HR 7327) suspends for one year an IRS requirement that account holders of 401(k) style plans, including regular IRAs , must withdraw a minimum amount of money every year after they reach age 70 1/2. The purpose is to not force seniors to take money out while asset values are depressed. How does this effect possible IRA rollover gifts to charity? I believe there is still an strong economic value to all donors who do not itemize their deductions to use IRA withdrawals to make their 2009 gifts to charity. No income reporting and no income tax deduction make this attractive to all non-itemizers and it should be promoted.___________________

LATEST CD YIELDS..... 6 MONTH 1.29%; 1 YEAR 1.63%; 2 1/2 YEAR 1.69%; FIVE YEAR 2.38%...Compare these yields to your gift annuity rates and you will see how popular gift annuities are at this time.

MEDICARE AND RETIREMENT.....According to the Employee Benefit Research Institute, a person retiring in 2016 might easily need $200,000 in savings to fund Medicare premiums and out-of-pocket costs.___________

A BIG YEAR FOR BEQUESTS......Most bequest decisions from current bequests were made many years ago. Today the bleak economy has led many donors to put off a gift today but not a future gift if they are tied to your charity mission. While donors may rethink the timing of their gift your program should consistly promote all types of bequest opportunities to all income levels. Research shows the tendency to make a bequest is not related to any income level, across all income levels bequests are an important source of support.________________________________

Pinehurst office: PO Box 3335, 15 Pinewild Drive, Pinehurst, NC 28374
Phone: 910-295-6800

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