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September Newsletter

Quotes for today: Charity looks at the need and not at the cause.
Jewish Proverb


The below giving concept was featured in a page 1 article by Holly Hall in the September 9th edition of The Chronicle of Philanthropy.

Less than 100 days left to educate your Professional advisors on the Charitable options when donors convert a Traditional IRA to a Roth IRA

Connell & Associates is offering a seminar for the professional advisors in your area to take advantage of the one time IRA 2010 conversion opportunity. The seminar titled:

"Charitable Gift and Planning Options for Individuals Converting IRA Accounts"

Seminar includes a 1 to 1 1/2 hour presentation, slide handouts, resource materials and follow up personal proposals until the end of 2010 for interested advisors and their clients. If you are interested in a seminar presentation in your area contact me by Email and I will respond with available dates and a presentation cost proposal.

Are you promoting the new Roth IRA conversion opportunity? Here is an example from the Office of Gift Planning at Duke University from one of their publication advertisements.


Power in Deferred Gift Annuities.....I have long been a fan of Deferred Gift Annuities and when the Flexible Deferred Gift Annuity concept was approved it provided the best of all worlds for charitable giving. Deferred charitable gift annuities (DCGA) are not just for young professionals. They are appropriate older individuals who wish to save taxes today, do not need current income, but may need to turn on the income if confronted with health or financial issues.

What is a DCGA? It is an gift annuity agreement where the start date of the payment begins one year or more from the funding date. In a standard deferred annuity agreement the payment date is fixed and payments must begin on the stated date. With a flexible deferred annuity the donor(s) select a target beginning date but maintains the flexibility to begin the payments earlier or extend the deferral period to a later start date. Beginning the payments earlier results in a lower payment than the target payment date while extending the payment start date results in a higher payment.

Setting the start date has a direct correlation to the amount of the charitable deduction. A longer target start date results in a higher charitable deduction. The monthly AFR (applicable federal rate) also effects the charitable deduction. A low AFR results in a lower deduction so the selection of the AFR becomes critical with deferred annuities.

There are several market prospect segments for deferred gift annuities. First, young professionals who wish to supplement their retirement programs while making an irrevocable future commitment to charity are a natural market. Second, older individuals approaching retirement but concerned they will have sufficient retirement assets are a developing market segment. Third, senior prospects who wish to save taxes but have the option of receiving future payments can meet both objectives with a DCGA. Fourth, a developing market are those couples where the older spouse wishes to provide for the younger spouse but also support charity. With the use of a DCGA the older spouse can set aside assets, receive a current income tax deduction, with instructions to the younger spouse to begin the payment upon their death.

Marketing strategy: tell the story about DCGAs in your publications; solicit a young board member to talk about the benefits at a board meeting; develop a DCGA advertisement or postcard similar to the McLeod Foundation example; do a web site examples for various market segments.

If you have a software program to do calculations work up five examples for the following ages; a 50 year old with payments beginning at age 65 and 70; a 70 year old single donor with flexible payments targeted to begin at age 77; a couple ages 62 and 73 a flexible annuity with a 15 year deferral period. You will be surprised at the power in deferred annuities.


Charitable Trifecta....The other day one of my many Email newsletters used the term "Charitable Trifecta." When it comes to giving most donors wish to benefit charity first, themselves second and their family third. The Charitable Planning Trifecta is achieved by establishing a Charitable Remainder Trust (CRT) and an Irrevocable Life Insurance Trust (ILIT). The donor(s) benefit from the CRT with increased income and decreased taxes. The charity benefits knowing they have an irrevocable future expectancy. The family benefits because a portion of the CRT income and tax benefits are used to make the payments on the life insurance policy that replaces in whole or in part the future gifts to charity.

This same strategy works when a gift annuity is established and a portion of the gift annuity payment is gifted to a child who uses it to purchase life insurance on the parent.

Does Your Estate Plan Need a Makeover?....That is the title of several ads now appearing in AARP publications. It got my attention. How about yours?


Have you Lost a Bequest Today?.....A recent Technical Assistance Research Project in Washington D.C. said there are four main reasons why any business (read charity) loses a customer: 3% leave for convenience; 9% for a relationship; 15% because of a problem with a product or service; and 68% leave because of perceived indifference --this group simply did not feel valued or appreciated.

Bank of America and the Center on Philanthropy at Indiana University surveyed wealthy Americans who stopped giving to nonprofit groups and found 57% no longer felt personally connected to the cause.

The above was driven home to me when a new client told me about a couple who changed their will because they had not heard (except the quarterly publication) from the charity for over 3 years. Makes you stop and think about the power of relationships in planned giving.

What can you do? Send a note to everyone in your bequest society at least every other month and remember their birthdays.


News and Notes....The Senior Epoch has arrived. America is aging up. The over 65 sector will double from 40 million today to 89 million and grow from 13 percent of the population today to 20 percent by 2050.

Are you into....Guerrilla marketing defined as "Unconventional marketing intended to get maximum results from minimal resources." Idea: sign up with your local radio station to do several 30 or 60 second spots on charitable giving (and planned giving of course) for the month November since National Philanthropy Day is November 15th, and it is celebrating its 25th anniversary. Idea2: Develop a Will poster to be placed on every bus and bus stop in your town. If you do not have a bus stop asked for a donation of a billboard.

By 2020 Hispanics will make up nearly 20% of the American population. Is your planned giving material and web site information available in Spanish?

The amount of social security check #00-000-001 written to retired legal secretary Ida May Fuller in 1940 was $22.54.

The average monthly benefit of SS in 2008 was $1,001.

Real estate comprises 35% of the assets of U.S. Households but only about 3% of charitable giving. Note: the great potential of real estate gifts must done according to approved policies. Are your policies up-to-date?

NY Times article on Making Wills with Software click link.


Seminar target audience.... The other day I received a notice of a Women & Wealth seminar sponsored by a Lakeland Florida investment firm. The first seminar in the series invited me to join them for an evening of discussion focusing on managing investments, setting realistic life goals and a brief history lesson (on investment returns). Each seminar featured a special guest and focus. In these uncertain times charities should reach out and tackle some of the difficult issues faced by today's women.

Since women are the major distributors of family wealth this is an appropriate approach for charities to sponsor. The special guest approach is an enticement to attend multiple seminars. Charities should add sections on "How to make a will that protects your wishes;" "Should you have a trust to fulfill your wishes;" "How to partner with the governmental rules on taxes and inheritance to enhance your wishes." To be successful you will need the right mix of speakers and promotion.


Kudos Corner

This is a new section where I will be highlighting some gift expectancies and gift program elements I think will be helpful and informative, not all gifts are included.

Kudos Corner will return next issue.


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, 15 Pinewild Drive, Pinehurst, NC 28374
Phone: 910-295-6800

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

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