FREE: 2017 Planned Giving Law & Tax Book by Dr. Russell James

The 2017 version of the 427 page book, “Visual Planned Giving: Introduction to the Law & Taxation of Charitable Gift Planning” by Dr. Russell James has now been released. The book is available as a free download at or in hard copy at

Now in its 4th annual edition, this book provides an introductory overview of the wide range of charitable gift planning topics including elements of a gift, documentation requirements, valuation rules, income limitations, bargain sales, charitable gift annuities, charitable remainder trusts, charitable lead trusts, life insurance, retirement assets, private foundations, and donor advised funds.


Ways and Means Blueprint: Suggested Points for Charities to Make

As you are probably aware, the new Republican majority Congress plans to have legislation on multiple fronts well underway, even before the inauguration, and major tax reform is one of the areas where fast action is targeted. Kevin Brady, chairman of the House Ways and Means Committee has promised a House Bill by April of 2017. The tax writers plan to revive Dave Camp’s Tax Reform Bill from 2014 that was never voted on, and tweak it with concepts from the Blueprint the House Ways and Means Republicans laid out in June of 2016. Some provisions may have a chilling effect upon charitable giving. Brady has invited comments on the Blueprint. Conrad Teitell, a nationally well-known attorney in the charitable planning area, has prepared the following materials as suggestions for charities to use when giving feedback, and has graciously consented to use of these materials. You and your colleagues may wish to review these suggestions and use some or all of them in your organizaton’s response to Congress by cutting and pasting from the document to tailor it to your organization.

Ways and Means Blueprint: Suggested Points for Charities to Make

Prepared by Conrad Teitell

Cummings & Lockwood LLC

  • Briefly identify your charity and tell how it serves American citizens.
  • We agree with and thank you for your goal to make the tax laws fairer and simpler. But simplicity by itself shouldn’t be the enemy of the good that American charities do in serving its citizens—often providing services that would otherwise have to be provided by federal, state and local governments.
  • The decrease in charitable gifts that would result from the major curtailing of the income tax incentive for charitable giving and the elimination of the estate tax that would result in reduced charitable bequests, would be a double whammy for American charities. The House of Representatives surely wants to benefit—and not harm—charities and those they serve.
  • We understand that the Ways & Means bill now being drafted follows the Blueprint and is guided by then W&M chairman Dave Camp’s Tax Reform Act of 2014. (That bill was introduced but not voted on.) The two together would severely limit income tax incentives for charitable contributions.
  • Only 5 percent of taxpayers—compared to the current 35 percent—would be itemizers.
  • For the remaining 5 percent, a 2 percent floor would apply to the charitable deduction.
  • The current fair market value deduction wouldn’t be allowable for gifts of appreciated real estate and gifts of non-publicly traded stock—such as stock in small businesses.
  • Request for opportunity to comment on the bill now being drafted. The Blueprint invites public comments. Our following comments address the specific and many general concepts of the Blueprint and Mr. Camp’s bill. However, we ask that the public be given an opportunity to comment on the specific bill, now being drafted, when it is made final. We are suggesting a short comment period. Changes of the magnitude being considered shouldn’t be voted on by the House before the public has time to review and comment on the bill.

Based on the information that we now have, here are our comments:

  • If the percentage of donors who itemize is reduced to 5 percent (or a percentage significantly lower than the current 35 percent) charitable deductions should be deductible from gross instead of adjusted gross income (above the line).
  • The 2 percent floor of the Tax Reform Act of 2014—and with only 5 percent of taxpayers itemizing—would decimate tax incentives to charitable giving.
  • Retain the current law that authorizes charitable remainder unitrusts, charitable remainder annuity trusts, charitable gift annuities, charitable lead annuity trusts, charitable lead unitrusts and charitable remainder interests in personal residences and farms.
  • Retain the current law allowing individuals age 70½ or older to make direct (outright) transfers—not deductible as charitable contributions—from an IRA of up to $100,000 per year without having to report the IRA distributions as taxable income on their federal income tax returns. This law encourages all taxpayers (whether they itemize or not) to make charitable gifts.
  • Expand the direct charitable IRA transfer (above) to allow IRA rollovers for gifts that benefit charities and provide taxable retirement income— charitable life-income plans—for the donors. At the donor’s death, the assets in the plan are owned outright by the qualified charity. Charitable deductions aren’t allowable for amounts transferred to the life-income plans (charitable remainder trusts and charitable gift annuities). The Legacy IRA Act (H.R. 5171) would accomplish the foregoing. It was introduced on May 6, 2016 with Ways and Means Committee cosponsors: Peter Roskam R-IL); Earl Blumenauer (D-OR); Patrick Tiberi R-OH); Erik Paulsen R-MN); Mike Kelly (R-PA); Kristi Noem R-SD); Adrian Smith (R-NE); and Devin Nunes R-CA). Rep. Kevin Cramer (R-ND), a long-time advocate of the legislation, is also a cosponsor.
  • The Blueprint calls for repeal of the estate tax. Although we take no position on the issue, repeal of the estate tax will result in decreased major bequests by wealthy taxpayers.
  • The Blueprint states that its changes in the tax laws will spur the economy and this will redound to the benefit of charitable organizations and the Americans they serve. We, of course, hope that the economy will expand. However, all recognize that this won’t happen overnight. In the meantime, charities will still be called upon to feed and shelter the homeless, fight drug addiction, educate youngsters and provide all their other services for the public good.


Conclusion. In the Blueprint’s own words, the charitable deduction helps accomplish the goal of strengthening civil society. However, many of the Blueprint’s provisions that directly and indirectly affect American taxpayers would thwart that goal.


How to communicate your views—

To comment to the House Ways & Means Committee:

Go to: and click on “Click Here to Give Your Feedback.”

Also, give your views to the individual members of the tax writing committees.

Also send your comments to the House member in your District who isn’t on the W&M Committee. Personal visits by groups of charities in the Congressperson’s home office are the best.

Good idea to give your Senators (on and not on the Senate Finance Committee) a heads-up on your concerns about the House Blueprint proposals.

Which one are you?

Facebook users know that you can take a BuzzFeed quiz to help you find your avatar in pop culture, world history, or interstellar space. Are you an elf, or a hobbit? ZZ Top, or Foreigner? Kermit or Ernie? Mars or Pluto? Naturally, when I read Kathryn Miree’s Planned Giving Today article, “The Six Faces of Gift Planning Officers,” I thought, “there should be a quiz!” Kathryn says, “There are at least six distinct job models, each of which requires different skills, experience, and expertise. Some are heavily donor oriented, while others have little direct contact….The key to a successful match of staff and skills is found by understanding what the job entails and the strengths the job candidate brings to the table.” When the fit isn’t good, gift planners can feel frustrated, unappreciated and confused about the expectations for their position. ID-100117044

Unfortunately, my Six Faces quiz was just too hard to score. There are many crossovers among the aptitudes and skill sets. The Portfolio Manager and the Legal Think Tank both work independently, but in very different ways. The “I Do It All” fundraiser and the Major/Planned Gifts Officer need to know about much more than planned gifts, but at different levels. Finding the right fit isn’t a trivial matter, like learning whether your House is Stark or Targaryeon. But I’m guessing that most people don’t really need a standardized test to figure out which kind of gift planner they are or want to be. Here’s a quick taste of Kathryn’s categories. And to prove that PPP doesn’t play favorites, I’ve included a resource from the archives for each category.

The Calling Machine
Do you spend two-thirds of your time on the road, talking to prospects? Do you have a solid knowledge of planned gifts that allows you to develop, cultivate and close gifts on your own?

Forever Change the Way You Plan Trips: Mapping Donor Data (Katherine McKay), National Conference on Philanthropic Planning 2012

The Portfolio Manager

Do you have an assigned pool of donors and planned gift prospects? Do you like working independently to cultivate and steward “your” donors?

Changing “No” to “Yes”: Overcoming Common Obstacles to Planned Giving (Laura Hansen Dean, Pamela Jones Davidson), The Journal of Gift Planning, Vol. 14, No. 2 (2010)

The Cheeleader/Problem-solver
Are you the advisor to a large and/or decentralized team of fundraisers, helping them to surface planned gift prospects and close gifts? Do you enjoy sharing your knowledge of planned gifts with colleagues as well as donors?

SIGNALS — A Deliberate Approach to Discovery and Assessment of a New Prospect (Dan Shephard), National Conference on Philanthropic Planning 2013

The Legal Think Tank
Are you the go-to person in your organization for technical advice and illustrations? Are you an authority on the rules and regs who prefers to let others do the asking?

The CRT Stock Redemption Strategy for Philanthropic and Business Succession Planning (Jonathan Ackerman), The Journal of Gift Planning, Vol. 13, No. 3 (2009)

The “I Do it All Gift Planner”
Do you work for a smaller organization where you’re in charge of all types of fundraising? For planned gifts, do you focus mostly on “entry level” techniques, like bequests and beneficiary designations?

The “Plan” in Planned Giving…a Long and Short Three-Year Action Plan (Pamela Davidson), National Conference on Philanthropic Planning 2012

The Major/Planned Gift Officer
Do you enjoy being part of a team that often includes the donor’s advisors? Are you comfortable asking for help when your own planned gift expertise runs out?

Blended Gifts, Eh? Making the Most of This Emerging Workhorse for Major & Planned Gift Officers (Ashley Buderus, Gordon Smith), National Conference on Philanthropic Planning 2013

You can read Kathryn’s full article through the end of March, courtesy of Planned Giving Today, by clicking here.

Which face of gift planning is yours? Is there another that would be a better fit for you? Would you like to suggest a seventh face? Share your thoughts in the comments.

Ways & Means Chairman Unveils Major Re-write of Tax Code, Includes Limit on Charitable Deduction and Other Provisions Affecting Nonprofit Community

Last week House Ways & Means Chairman Dave Camp (R-MI) unveiled his much-anticipated comprehensive tax reform bill, dubbed the “Tax Reform Act of 2014,” that would dramatically alter the United States tax code and includes many provisions relating to charitable giving and tax-exempt organizations. The draft bill comes on the heels of 30 Congressional hearings dedicated to tax reform, 11 bipartisan tax reform working groups, three discussion drafts on specific areas of tax law, and more than 14,000 public comments on the matter, and has set off a tidal-wave of debate in and around Washington, DC for what is expected to ultimately become the largest re-write of the tax code since 1986. Although the bill faces a number of obstacles to passage, it will certainly act to frame the tax reform debate throughout the rest of 2014 and into 2015. The full text of the draft bill (975+ pages) is available here, with a helpful section-by-section summary (190+ pages) here. For a quick overview of the draft, review Chairman Camp’s press release or the executive summary.

Under Chairman Camp’s bill, the current seven tax brackets would be collapsed into three brackets of 10%, 25% and 35%, but 99% of households – those making less than $450,000 a year – would pay no more than the 25% rate. To achieve these lower rates, however, the bill would eliminate the personal exemption for dependents, and many deductions like state and local taxes and mortgage interest would be either eliminated altogether or limited in some way. The bill would also turn the vast majority of taxpayers – as many as 95% – into non-itemizers by raising the standard deduction from $12,200 to $22,000 for married couples filing jointly. There is little doubt the changes outlined above would have a dramatic effect on charitable giving in America, but the bill goes even further by making specific changes to not only the current-law charitable deduction but also the laws governing various tax-exempt entities. There are many provisions relevant to the nonprofit community in the bill, and below is a list of just some of the provisions. Under the bill:

An individual’s charitable contributions could be deducted only to the extent they exceed 2 percent of the individual’s Adjusted Gross Income (AGI).
The 50 percent limitation for cash contributions and the 30 percent limitation for contributions of capital gain property to public charities and certain private foundations would be harmonized to a single limit of 40 percent whereas the 30 percent contribution limit for cash contributions and the 20 percent limitation for contributions of capital gain property that apply to organizations not covered by the current 50 percent limitation rule would be harmonized at a single limit of 25 percent.

Taxpayers could deduct charitable contributions made after December 31st, the close of the tax year, but before the due date of the return, April 15th.
The amount of any charitable deduction generally would be equal to the adjusted basis of the contributed property. For the following types of property, however, the deduction would be based on the fair market value of the property less any ordinary gain that would have been realized if the property had been sold by the taxpayer at its fair market value: tangible property related to the purpose of the donee’s tax-exempt purpose, any qualified conservation contribution, any qualified inventory contribution, any qualified research property, and publicly traded stock.

The special temporary rules for conservation easements would be made permanent. The general rule would provide that deductions for conservation easements would be limited to 40 percent of AGI.

Income from intellectual property contributed to a charitable organization would no longer be allowed as an additional contribution by the donor. The deduction for the contribution of the intellectual property would be retained.
All entities exempt from tax under section 501(a), notwithstanding the entity’s exemption under any other provision of the Code, would be subject to the Unrelated Business Income Tax (UBIT) rules. A tax exempt organization would be required to calculate separately the net unrelated taxable income of each unrelated trade or business. In addition, any loss derived from an unrelated trade or business could only be used to offset income from that unrelated trade or business, with any unused loss subject to the general rules for net operating losses. Also, the deduction against gross income subject to UBIT would be increased from $1,000 to $10,000.

The private foundation excise tax rate on net investment income would be reduced to 1 percent. The rules providing for a reduction in the excise tax rate from 2 percent to 1 percent would be repealed. The provision would also repeal the exception from the excise tax for exempt operating foundations.
Private operating foundations would be subject to the excise tax for failure to distribute income like private foundations generally.

Type II and Type III supporting organizations would be repealed. Thus, organizations that support public charities would need to qualify as a supporting organization that is operated, supervised, or controlled by a publicly supported organization (i.e., a Type I supporting organization), or they would be treated as private foundations.

Donor advised funds would be required to distribute contributions within five years of receipt. An eligible distribution is a distribution made to a public charity. Failure to make an eligible distribution would subject the sponsoring charitable organization to an annual excise tax equal to 20 percent of the undistributed funds.

A tax-exempt organization would be subject to a 25 percent excise tax on compensation in excess of $1 million paid to any of its five highest paid employees for the tax year. The excise tax would apply to all remuneration paid to a covered person for services, including cash and the cash value of all remuneration (including benefits) paid in a medium other than cash, except for payments to a tax-qualified retirement plan, and amounts that are excludable from the executive’s gross income.

Certain private colleges and universities would be subject to a 1 percent excise tax on net investment income. The provision would only apply to private colleges and universities with assets (other than those used directly in carrying out the institution’s educational purposes) valued at the close of the preceding tax year of at least $100,000 per full time student. State colleges and universities would not be subject to the provision.

Penalties for failure to file various returns, disclosures, or public documents on organizations and managers would be increased.

It is also worth noting that the bill does not extend the IRA Charitable Rollover provision. Given the scope, and perhaps more to the point, the timing of Chairman Camp’s bill, it will face many obstacles in the road toward enactment into law. For example, Republican leadership in both the House and Senate (to say nothing of rank-and-file members) is not likely to sign-off on the bill any time soon, showing very little interest in advancing the issue of tax reform during an election year. Democrats, for their part, will outright oppose the draft, instead calling for tax reform that actually raises revenue. Further complicating matters for Chairman Camp is the fact that he recently lost his tax reform ally Max Baucus who left the Senate to become the United States Ambassador to China. Baucus’s successor as Senate Finance Committee Chairman is Senator Ron Wyden (D-OR), who has indicated several times in recent weeks that he is more interested in moving an extension of expired tax provisions, which includes the IRA Charitable Rollover, this year than a comprehensive tax reform package. In the weeks and months ahead, PPP will continue to review Chairman Camp’s legislation and monitor developments on this or any bill relating to tax reform. PPP will also continue to work with its many partner organizations in the Charitable Giving Coalition, which released a statement and press release on the Camp bill late last week.

NRC Nonprofit Fundraising Survey Now Available

The Nonprofit Research Collaborative (NRC) has just released their report about charitable receipts in 2013. 62% of responding charities saw gift receipts rise, and 67% met their fundraising goal. These are the best results since 2007.

Online giving, events and major gifts remain areas of increased receipts, with increases at 62% of charities. Board giving, foundation grants and corporate support increased at less than 50% of the charities using those methods. In one surprise, this is the second year where receipts have increased in response to telephone appeals. Those are not used by a wide range of charities, but after two years of very low rates of increase, they are trending upward.
Join the PPP Linkedin Group and get involved in discussions on current topics in gift planning.