Apra Indiana 2019 Skills Workshop

Registration is now open for the 2019 Apra Indiana Basic & Advanced Skills Workshop, which will take place on Tuesday, June 4 and Wednesday, June 5 at the Central Library in Indianapolis. We are excited to have four keynote speakers from the prospect development industry: Ann Emery, Christina Pulawski, Dee Metaj, and Marianne Pelletier. There will also be basic and advanced track options with topics that include prospect research and analytics in foundation and corporate relations, manipulating data in excel, data visualization, free research resources, and more! Click here to view more information or to register!

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Effects of the 2017 Tax Cuts and Jobs Act on Charitable Giving

By Marya Jones, Director, Planned Giving, Indiana University Health Foundation

The 2017 Tax Cuts and Jobs Act ("The Act"), effective January 1, 2018, included changes in corporate and individual tax rates that impact how donors choose to give to our organizations. Understanding these changes and the variety of charitable giving vehicles available will help fundraising professionals liaise with sophisticated donors who want to maximize their charitable giving and tax benefits.

What We Know

The Act included an increase in the individual standard deduction, raising the standard deduction from $6,350 to $12,000 for single individuals, and from $12,700 to $24,000 for married couples.¹ Related changes include limiting the aggregate amount of state and local income taxes, including property taxes that can be deducted by itemizers, to $10,000; reducing the cap on home mortgage interest deductions for new loans from $1 million to $750,000 in principal value; and repealing the deduction for interest paid on home equity debt.² Experts estimate that the provision will radically decrease the number of taxpayers who itemize their deductions from about 30% of taxpayers in 2017 to 6% in 2018.³

Doubling the estate and gift tax exemptions under The Act to $11.4 million means that far fewer wealthy taxpayers will experience the hefty 40% tax for leaving or gifting money to their children. The IRS announced that the estate and gift tax exemption for 2019 is $11.4 million, now allowing a married couple to shelter $22.8 million from estate and gift taxes. The annual gift exclusion amount is $15,000 per individual for 2018, up from $14,000. Since 2018 individual income tax returns were not due until April 15, 2019, the cumulative reported effects of the changed tax laws will not really be evident until late 2019.⁴ Giving USA, the most widely used comprehensive report on philanthropy, published annually by the Giving Institute with the assistance of the Indiana University Lilly Family School of Philanthropy, will report the 2018 numbers in mid-June 2019.

Benefits to Date

One benefit of The Act for charitable giving is an increase in the amount of deductions an individual can take for giving cash to a charity or operating foundation. The increase is up from 50% to 60% of one’s adjusted gross income, including in carryforward years. Excess amounts can continue to be carried forward for up to five years.⁵ Raising the standard deduction will result in more “bunched giving.” Instead of making annual gifts to charities, donors will choose to accumulate their giving dollars over multiple years to make several years’ worth of gifts in one year.⁶ Donor advised funds (DAFs) are an increasingly popular means by which to accomplish “bunched giving,” especially when market volatility occurs. Donors with funded DAFs won’t have to reach into their wallets or donate stock from their current investment portfolios to continue to show their charitable support. Repeal of the “Pease” limitation on certain itemized deductions, including charitable contributions for taxpayers who exceed the applicable threshold, is suspended for taxable years after December 31, 2017 and before January 1, 2026, resulting in the ultimate value of charitable contribution deductions increasing.⁷

Good News

Based on The Philanthropy Outlook 2019 & 2020 ("The Report") from the Lilly Family School and the consulting firm Marts & Lundy, charitable giving in the United States is expected to increase 3.4% in 2019 and 4.1% in 2020, exceeding historical 10-year, 25-year, and 40-year annualized averages.⁸ The Report projects growth rates as follows: 2.1% in 2019 and 3.4% in 2020 for giving by individuals and 5.4% in 2019 and 5.6% in 2020 for giving by estates.⁹

Best Gift Opportunities under The Act

Charitable gift annuities

- This life-income gift provides donors with income for life or a specified period of years and leaves the principal to the recipient organization.

Increased charitable gifts to itemize deductions

- If the total of a donor's itemized deductions is close to the new higher standard deduction amount, then the donor should consider giving more in 2019 and later years so that the donor's income-tax charitable deductions will help the donor exceed the standard deduction, thus allowing the donor to itemize and receive the tax benefits of doing so.

Gifts of appreciated securities

- Donors can still save capital-gains taxes by giving appreciated securities owned for more than a year, a key part of the tax law that has not changed.

Retirement plan gifts

- A simple and smart way to make a charitable gift is through retirement plan beneficiary designations. While loved ones are subject to paying income tax on retirement plan gifts they receive, charities are not. Thus, a donor can help loved ones save taxes by giving them other assets and making retirement plan gifts to charity.

IRA rollover gifts

- Donors 70½ and older who have not yet taken the required distribution from their IRA might ask their IRA administrators to make direct, tax-free transfers of up to $100,000 per year from IRAs to qualified charities as it means that they will not have to count the transfers as income for federal tax purposes. Since no tax is incurred on the withdrawals, the gifts do not qualify for charitable deductions, but they may be counted toward an individual’s minimum required distribution.

Gifts that cost nothing now

- A bequest in a will or trust continues to be a way to make a significant gift that costs nothing now. There are many ways to design a bequest or designation in a trust that best meets family priorities and charitable objectives.

Marya Jones currently serves as the Director of Planned Giving for the IU Health Foundation, where she assists donors in making planned gifts for the benefit of IU Health. She works with donors statewide to create a lasting legacy and to assure that gifts benefit the region and medical area chosen by each donor.

Most recently, Marya served as an Administrative Law Judge for the Indiana Utility Regulatory Commission. Prior employment includes serving as the Executive Director of the Greater Indianapolis Progress Committee during Bart Peterson’s mayoral administration in Indianapolis, Associate Director of Planned Giving Services at the Indiana University Foundation, assigned to the Indiana University School of Medicine Vice President and Trust Officer at Bank One as Associate Trust Counsel in the Trust Department, and as a Commissioner in the Indianapolis Marion County Probate Court. Marya earned an A.B. in American Government at Harvard University in 1982 and received her J.D. from Indiana University McKinney School of Law in 1986.

1 Takagi, Gene. The New Tax Law and Its Impact on Nonprofits- Part 1 (2018, January 7). Retrieved from http://www.nonprofitlawblog.com/tax-cuts-and-jobs-act..., citing Rosenberg, Joseph and Stallworth, Philip. The House Tax Bill Is Not Very Charitable to Nonprofits. (2017, November 15). Retrieved from http://www.taxpolicycenter.org/taxvox/house-tax-bill-not...
2 Takagi, Gene. The New Tax Law and Its Impact on Nonprofits- Part 1 (2018, January 7). Retrieved from http://www.nonprofitlawblog.com/tax-cuts-and-jobs-act...
3 National Council of Nonprofits. Tax Cuts and Jobs Act, H.R. 1 Nonprofit Analysis of the Final Tax Bill (2018, February 22). Retrieved from https://www.councilofnonprofits.org/sites/default/files/documents/tax-bill...
4 See Takagi, Gene. The New Tax Law and Its Impact on Nonprofits- Part 1 (2018, January 7). Retrieved from http://www.nonprofitlawblog.com/tax-cuts-and-jobs-act...
5 Ibid.
6 Ibid.
7 Ibid.
8 The Philanthropy Outlook. Retrieved from http://philanthropyoutlook.com/projections/total giving/; see also The Philanthropy Outlook Marts & Lundy 2018 & 2019. Retrieved from http://martsandlundy.com/wp-content/uploads/2018/03/Philanthropy_Outlook...
9 Ibid.
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2019 Founders' Scholarship Winner Announced

Congratulations to Ryan Allison, a research analyst with the Indiana University Foundation. Ryan has been awarded the 2019 Apra Indiana Founders’ Scholarship. The scholarship covers the costs of any Apra- or CASE-affiliated conference registration up to $1,500 plus a one year membership with the organization. In support of the Apra Indiana goal of promoting professional growth, this scholarship is awarded to an Apra Indiana member based on financial need.