Year-End Giving With a New Twist

November 27, 2017

Each year around this time the literature is replete with articles about year-end giving. Clearly, November and December are the best months for philanthropy.

Research Supports Year-end Giving

A study by Nonprofit Insiders Network found that 28% of the organizations polled reported that they raise between 26% and 50% of their total annual income from year-end asks alone. Similarly, a Charity Navigator study revealed that 31% of online annual giving occurred in December. Finally, a study of high net worth individuals found that 42.7% indicate that they tend to give more around the holidays while 44.4% report giving about the same.

The case is clear for year-end giving, and most organizations solicit it through direct mail. In fact, as fundraising consultants, we advise our clients to begin year-end requests in early November and then follow it up with a Season’s Greeting post card in December that includes a subtle reminder. We also recommend using brief handwritten Post-it note messages by board members and other volunteers to enhance the response rate.

A Solid Vehicle for Year–end Giving

There are other ways to enhance the November mailing, but the point of this article is to encourage year-end giving and introduce you to another vehicle for that.

To that end, I thought I’d spend a few minutes talking about a relatively new vehicle in nonprofit fundraising, the IRA Charitable Rollover, approved in December of 2015. It’s actually been around since 2006, but it has been provisional.

For taxpayers over the age of 70 ½, Congress made permanent the provision allowing individuals to contribute up to $100,000 per year, through an (IRA) distribution given directly to a charity. Of course, one key benefit of the direct charitable contribution from your IRA is that the distribution counts towards your Required Minimum Distribution.

Of course, for stocks, properties or any other assets within the IRA that are given this way there are no capital gains taxes that have to be paid. If donors do choose this vehicle, they must tell their fund manager to transfer funds directly to the charity and name them as donor. If the gift is intended for a particular area the manager should also specify that.

Organizations Have Benefitted Already

Some organizations are well aware of this provision and have clearly taken advantage of it. For example, between 2006 and 2013, the University of Michigan actively promoted the IRA Charitable Rollover and yielded $19.8 million from 790 donors. They contributed anywhere from a few hundred dollars to the maximum of $100,000.

What I found interesting is that most nonprofits either don’t understand the charitable IRA distribution, or if they do understand their understanding is limited. Therefore, the IRA Charitable Rollover is thrown into the “planned giving” bucket and pretty much ignored.

My advice is to pull this back out of the bucket and study it, so you have a working understanding of the concept. Why do that? No doubt, this way of giving is one of the best and most powerful vehicles to emerge in philanthropy in quite a long time. Everyone clearly benefits including the donor and the nonprofit.

For Senior Giving It’s the Best Vehicle

Sure, this doesn’t apply to everyone, but for seniors who are planning to make a gift to a charity, this is by far the best way to do it. If you’re the head of a nonprofit or chief development officer, I suggest that you do everything you can to inform your donor base regarding the IRA Charitable Rollover. No doubt it will prove beneficial to you not only by increasing donations at year’s end, but also throughout the year as you seek to advance your mission.

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Year-End Giving With a New Twist

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