IRA NOW

I used to think of IRA as the Irish Republican Army. (Until my late teens I had no idea there were Protestants in Ireland!) What does it say now that my frame of reference is Individual Retirement Account?

Fortunately, the IRA Charitable Rollover is back! Congress extended it to the end of 2009 as part of the recent Emergency Economic Stabilization Act. This provision allows donors age 70½ to “roll over” funds up to $100,000 annually from their traditional IRA or Roth IRA and contribute them tax-free directly to a charity.

This could mean up to $1 billion or more in new charitable giving from IRAs. The fact that not all non-profits are marketing this opportunity to their donors makes me sick.

Larry Stelter, President of The Stelter Company, reports on a web-based survey they did in August and September 2007 in which 652 nonprofits participated. Among the 18% of respondents who said they did NOT market the IRA Rollover promotion, the most common reason for failing to do so was lack of staff or time. As Mr. Stelter points out, “That may have been a costly failure, however, because the organizations that did promote the law change...closed an average of eight gifts each. The average size of a gift was $28,278, which means that the organizations promoting the change brought in an average of more than $200,000 each as a result of their efforts to spread the word about the change in the law.”

The Stetler findings offer helpful information on how non-profits can market this opportunity. Their survey revealed that “universities were among the most successful organizations in raising more money and in reaching new donors, primarily because they were nearly twice as likely (38 percent) as other nonprofits (18 percent) to use multiple methods of promotion. Another reason was that universities started their promotions early. Nearly three out of five of those that responded (58 percent) sent out promotional materials before November 2006, compared to less than half (46 percent) of the other organizations.”

So: Use at least two methods of promotion – whether letter, newsletter, postcard, email blast -- and do it now! Organizations reported receiving more responses, closing more gifts, raising more funds and reaching more first-time donors. (Stetler advises that if you can do only one of these things, using multiple methods of promotion is more significant in producing stronger numbers than early promotion.) Do it now! Plug catch phrases into everything you print!

IRA ROLLOVER EXTENDED

MAKE A TAX-WISE AND GENEROUS GIFT USING YOUR IRA!

TRANSFER UP TO $100,000 FROM YOUR IRA DIRECTLY TO US WITHOUT INCREASING ANNUAL GROSS FEDERAL INCOME TAXES.

NOTE:

The new Act applies only to gifts made in 2008 and 2009, so time is of the essence!

To qualify for IRA rollover treatment, the donor must direct the IRA manager to transfer funds directly to a charity (not cash out and issue a check).

The donor must be at least age 70 ½ at the time of the gift.

Donor-advised funds and creation of life income agreements are not eligible.

The distribution will count toward the mandatory withdrawal amount.

Each spouse may make a transfer of the full amount.

Non-profits that plan to use this incentive in their fundraising efforts should advise their donors to consult with their own professional tax or legal counsel to ensure that their gifts will qualify under this new provision.

The information in this blog is for general guidance and should not be a substitute for professional advice.

For more information visit the National Committee on Planned Giving: http://www.ncpg.org/gov_relations/hr4_center.asp?section=8