Go to content Go to navigation Go to search

January 20, 2009

Trends That Will Affect Fund Raising in 2009

No one can say for sure how charities will fare in efforts to raise money this year, but Robert F. Sharpe, a planned-giving consultant in Memphis, says several trends will influence how generous donors are in 2009 and beyond.

Among them:

• A reduction in estate taxes. This year people whose estates are worth less than $3.5-million will be exempt from estate taxes,compared with the $2-million limit last year. Donors who are now exempt from the tax may direct more of their assets to charity.

• Low investment returns. Falling interest rates and dividends will depress many donors’ income from some bonds and other sources. Some types of charitable gifts, particularly gift annuities, can help donors receive more income in the form of guaranteed payments for life, in exchange for contributing cash and other assets. At their death, the charity receives the remaining assets. Gift annuity payment rates will be reduced on February 1, but remain an attractive alternative for many donors.

• Possibility of inflation. Iif inflation rises over time with increased government spending, as some economists predict, gift annuity payments to older donors could be worth far less then they were initially and curtail the popularity of such gifts. For that and other reasons, it may be best to encourage gift annuities among relatively older donors.

• No minimum required withdrawal from individual retirement accounts. Because Americans’ retirement savings have been decimated in the economic meltdown, Congress moved to help older people conserve savings this year. A new law eliminates the requirement that donors aged 70 1/2 take a minimum distribution in 2009 from their retirement accounts, income that is taxable. An unintended consequence of the new law: Some donors will not have much incentive to give through their retirement accounts as a way to satisfy the withdrawal rule. Many donors will, however, continue to give to charity in his way because of the heavy taxation of retirement plan assets during their lifetimes and at death.

• More pressure on bequests from medical costs. With people living longer and medical costs skyrocketing, the percentage of their estates that donors leave to charities in their wills may be increasingly reduced by end-of-life medical debts applied to their estates.

• A push to lower fund-raising costs. As charities seek ways to offset the effects of the bad economy and, in many cases, declining contributions, they are increasingly resorting to layoffs, hiring freezes, and other cost-cutting measures. Scrimping on fund raising, however, especially efforts to educate donors about gift annuities, retirement-fund gifts, and other, more complex types of giving could depress donations even further in the long run.

Do you agree with Mr. Sharpe? What fund-raising trends you see shaping 2009? Click on the comments link below to share you ideas.

— Holly Hall

Tuesday January 20, 2009 | Permalink

Commenting is closed for this article.

Previous: College Fund Raisers Predict Small Decline in 2009 Gifts
Next: Will Obama's Inauguration Help Fund Raising?

---

Copyright © 2009 The Chronicle of Philanthropy