This session will explain why planned giving is important to every non-profit organization and will go through the basic steps to start a planned giving program.

1. Planned Giving Programs
(PGPs)
Why PGPs are Needed and
How to Get One Started
By:
Brian R. Della Rocca, LL.M. (Taxation)
301.587.2241
bdellarocca@kdrlawgrouppa.com
www.kdrlawgrouppa.com

2. Failure of Non-Profits
Other than poor leadership and lack of focus, failure to raise money to
support the organization leads to the demise of many non-profit
organizations

3. Current vs. Future Collection
Many new, struggling Non-Profits seek current donations due to the
urgent need to raise money.
Fail to recognize the importance of future giving programs.
Not just a problem of new Non-Profits, older, more established Non-
Profits do not always recognize the importance of future giving or simply
are too focused on current giving to worry about the future.

4. Current Giving: Cash
“Cash is King!”
The most common form of giving to Non-Profits.

5. Current Giving: Tangible Personal Property
Not ideal for every Non-Profit but giving an automobile, furniture, and
clothing can provide a Donor with a very nice income tax deduction.
Ideal for Non-Profits who provide these types of items to needy
individuals.
Not ideal for Non-Profits who would have to sell the items to obtain a
benefit from them.

6. Current Giving: Appreciated Securities
Great way for Donor to receive a charitable deduction while removing highly
appreciated securities from the Donor’s account.
Avoids capital gain recognition for the Donor.
Non-Profit can either hold on to the securities or turn around and sell the
securities and take the cash.
Ideally are publicly traded but can be close-corporation securities as long as
securities are marketable.

7. Current Giving: Real Estate
Great way for Donor to receive a charitable deduction while removing
appreciated real property from the Donor’s estate.
Avoids capital gain recognition for the Donor and helps to reduce value of
estate.
Non-Profit can either hold on to the real property or sell the real property
and take the cash. This may not be ideal for a Non-Profit depending on
the location of the real property.

8. Current Giving: Retirement Assets
Donors over 70 ½ years can give up to $100,000 (which includes the
Donor’s required minimum distribution (RMD)) to a Non-Profit of their
choice and the donated $100,000 will NOT be included in the Donor’s
adjusted gross income (AGI) in that year.
• While the Donor will receive a charitable deduction (with a 5 year carry-over) for
the donation, that is not the biggest benefit.
• The reduction of the Donor’s AGI is a big benefit as many income tax
deductions are based on a taxpayer’s AGI.
• Lowering your AGI may make the Donor eligible for many additional income tax
deductions.

9. Example
• Donor (70 years old) gifts $100,000 (“Gift”) from her IRA to Non-Profit A.
• $50,000 of the donation is the Donor’s RMD.
• Donor has other income of $75,000.
• Donor has medical expenses of $6,000.
• With the RMD included in Donor’s AGI, the Donor’s AGI is $125,000 so the
Donor cannot deduct her medical expenses which are only 4.8% of her AGI
(income tax laws require medical expenses exceed 7.5% of AGI to be
deductible).
• Without the RMD included in Donor’s AGI, the Donor’s AGI is only $75,000
so her medical expenses are deductible because they are 8% of her AGI.
• BONUS: Donor also receives a charitable deduction of about $37,500 and can
carry over the remaining value of the donation for 5 years.

10. Types of Planned Gifts
Wills/Revocable “Living” Trusts (RLT): Bequests/Distributions from a
Will or RLT upon death of Donor.
Retirement Assets: Can be used as both deferred and current giving.
Life Insurance: Giving upon death of Donor.
Charitable Trusts: Can be used as both deferred and current giving.
Pooled Income Fund: Form of deferred giving.

11. Deferred Giving: Wills/RLTs
Direct bequests or distributions from a Donor’s estate or trust after death.
Donor’s estate receives dollar for dollar charitable deduction on estate tax
returns (as opposed to only receiving a charitable deduction for a percentage of
the donation on the Donor’s income tax returns during his lifetime).
Donor does not feel financial impact of donation and family frequently does not
either.
Donor does not have to be wealthy – a bequest/distribution of a small
percentage of the Donor’s estate/trust will have a small impact on the Donor’s
legatees/beneficiaries but may have a major impact on a nonprofit organization.

12. Deferred Giving: Retirement Assets
Donor can designate a Non-Profit as the recipient of all or a
portion of the Donor’s retirement assets after the Donor’s death.
Benefit to Donor’s Estate: Estate Tax Charitable Deduction.
Benefit to Income Taxable Recipients: Donor is able to fund
bequests/distributions to those recipients in alternate, non-
income taxable ways.

13. Example: Funding Charitable Bequest with
Retirement Assets
Decedent has $6 million Estate which includes a retirement account of
$750,000. Decedent leaves 2 living children who will receive equal shares of her
estate.
Decedent wants to leave $600,000 to Non-Profit to avoid federal estate tax
liability (current exemption of $5.49 million) leaving children with $2.7 million
each.
If Decedent leaves non-retirement assets to Non-Profit, children will each
receive $375,000 of retirement assets which will be reduced by income taxes
when withdrawn leaving them with $2.325 million of non-income taxable
inheritance.
If Decedent leaves $600,000 to Non-Profit using retirement account, children
will only receive $75,000 of retirement assets and the remaining $2.625 million
will not be subject to income taxation.

14. Deferred Giving: Life Insurance Death Benefits
Donor can designate a Non-Profit as the recipient of all or a
portion of the Donor’s life insurance proceeds after the Donor’s
death.
Benefit to Donor’s Estate: Estate Tax Charitable Deduction.

15. Deferred Giving: Charitable Trusts
Charitable Remainder Trusts (CRTs)
• Donor receives income for life or for a term of years and the designated Non-Profit(ies) receives a lump sum
distribution of the remainder after Donor’s death or the expiration of the term of years.
• Donor receives a current charitable deduction based on the value of the initial contribution less the value of the
retained income interest.
Charitable Lead Trusts (CLTs)
• Non-Profit receives income for Donor’s lifetime or for a term of years and the Donor’s family receives a lump sum
distribution of the remainder after Donor’s death or the expiration of the term of years.
• Donor receives a current charitable deduction based on the value of the initial contribution less the value of the
interest calculated to be distributed to Donor’s family.
• CLTs can also be used in a Donor’s Will/RLT to significantly reduce the Donor’s estate tax liability.

16. Charitable Remainder Annuity Trust Example
(Slide 1)
Trust Term: Life
Transfer Date: 1/2017
§7520 Rate: 1.60%
FMV of Trust: $1,000,000.00
Growth of Trust: 8.00%
Percentage Payout: 5.000%
Payment Period: Quarterly
Lives: 1
Age: 65

17. Charitable Remainder Annuity Trust Example
(Slide 2)
Amount of Annuity to Donor: $50,000.00
One Life Annuity Factor: 14.8987
Payout Frequency Factor: 1.0060
Present Value of Annuity =
Annuity Payout times Factors:
$749,404.61
Charitable Remainder =
FMV of Trust less PV of Annuity:
$250,595.39
Charitable Deduction for Remainder
Interest:
$250,595.39
Donor's Deduction as Percentage of
Amount Transferred:
25.059%

18. Charitable Remainder Annuity Trust Example
(Slide 3)
Year Principal Growth Payment Remainder
1 $1,000,000.00 $78,500.00 $50,000.00 $1,028,500.00
2 $1,028,500.00 $80,780.00 $50,000.00 $1,059,280.00
3 $1,059,280.00 $83,242.40 $50,000.00 $1,092,522.40
4 $1,092,522.40 $85,901.80 $50,000.00 $1,128,424.20
5 $1,128,424.20 $88,773.92 $50,000.00 $1,167,198.12
6 $1,167,198.12 $91,875.84 $50,000.00 $1,209,073.96
7 $1,209,073.96 $95,225.92 $50,000.00 $1,254,299.88
8 $1,254,299.88 $98,844.00 $50,000.00 $1,303,143.88
9 $1,303,143.88 $102,751.52 $50,000.00 $1,355,895.40
10 $1,355,895.40 $106,971.64 $50,000.00 $1,412,867.04
11 $1,412,867.04 $111,529.36 $50,000.00 $1,474,396.40
12 $1,474,396.40 $116,451.72 $50,000.00 $1,540,848.12
13 $1,540,848.12 $121,767.84 $50,000.00 $1,612,615.96
14 $1,612,615.96 $127,509.28 $50,000.00 $1,690,125.24
15 $1,690,125.24 $133,710.00 $50,000.00 $1,773,835.24
16 $1,773,835.24 $140,406.80 $50,000.00 $1,864,242.04
17 $1,864,242.04 $147,639.36 $50,000.00 $1,961,881.40
Summary $1,000,000.00 $1,811,881.40 $850,000.00 $1,961,881.40

19. Charitable Lead Annuity Trust Example
(Slide 1)
Trust Term: Life
Transfer Date: 1/2017
§7520 Rate: 1.40%
FMV of Trust: $1,000,000.00
Growth of Trust: 8.00%
Percentage Payout: 7.000%
Payment Period: Quarterly
Lives: 1
Age: 65

20. Charitable Lead Annuity Trust Example
(Slide 2)
Annual Payout to Non-Profit: $70,000.00
Quarterly Payment: $17,500.00
Single Life Annuity Factor: 15.2163
Payout Frequency Factor: 1.0052
Present Value of Annuity Limited by
§7520 Regs:
$830,902.64
Remainder Interest = FMV of Trust
less PV of Annuity:
$169,097.36
Charitable Deduction for Income
Interest:
$830,902.64
Donor's Deduction as Percentage of
Amount Transferred:
83.090%

21. Charitable Lead Annuity Trust Example
(Slide 3)
Year Principal Growth Payment Remainder
1 $1,000,000.00 $77,900.00 $70,000.00 $1,007,900.00
2 $1,007,900.00 $78,352.00 $70,000.00 $1,016,432.00
3 $1,016,432.00 $79,214.56 $70,000.00 $1,025,646.56
4 $1,025,646.56 $79,951.72 $70,000.00 $1,035,598.28
5 $1,035,598.28 $80,747.88 $70,000.00 $1,046,346.16
6 $1,046,346.16 $81,607.68 $70,000.00 $1,057,953.84
7 $1,057,953.84 $82,536.32 $70,000.00 $1,070,490.16
8 $1,070,490.16 $83,539.20 $70,000.00 $1,084,029.36
9 $1,084,029.36 $84,622.36 $70,000.00 $1,098,651.72
10 $1,098,651.72 $85,792.12 $70,000.00 $1,114,443.84
11 $1,114,443.84 $87,055.52 $70,000.00 $1,131,499.36
12 $1,131,499.36 $88,419.96 $70,000.00 $1,149,919.32
13 $1,149,919.32 $89,893.56 $70,000.00 $1,169,812.88
14 $1,169,812.88 $91,485.04 $70,000.00 $1,191,297.92
15 $1,191,297.92 $93,203.84 $70,000.00 $1,214,501.76
16 $1,214,501.76 $95,060.16 $70,000.00 $1,239,561.92
17 $1,239,561.92 $91,064.96 $70,000.00 $1,266,626.88
Summary $1,000,000.00 $1,456,626.88 $1,190,000.00 $1,266,626.88

22. Deferred Giving: Pooled Income Fund
A type of charitable “mutual” fund created from securities or cash
donated by individuals, a family, or a corporation to a Non-Profit which is
then invested to provide income for the Donor(s) during her/their
lifetime(s). When a Donor dies, the deceased Donor’s share of the fund is
available for use by the charitable organization.

23. How to Set Up a PGP
Form a Planned Giving Committee
oVolunteers vs. Employees vs. Mix of Both
oEstate planning attorney is recommended for committee
Educate the members of that committee on the essentials of a
PGP.
Create a “target list” of prospective Donors.

24. Planned Giving Committee
No ideal size but the more members of the Committee the easier it will be to implement a
PGP.
Director of Development of Non-Profit should be on Committee. In a small Non-Profit, the
President/CEO is frequently on the Committee.
A few Board members of the Non-Profit Board should be on the Committee.
Set the frequency of Committee meetings (encourage all members to show up in person to
each meeting)
May be beneficial to hire a consultant with experience helping Non-Profits set up PGPs.

25. Gift Acceptance Policy
Develop a policy of what gifts you are willing to accept.
Temptation is to simply accept whatever comes but that can be a big mistake.
Some gifts may be more complicated to redeem than they are worth (i.e., bargain sale)
While a bargain sale is a great option for some Non-Profits, not all Non-Profits have
the ability to partake.
A bargain sale is when a Donor proposes to sell an asset at a bargain price to a Non-
Profit.

26. Types of Gifts to Consider
Cash
Tangible Personal Property
Securities
Real Estate
Remainder interests in Real Estate
Oil, Gas, and Mineral Interests
Bargain Sales
Life Insurance
Charitable Gift Annuities
Charitable Remainder/Lead Trusts
Retirement Plan Beneficiary Designations
Bequests
Life Insurance Beneficiary Designations

27. Gift Acceptance Committee
A subcommittee of the Planned Giving Committee.
Comprised of a few members of the Planned Giving Committee
The Gift Acceptance Committee sets the acceptance policy (what gifts will
be accepted by the Non-Profit) and reviews and approves all gifts received
by the Non-Profit.

28. Announce and Re-Announce
Announce your new PGP to your Donors/Supporters.
Include announcement in newsletter, if you have one.
Have PGP kick-off event and invite top Donors/Supporters.

29. Focus and Hustle!
Focus your efforts on your top Donors/Supporters (does not mean to
ignore your other Donors/Supporters)
Be part of Donors’/Supporters’ lives – take them to lunch/dinner, invite
them to cocktail hours, have President/CEO call them and write personal
messages on any newsletters/mailings being sent to them.
Will not be successful overnight but, over the years, you will see the result
(that’s the point!).

30. Brian R. Della Rocca, LL.M. (Taxation)
Brian is a principal in the Kuwamura Della Rocca Law Group, P.A. (“KDR Law Group”), an estate planning boutique with offices
in Silver Spring, Maryland and Rockville, Maryland.
Born and raised near Albany, New York, Brian has been practicing law since 2003.He earned his law degree from the Catholic
University of America, Columbus School of Law. Brian also earned a Masters of Law (LL.M.) in Taxation and a Certificate in
Employee Benefits from the Georgetown University Law Center. During his undergraduate years at the State University of New
York, College at Oneonta, he was a member of the Tau Kappa Epsilon fraternity.
Brian is a frequent lecturer on estate and tax planning, including Estate Planning for Single Parents, the portability of the federal
estate tax, the transfer for value rule, and, before the Maryland Register of Wills Association, on how to clear title to real property
without the need to open multiple generations of estates. Brian has been quoted in Money Magazine and the Journal of Financial
Planning on various estate planning topics.
Brian earned an AV Preeminent rating from Martindale Hubbell and has been named a “Rising Star” and a “Super Lawyer” by
Super Lawyers Magazine for the District of Columbia in the field of Estate and Trust Law since 2013 and in Super Lawyers
Magazine for the State of Maryland since 2009.
Brian currently serves on a committee for the Estate Planning Council of Montgomery County, Maryland. Brian is a former Co-
Chair of the Maryland Estate and Gift Tax Study Group and a former Member of the Estates & Trusts Section Council for the
Maryland State Bar. Additionally, is the former Co-Chair of the Montgomery/Prince George’s County Tax Study Group.
In his personal time, Brian just completed two terms as the President of the Lido Civic Club of Washington, DC, an Italian-
American charitable organization formed over 85 years ago. He has been a member of the club since 2009.
Brian lives in Montgomery County, Maryland with his wife, two daughters, and a (male) dog.