Legislation

As charitable giving continues its steady upward climb and more Americans value the crucial role nonprofit organizations play in sustaining our cultural, social, religious and economic life, a significant threat lingers.

It’s time to identify this threat, speak out against it and unite behind the common cause of advancing fundraising. If we don’t mobilize and speak out, we’ll have nobody to blame but ourselves when the most sweeping, intrusive and draconian federal regulation of nonprofit organizations takes effect.

It comes as no surprise that the hot topic of conversation whenever development pros gather these days — whether at a conference, a cocktail party or the water cooler — is the impending postal and legislative changes affecting nonprofit fundraising.

We have previously looked at charitable remainder trusts and their role in philanthropic giving. Now let’s look at the other side of the coin: charitable lead trusts. While a charitable remainder trust combines a present non-charitable interest with a remainder interest that passes to charity, a charitable lead trust is a charitable interest followed by a non-charitable remainder.

With a charitable lead trust, the organization doesn’t have to wait until the expiration of the non-charitable interest but rather receives the interest at the start. As with remainder trusts, there are requirements governing lead trusts.

As a general rule, inherited assets are not subject to federal income tax. But if a beneficiary receives a gift before the death of the donor, it is considered “Income in Respect of a Decedent” and will be subject to income tax in the hands of that beneficiary.

There are many of these IRD assets: savings bonds, lottery winnings, IRAs, etc. Since these assets carry income tax burdens, they’re excellent candidates for charitable giving.

In June, the Senate Finance committee — which oversees the Internal Revenue Service’s regulation of tax-exempt organizations — released a draft staff report suggesting many drastic changes in the law that governs charities. Sen. Charles Grassley (R-Iowa), the chairman of the committee, announced at press time that he intended to introduce bipartisan legislation this fall to incorporate some of these changes. Here is a condensed look at some of the more wide-ranging, proposed changes.

In the past few years, there have been numerous issues concerning the details of how a charity should benefit from a donor’s life insurance policy. A new life insurance-based plan provides a benefit to charities in the form of cash payment or significant future income — without the charity being required to invest any money.

Such plans need to be carefully evaluated by charities because they raise a significant number of tax issues. This column serves as a brief outline of the plan and the issues that should be considered by a charitable organization before going forward.

Most donors know that if they want to make a contribution of property to a charitable organization, they must establish the value of the donated item in order to claim it as a deduction. And knowing what is necessary to support a claim might encourage a donor to actually make the donation.

This column is a brief review of the requirements governing donations of property, other than publicly traded securities, having a value in excess of $5,000.

The Senate’s Governmental Affairs Committee and the House of Representatives’ Committee on Government Reform hosted the final hearing on postal reform in late March. There, U.S. Postal Service officials had one last opportunity to present their proposals for reform of the USPS.

As donors prepare their federal income tax returns this and every year, one question looms: Can their tax-deductible gifts be substantiated?

The Internal Revenue Code has specific provisions under IRC 170 (f)(8) that govern when and how donations must be substantiated. Failure to comply with these rules could prohibit a donor from making a deduction.

“Is it the end of the line for fundraising by phone?” was what many nonprofit organizations were pondering last year when more than 48 million Americans signed up for the National Do-Not-Call Registry. While the law clearly stipulates that charitable and political calls are exempt, many members of the public still are unaware of the distinction.

A Harris Interactive poll of 1,011 people in August 2003 found that 37 percent thought that the federal do-not-call list also applied to charity calls.