Charities see gold in IRA donations
Posted on Sunday, October 12, 2008
URL: http://www.nwanews.com/adg/News/240002/
The University of the Ozarks didn’t wait before calling donors to let them know Congress passed the Emergency Economic Stabilization Act.
The university’s director of major and planned giving, Andrea Dixon, called Fayetteville resident Hugh Brewer and other past donors in the three days after President Bush signed it into law on Oct. 3.
Much of the $ 700 billion bailout of the U. S. financial system focuses on helping banks and homeowners, but the Clarksville college, and some of the state’s churches and charities, are using one aspect of the act to spur financial enthusiasm.
Dixon told Brewer about a provision tucked in the rescue plan that continues to allow people with Individual Retirement Accounts to give money to educators, churches and nonprofit groups without paying taxes on the gift.
“That change is a wonderful deal for charities, ”said Brewer, 72, a Fayetteville resident and former owner of Upchurch Electrical Supply Co.
Now, Arkansas charities are dialing up donors, preparing the next issue of newsletters and sending e-mails to let them know about the IRA contribution.
They are describing how the provision allows people who are at least 70 1 / 2 years old to give up to $ 100, 000 per year from either a traditional or Roth IRA account directly to a nonprofit group without the person having to claim the money as income.
The Pension Protection Act of 2006 first created that opportunity, but it ended Dec. 31, 2007. Congress, as part of this month’s stabilization act, let it continue through 2009.
Jack Butt, a Fayetteville tax attorney who’s chairman of Northwest Arkansas Community Foundation, said many of his older clients have large amounts of money in IRAs. They are best able to give that money to charities, Butt said.
“ It’s an upper middle class niche and there are a lot of those people in Northwest Arkansas,” Butt said.
The timing of the provision, however, isn’t a windfall that nonprofits hoped.
Dixon said some of the people she’s calling are reluctant to give right now because the value of their IRAs tumbled with the stock market’s plunge last week.
“They were positive about the rollover, but the market is so difficult right now,” Dixon said.
A rollover in pension planning generally refers to allowed, taxfree transfers among various retirement accounts. The 2006 and 2008 federal laws also use the term rollover for these tax-free donations from IRAs to qualified charitable organizations.
Meredith Brunen, associate director for development for Northwest Arkansas Community College Foundation in Bentonville, said the college will tell past donors about the IRA tax-free contribution provision. The college is developing a giving program.
“The biggest reason people don’t give is they aren’t asked,” Brunen said. “People have an interest in giving, but they’ve got to be asked.”
The Jones Center for Families in Springdale later this month will mail 1, 000 copies of its Legacy newsletter, and part of it will describe the retirement fund opportunity, said Kelly Kemp, the center’s chief advancement officer.
Paul Eldridge, planned giving director at John Brown University in Siloam Springs, said donors did use the IRA contribution in 2006 and 2007.
“We have definitely had gifts we wouldn’t have had otherwise,” said Eldridge, noting that one donor gave $ 100, 000 in IRA money.
Most donors nationally didn’t give that much in 2006 and 2007, said Tanya Howe Johnson, president and chief executive officer of the National Committee on Planned Giving in Indianapolis. The committee earlier this year surveyed 900 organizations to find they received $ 140 million over two years in IRA money. The average gift was $ 16, 000.
The average gift was $ 20, 000 for the University of Arkansas Foundation in 2006 and 2007, said Jim Harris, the foundation’s planned giving director. About 50 donors gave $ 1 million.
Harris said 30 people earlier this year told the foundation they intended to give IRA money to UA after Congress acted.
“It’s an efficient way to make a gift,” Harris said.
Hugh Kincaid made his IRA donations earlier this year, believing Congress ultimately would act. He works in the trust department at the Bank of Fayetteville.
“An IRA was never intended as a way to pass wealth to family,” said Kincaid, 72, who gave money to his church, the UA Foundation and Fayetteville Community Foundation. “I’ve had a couple that calls us every two or three weeks asking about the extension. We’re finally able to tell them yes, they did it, and you can make your donation.”
Charities, congregations and colleges in Northwest Arkansas found many people willing to give them IRA money in 2006 and 2007.
About a dozen families used the provision in 2007 to give money to Central United Methodist Church in Fayetteville, said Brian Swain, the church administrator. It’ll be mentioned in a December newsletter to the church’s 3, 850 members.
Brewer gave to his church, the Arkansas Air Museum in Fayetteville and the UA Foundation in both years.
“If there’s extra money in your IRA, this is great,” Brewer said.
Rogers resident Virginia Mocivnik was hoping Congress would allow the IRA contributions to charities again.
“I was praying that they’d put that back in,” said Mocivnik, 74, who gave IRA money to the community college foundation, the Arkansas Single Parents Scholarship Fund in the past. “You don’t do it for the charities anyway. You do it for you because it makes you feel good.”