How Seniors Can Benefit From a Charitable Gift
Charities ask a never-ending question: “Where are we going to get our next charitable gift?”
I maintain that the question should be, “How can we help people solve problems they have where the solution results in a charitable gift to our church or charity?”
Using this approach more often could change fundraising from trying to get the next dime from unwilling donors to enjoying the benefits of a steady stream of charitable gifts.
As self-serving as this might sound the approach is actually good for everyone. Who would walk away from the chance to increase their income and make a charitable gift that will benefit others?
From a fundraiser’s point of view, this is the ideal strategy for winning charitable gifts while also helping the donor enjoy a higher retirement income.
This approach involves three steps. First, fundraisers must know the most common problems people can solve with a charitable gift. Second, you must be able to determine which problem(s) the donor wants or needs to solve. This requires the ability to ask questions and patiently eliciting answers. Third, you must be able to explain how a charitable gift can also solve the donor’s problem.
The key to all three is education, both yours and your donor base.
Consider this brief example.
Libby is a senior living on a fixed income. The current economy has not been kind to her. She has a $50,000 CD down at the bank that has been providing some of the income for her living expenses.
Libby would like to solve three problems:
1. Her CD is only producing interest income of $2,250 per year because it is only paying 4.5% interest.
2. All of the interest income she receives is taxable. In Libbys bracket, the taxes on the interest income amount to $350 per year. This further reduces Libbys interest income to $1,900 per year.
3. Libby’s bank, Washington Mutual, went bankrupt recently. JP Morgan Chase now holds her CD account. Chase is another big bank. Libby is terrified that Chase will also go under and she will lose her money. She is not sleeping well.
A good fundraiser could offer Libby a solution to her problem with a charitable gift.
1. Move Libby’s $50,000 to a charitable institution. This eliminates her fear of another bank failure.
2. Increase the rate of interest paid on her money to 7.1%.
3. Increase her interest income to $3,500 per year.
4. Protect $2,460 of that income from taxation.
5. The effective amount of interest she then earns from her money leaps from 4.5% to 8.49% each year.
6. Generate a tax deduction of $20,047 for her charitable gift. Because of Libbys tax bracket and financial situation, she will probably be able to carry over part of the deduction for the next six years. The amount of her deduction each year will probably mean she will not have to pay any income tax at all for that six-year period.
So what do you think? Don’t you think Libby would be willing to enjoy all of these benefits, solve all of these problems, enjoy the additional income each year, and be please to leave your church or other charitable organization a charitable gift of $50,000 upon her death?
Robert D. Cavanaugh, CLU is a 39-year veteran of the financial and estate planning industry. He publishes The Smart Giver, a charitable gift educational series which advances techniques to boost income, reduce taxes while helping churches and other non-profits. Additional information about charitable giving can be found at his blog.
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