Posted December 1st, 2006

From the Field: IRA Rollover Gifts

When I first heard about the Pension Protection Act of 2006, I thought that it would be useful to at least a few of our donors. So, as soon as we received word that the legislation passed, we put together a cover letter explaining the IRA rollover provisions as well as more detailed information from The Sharpe Group on the PPA. We targeted this mailing to those donors we thought would be affected because of their age and the fact they fell into our more generous donor categories, including trustees. In addition to mailing the information, if we had donors’ e-mail addresses, we e-mailed the information, and provided them with a link to more PPA facts on The Sharpe Group Web site.

Almost immediately, a donor contacted us to discuss a commitment to give $100,000 this year and $100,000 next year from an IRA. He wants to establish both an endowed scholarship and an award at Monmouth. Ironically, he is not one of the donors I anticipated would make this type of gift.

If it hadn’t been for the information provided by Sharpe, this gift wouldn’t have materialized. I appreciate and rely on the support that Sharpe routinely provides to the gift planning community. And in this case, the information was not only very useful, it also proved to be very lucrative as well.

I was worried the PPA might be a non-issue with our donors. I spoke with Robert Sharpe and he helped me develop a multi-layered strategy so that information about the opportunities of the PPA was available to our donors. First, we have talked to all the development officers on campus about the PPA. We let them know that if they wanted to do a mailing on the PPA legislation, we would help them with that. I suggested mailing the information to donors 69½ years old and older with a giving history in the past couple of years. Sometimes a letter from a dean was sent, sometimes info was included in a particular college’s publications, but the information was being sent all across campus.

Next, we ordered special IRA brochures from Sharpe and made that information available in a variety of ways. For example, when I attend a 50th Reunion, I am going to bring IRA rollover materials with me because that is an appropriate audience. In addition, we have made certain that brochures are available at events across campus.

Finally, when we send out our year-end newsletter prepared by Sharpe, we are going to include a box of copy on the IRA rollover information. While we did not want to deflect interest from the charitable gift annuity concept, we did want to provide information about the unique giving opportunity provided by the Pension Protection Act.

We are also going to include an insert in the newsletter about a couple who have decided to go the extra mile and make $100,000 gifts using IRA funds to UCLA’s graduate school of education. It is really great because they are retired faculty who love the school and their gifts will go toward scholarships. Their story was so on point that we could not resist featuring their IRA gift in the newsletter.

We have a number of other IRA gift commitments so far, all of which will be for the maximum of $100,000. In a few situations, individuals with 401(k)s were so motivated by this concept that they took money from their 401(k)s and funded IRAs to take advantage of this opportunity. Further, I am continually taking calls about IRA rollovers from development officers across campus who are working with donors on this. Most of these donors want to give the maximum amount and want to know how to go about it.

Several of our donors were quick off the mark in wanting to make gifts directly from their IRAs and initially we heard that their efforts were met with some resistance on the part of the financial services industry.

As a result, we are being very proactive in providing our donors with exactly what we think they will need to get these gifts completed with their IRA administrators. My advice to interested donors has been to start these gifts early. If this is what they want to do, donors need to contact their plan administrator immediately.

We have had interested Rotarians calling us in the past to discuss ways they could give from their retirement accounts generally, plus we had been notified by some Rotarians that they were leaving retirement plan assets to The Rotary Foundation in their final estate plans. So I felt like the IRA rollover would really appeal to many of our donors.

Our initial step was to provide a summary of the PPA to our volunteer base so they could answer any questions that might come up in the first few days after the legislation was signed. We are lucky to have a team of dedicated volunteers that are committed to fulfilling the mission of Rotary.

We also included some information in our planned giving newsletter provided by Sharpe. Luckily we were in the process of preparing our newsletter when the legislation was signed, so we were able to modify the production of the piece to include PPA information. We also did a targeted mailing to those individuals who we thought might specifically be interested in this based on previous discussions.

We have 15 completed gifts so far. And we have approximately 20 gifts pending where people have let us know that they are going to be making gifts by year-end. We have also had numerous phone calls—at least one a day if not more—from people saying “how does this affect me” and “thanks for sharing this information.”

We initially noticed a lack of knowledge about the bill among some of the IRA administrators. But as soon as this legislation was signed, we trained our staff and volunteers about this opportunity. We wrote drafts of letters that our donors could send out to their IRA providers explaining that these gifts are time sensitive and transfer-type sensitive, so that the administrators wouldn’t accidentally make the check out to the donor instead of charity. The entire gift acceptance team has tried to really step up and be there for the donors so they won’t have to explain this legislation on their own to their IRA administrators.

Some of our donors are interested in making gifts under $500, and some are looking at gifts in the $100,000 range. We have many Rotarians who are committed to the mission, so when they see an opportunity like this they are going to grab it. They are fiscally savvy and certainly charitably-minded, so that is good for us.

Some donors are seeing this as a way to make gifts from assets other than regular income, and others find that this is a way to make gifts they otherwise would not have given. It’s working both ways and working well.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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