Planning Matters | Sharpe Group
Posted January 1st, 2004

Planning Matters

As the new year begins, those responsible for the management of gift planning programs should be aware of a variety of recent and pro­posed legislative changes that may affect the way the nation’s nonprofits raise funds in 2004. By keeping these changes in mind, gift planners can safely chart a course to a successful new year.

The Sarbanes-Oxley Act

In the wake of various corporate scandals, in 2002 Congress passed the American Competitiveness and Corporate Accountability Act, also known as the Sarbanes-Oxley Act. Congress passed this act to pro­vide strict oversight of corporate gov­ernance of publicly traded companies. Even though the bulk of the law does not specifically apply to nonprofits, some sections do apply to the nonprofit community. Nonprofits should be pre­pared to achieve ever-higher levels of accountability and should expect pressure from advisors and volunteers to adopt policies to avoid possible problems. For more on the Sarbanes-Oxley Act or its implications for non­profits, see or

News from the IRS

For 2004 the Internal Revenue Service has created an exempt organ­ization compliance unit, which can be expected to identify and pursue what it considers to be tax avoid­ance schemes or other noncompli­ance issues. On the positive side, the service may also release new sample unitrust forms to complement the recently issued CRAT forms. Check for details.

Do Not Call registry

Judicious use of the telephone may well be the call of the day in the aftermath of Madigan v. Telemarketing Associates and the National Do Not Call registry. Even though neither of these items directly applies to gift planning calls made by nonprofit gift planners, you should be sensitive to the reception unsolicited calls may receive. Be sure to clearly identify yourself and the purpose of the call and respond according to how your call is received. Don’t expect donors who have placed their names on “do not call” lists to know or care that the law exempted nonprofits from its reach. For telemarketing efforts, 2004 may become a “year of distinction.”

Estate and gift tax changes

The permanent repeal of the estate tax and its effect on charitable giving is likely to be widely debated again in fall 2004 elections. In the meantime, the estate tax exemption equiv­alent rises to $1.5 million effective January 1, 2004. In a related area, many individual states are reviewing and revising their estate or inheritance tax laws. Be sure to periodically check how such changes may affect your organization’s gift planning efforts in 2004.

The CARE Act

The CARE Act and other charitable giv­ing legislation are being carried over for consideration again in 2004. Those who have delayed or postponed fund-raising activities while waiting for the passage of this legisla­tion the last several years may have done so at a great cost to the organizations they rep­resent. Regardless of the fate of the proposed legislation, gift planners should continue to assist donors with planning their gifts in the most effective manner possible. The CARE Act has been altered from its original form in ways that may reduce its ultimate impact. For example, it now only applies to IRA funds, not 401(k) or other popular plans. Also, all income from trusts and gift annuities funded from IRA assets will be subject to ordinary income rates. This development comes just at a time when the 15% tax on capital gains and divi­dends makes funding with other assets more attractive than ever. Keep up to date on the status of the CARE Act and other charitable giving initiatives in Congress at the Library of Congress’s Web site,

The key to a successful year in 2004 is to keep your eyes open so that you can sidestep any obstacles that you encounter. Steering clear of the bumps in the road may then allow you to continue on your course to having a very successful year.

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The publisher of Sharpe Insights 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 Sharpe Insights 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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