The State of Charitable Giving: The Profession, Politics, and Their Impact on the Charitable World

1. Fifth Third Bank The State of Charitable Giving: The Profession, Politics, and Their Impact on the Charitable World

2. Goals for the Presentation • Washington Update • Highlight Four Key Areas of Conversation and Concern – Status and Impact • Estate Tax • Charitable IRA Rollover • Charitable Tax Deduction • Economic Downturn • Other Areas of Concern to Watch in 2011

3. Washington Update • Foundations on the Hill – March 8-9,2011 • Representatives from 250 Private, Family and Corporate Foundations • Tax Reform on Top of Everyone’s Minds • Not for Profit Fight Ahead • What’s Next?

4. The State of Charitable Giving • Temporary Estate, Gift, and GST Tax Provisions – 2010 Tax Relief Act • Applicable exclusion amount is defined as $5M and then adjusted for inflation for any decedent dying after December 31, 2011.  • Estate, gift, and GST tax rate is capped at 35% after a $5M individual exclusion • Special election for 2010 for decedent dying in 2010, the executor may elect to use either no estate tax and modified carry-over basis or these new provisions

5. The State of Charitable Giving • Charitable IRA Rollover Act • Expired at End of 2009 • Extended Until December 31, 2011 • What we Have: • 70 ½ years of Age • $100,000 Maximum/No Deduction • Other Restrictions

6. The State of Charitable Giving • What Would We Really Like? • Public Good IRA Act – SB557 • Remove $100,000 Limitation • Giving Options Starting at 59 ½ • Include Distributions to Supporting Organizations, Donor Advised Funds and Private Foundations • Will It Happen?

7. The State of Charitable Giving • Limitation on Tax Rate for Itemized Deductions • Cap at 28% for families making more than $250,000. • Charitable Deduction has always been attached to the tax rates. • Decoupling has been proposed in the past but has never happened. • Started as Part of the Discussion on How we Fund Healthcare Reform • Will it Happen?

8. The State of Charitable Giving • Economic Downturn and Its Impact on Donors • Less Dollars to Give • Many Donors have Narrowed Their Focus • Estate Tax Uncertainty has created Donor Uncertainty • Volunteerism Up • Increase of Non Cash Assets

9. The State of Charitable Giving • Economic Downturn and Its Impact on Not for Profits • Less Dollars/Higher Demand on Programs • More Collaborations • More Mergers • Staff Reductions • The New Norm

10. The State of Charitable Giving • Areas of Concern to Watch: • Overall Tax Reform • Minimum Payout Requirements for Endowments, Donor Advised Funds, and Supporting Orgs • IRS Inquiries into Endowment Spending, Executive Salaries and Unrelated Business Income Tax • Paying for Healthcare Reform • Budget Cuts to Critical Social Service Programs • The Idea that Private Funds Can Replace Government Funds

11. Questions & Answers

12. Contact Information Heidi B. Jark, Esq. Vice President & Manager The Foundation Office at Fifth Third Bank 38 Fountain Square Plaza MD1090CA Cincinnati, OH 45263 P: (800) 336-6782 ext. 4397/(513) 534-4397 F: (513) 534-0960 E: Heidi.Jark@53.com