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CHARITABLE TAX PLANNING STATISTICS. H. King McGlaughon , Jr., JD, , Wachovia Nonprofit and Philanthropic Services . The number of 501(c)(3) organizations, 1996–2006. PROJECTIONS OF FILINGS.

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CHARITABLE TAX PLANNINGSTATISTICS

H. King McGlaughon, Jr., JD,, Wachovia Nonprofit and Philanthropic Services



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PROJECTIONS OF FILINGS

THE NUMBER OF PROJECTED FILED TAX RETURNS FOR TAX-EXEMPT ORGANIZATIONS (FORM 990s) IS PROJECTED BY THE IRS TO BE 1.023,900 BY THE YEAR 2012


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The Dimensions of Giving

  • More Americans give than individuals from any other country in the world

    • 80% of US households donate money each year to over 1.5 million charities, social welfare organizations and religious congregations in the U.S.

    • an estimated 75% of those donors receive no tax benefit from their charitable gifts

  • As our wealth increases, the percentage contributed rises markedly

    • 95% of families with a net worth in excess of $1 million give to charitable organizations annually

    • 98% of families with a net worth in excess of $5 million give annually

Source: Chronicle of Philanthropy



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The Importance of Giving for the Affluent

Source: Boston College - Social Welfare Research Institute & Bankers Trust


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The Dimensions of Giving

  • Aggregate contributions from individuals, corporations and foundations for 2006 was $295 billion, an increase of 5% over 2005

    • contributions from individuals (lifetime, at death and through private foundations) made up more than 90% of the total

    • since 1959 contributions have grown at an average of 3% per year above inflation

    • contributions fall an average of 0.7% in recession years

Source: Center for Philanthropy at Indiana University


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LARGEST DONORS

2007 –

Leona Helmsley – 4 billion

Barron Hilton – 1.2 billion

Jon and Karen Huntsman – 627 million

T. Denny Sanford – 503 million

George Soros – 475 million

John Kluge – 400 million

See more at: The 2007 Slate 60.


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2006 CONTRIBUTIONS: $295 BILLIONBY TYPE OF RECIPIENT ORGANIZATION

Environmentand animals$8.863.4%

Internationalaffairs$6.392.5%

Foundations$21.70 8.3%

Arts, culture, and humanities$13.515.2%

Unallocatedgiving

$16.156.2%

Public-society benefit$14.035.4%

Human services

$25.36 9.7%

Religion $93.18 35.8%

Education$38.56 14.8%

Health $22.548.7%


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Average rates of change, 1987–1996 and 1997–2006 by type of recipient (adjusted for inflation)

1997–2006

1987–1996


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Total giving, 1966–2006 of recipient (adjusted for inflation)

Inflation-adjusted dollars

Current dollars

Recessions in yellow: 1969–70; 1973–75; 1980; 1981–82; 1990–91; 2001


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Total giving by source of recipient (adjusted for inflation)Five-year spans, adjusted for inflation

1,381.94

$ in billions

1,200.69

829.65

766.08

671.94

597.70

563.91

551.47

1967–71

1972–76

1977–81

1982–86

1987–91

1992–96

1997–01

2002–2006

Individuals

Bequests

Foundations

Corporations

Giving USA uses the CPI to adjust for inflation.


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Individual giving as a share of income, 1966–2006 of recipient (adjusted for inflation)Personal income and disposable personal income


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What DOES Matter? – Source of Wealth of recipient (adjusted for inflation)


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Philanthropy is one of the top 4 financial issues for UHNW (Ultra High Net Worth) investors

Tax

Tax

91%

Minimization

Minimization

Asset

89%

Management

Estate Planning

73%

Philanthropy

51%


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Philanthropic Motivation (Ultra High Net Worth) investors


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Motivation for Increased Giving (Ultra High Net Worth) investors


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The Current Market Environment (Ultra High Net Worth) investors


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The Current Market Environment (Ultra High Net Worth) investors

  • CRTs are excellent asset management tools

  • Tax free asset management zone

  • Ability to move around in market without concern for realization of gains in portfolio

  • Creates cash flow through Income Tax Deduction, conversion of dividends a/o interest into income stream based on total value

  • Ability to control taxability of income stream through changes in asset allocation


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The Current Market Environment (Ultra High Net Worth) investors

  • “CLTs: Leverage Market Down-Turns”

    • Tax benefits inverse to market conditions

    • Strong stocks that have lost value

    • Client intends to hold

    • Deflated value makes for optimal

      • CLT funding

    • Leverage the Market AND the lifetime estate/gift tax exemptions


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The Boom in Donor-Advised Funds (Ultra High Net Worth) investors

  • Size of Donor Advised Fund Market grew almost 800% from 1995 to 2005

  • Proliferation of “commercially sponsored” DAF programs


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Growth in Private Foundations: (Ultra High Net Worth) investors

  • Over 60,000 private foundations in US today.

  • 50% were created in last 10 years.

  • Funding of private foundations is at its highest level ever in terms of annual transfers to private foundation endowments.


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Giving to foundations, 1978–2006 (Ultra High Net Worth) investors

$ in billions

29.22

29.50

25.67

16.23

9.12

12.63

6.60

5.30

4.98

Inflation-adjusted dollars

4.96

4.46

2.39

Current dollars

1.61

1978

1981

1986

1991

1996

2001

2006

Data: The Foundation Center


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