Leadership Institute on CRTs and the Future of Gift Planning

PPP Leadership Institute discussions get my mental juices flowing so much that my head hurts! This year, attendees have identified more than twenty topics of interest, including non-cash assets, non-direct gifts and advised funds, communicating the true value of gift planning to data-driven decision makers, disintermediation, donor restrictions, charity secret shopping, tax triggers for planning, 90 percent of recent campaign came from two percent of donors and other similarly provocative ideas.

Leadership Institute members always meet for roundtable discussions at the National Conference on Philanthropic Planning. In Minneapolis, those discussions focused on two primary topics: Charitable Remainder Trust Trends and Opportunities, Concerns and Predictions for the Gift Planning Field. 

During the charitable trust roundtable, most attendees said that CRTs were finally coming back. From 2002-2012, charitable remainder unitrusts rose from 89,000 to 91,000 but assets dropped from $100B to $91B. During the same period, annuity trusts dropped from 23,000 to 14,000 with assets falling from $10B to $6.5B. With annuity trusts in particular, many discussed the fact that gift annuities were becoming more prevalent for large gifts and may be cannibalizing CRATs. Click here for a deeper dive into the topic by Leadership Institute member Reynolds Cafferata.

Attendees noted the key CRT drivers are the return of asset appreciation, higher income tax regime providing greater benefits of a tax-free sale and baby boomers wanting to cash out of businesses, stock or real estate in exchange for less management and life-time income. As financial markets are hitting new highs, donors want to take some assets off the table, but there are some distinct changes from the late 90s. First, donors are choosing a much lower payout rate usually between 5-6 percent. Second, many more are including non-spouse income beneficiaries. Third, more current CRTs are being funded with non-cash/illiquid assets. And finally, donors are including more testamentary CRTs for retirement plan and other IRD (income in respect of a decedent) assets.  

One attendee remarked on the evaluation, "It [the roundtable discussion] was so affirming! I had just reported to our board last Friday that we've only established one new trust since 1999 and I wasn't entirely sure why. Great discussion. Thanks for opening it up for non-Leadership Institute members to listen in."

You can share your own experience with CRTs by responding to these polls:

The next Leadership Institute Roundtable will be held March 22 and 23 at the Anaheim Marriott in Anaheim, California. Watch the PPP Perspectives blog and e-newsletter for more information. If you’d like to join the Leadership Institute so that you can participate in the discussion, click here to download an application. (PPP members who do not belong to the Leadership Institute may audit the roundtables, although they cannot participate in discussion.)

About Bryan Clontz

Bryan Clontz is a 2013 co-chair of the PPP Leadership Institute. He is president and co-founder of Charitable Solutions, LLC, specializing in non-cash asset receipt and liquidation, gift annuity reinsurance brokerage, gift annuity risk management consulting, life insurance appraisals and CRT/CGA investment management. He also serves as a Senior Consultant for Ekstrom & Associates – a Connecticut-based community foundation consulting firm. From 1993-2003, he served as the vice president of advancement at The Community Foundation for Greater Atlanta and the national director of planned giving for Boys & Girls Clubs of America. He received a bachelor’s of science in business administration from the College of Charleston in Charleston, SC; a master’s degree in risk management and insurance from Georgia State University in Atlanta, GA; and a master’s degree in financial services from the American College in Bryn Mawr, PA.