by Mike Gallagher for the CMF NewsWire
Posted: 10/7/2008

The reactions of Michigan community foundation leaders range from sighs of relief to downright excitement as word spreads of the recent extension through 2009 of the IRA Charitable Rollover as part of the Emergency Economic Stabilization Act of 2008 President Bush signed into law last Friday.

The IRA extension was included in the $700 billion “Bailout Bill” that the Senate passed last Wednesday and the House approved late Friday by a vote of 263 to 171.

As enacted, the IRA Charitable Rollover permits IRA owners age 70 ½ or older to make direct gifts from their IRAs to qualified charities totaling $100,000 per year without suffering any negative tax consequences since it does not have to be declared as income.

For the foundation sector, the good news means millions of more dollars will be pumped into charitable projects as community foundations and other nonprofit organizations are asked to handle the tax-free contributions from individuals’ IRA plans.

Before it expired on December 31, 2007, the giving incentive had generated hundreds of millions of dollars in charitable donations nationally, says the National Committee on Planned Giving (NCPG).

According to a survey conducted by NCPG shortly before the end of 2007, approximately 5,814 individuals had given more than $102 million as IRA rollover contributions; yet nonprofit financial watchdogs say that dollar figure may only be scratching the surface of what has actually been given so far.

Philanthropic groups throughout the U.S. say they believe the actual dollar amount contributed to date could actually be $150 million to $200 million or more and nonprofit accounting experts are now predicting that the new expected flow of charitable funds could surpass $1 billion in the next five-to-10 years if Congress votes to make the program permanent and removes current donation caps.

The NCPG national survey includes findings that show up until December 2007: 28% of donors made IRA Charitable rollover gifts of $1,000 or less; 29% donated between $1,001 and $5,000; 13% gave between $5,001 and $10,000; 11% donated $10,001 to $25,000; 8% provided between $25,001 and $50,000; 3% gave between $50,001 and $99,999; and 7% donated the top amount of $100,000.

Nationally the top recipients of those dollars were:

• Public universities – 32.1%
• Private universities – 27.2%
• Small colleges – 9.6%
• Hospitals & health care organizations – 5.2%
• Community foundations – 4.4%

“The IRA Charitable Rollover is considered one of the most successful programs ever enacted by Congress,” according to NCPG President and CEO Tanya Howe Johnson. “We expect it to generate hundreds of millions more before the end of next year as well. And then hopefully we can make it permanent.”

Great Results Anticipated With Extension

The staggering success of the charitable initiative was not lost on congressional leaders, many of whom voiced their support for permanently approving this unique giving incentive.

One such leader in Michigan, for example, is Congressman Dave Camp (R-MI), who remains a leading proponent of the IRA Charitable Rollover legislation and will be a significant voice in trying to persuade his congressional colleagues of the need to permanently extend it.

“I’m amazed at how Americans have embraced the new giving law…and I expect this extension to generate substantial charitable dollars that will help those in need in Michigan and beyond,” says Camp.

Foundation leaders in Michigan and in other states say they expect increases in those numbers across the board as the extended IRA rollover provision gains steam the remainder of this year and throughout 2009.

“Our goal now is to convince Congress to make it a permanent law…and its success in generating millions of new philanthropic dollars to help society should assist us in doing just that,” adds Robert S. Collier, president and CEO of the Council of Michigan Foundations (CMF), who has also been a leader in the effort to secure the rollover extension.

Diana Sieger, president of the Grand Rapids Community Foundation and CMF chair, is effusive in her praise of Congress and President Bush for seeing the merits of the IRA Charitable Rollover.

“What is especially exciting is some of these donations represent first-time giving by individuals, so it is not only new dollars that can be put to use in the nonprofit community, but also can spark future gifts as these donors learn the value of their contributions,” says Sieger.

Michigan Community Foundation Leaders Excited

Cheryl W. Elliott, president and CEO of the Ann Arbor Area Community Foundation, says she is “ecstatic” with the new extension.

“It has been very valuable for us. For example, in its initial year we received gifts totaling close to $200,000,” she says. “Certainly (financial) advisors were keeping a watchful eye on it hoping it would be extended. We know that because these advisors are now calling us about it. We are positioned to promote it to our community.”

Up in the U.P., foundation leaders also say they are happy Congress has once again seen fit to provide Americans with the valuable giving tool.

“We’re very excited it has been extended,” says Debbie Flannery, executive director of the Dickinson Area Community Foundation. “While I don’t think it is well known (among area residents) at this time, we’re hopeful that will change.”

Echoing that thought is Dennis W. Fliehman, president and CEO of the Capital Region Community Foundation in Lansing.

“I wish it (passage) had come earlier in the year so we could get the word out to folks, but better late than never,” says Fliehman. “I’m certain people will take advantage of it. We did get several significant gifts through it before it expired in 2007. It helped establish some nice charitable endowment funds. We plan on letting professional advisors know about this so they can advise their clients as to its importance.”