Make a 2019 New Year’s Resolution: Start a Legacy Ministry in Your Church

As you think about 2019 and what it holds for your church, why not consider making a new year’s resolution to create a Legacy Ministry in your church?

A Legacy Ministry is a way to expand the stewardship conversation with believers beyond tithes and offerings. It’s a tool by which Christ followers plan their estates to not only take care of their families at death, but to also establish a legacy that supports the work of the Kingdom—through the local church and beyond.

This area of stewardship is often left out of the plans of many congregations. With so much emphasis on the church’s operating budget and the weekly giving, all too often church leaders miss the opportunity to share with their congregation ways in which they can impact the Kingdom of God using assets unlikely to be available until after they have left this earth.

Proverbs 3:9 says: Honor the Lord with your wealth and with the first fruits of all your produce. (ESV)

When you think about “first fruits,” especially in the Old Testament, the concept of tithing comes to mind. We understand the command to tithe our income and bring it to the church as a part of our worship of God. But this verse states we should also honor God with our “wealth.” Our wealth refers to the abundance of material blessings God has provided for us to manage over our lifetime. So, while tithing is very important, we should not forsake the command to honor God with our wealth.

A sobering statistic reveals less than 10% of estates include a charitable bequest, and less than 2% of Christians include their church in their estate plan. Why is this? I believe most have not been asked! There are many charities and causes available today that are good and worthy of support. Most nonprofit agencies make a concerted effort to ask donors for large gifts that may come out of the “wealth” mentioned in Proverbs 3. The church is finally realizing it cannot assume members will intuitively give out of their estate simply because they have given to the church all their life. The church needs to actually “make the ask,” and a legacy ministry is the way to do it.

What benefits does a legacy ministry have for the church and its donors? How do you get started? Stay tuned for next month’s article to find out.

Ready to take action today? TBF would love to help you and your church. Give us a call today at 615-371-2029 to get started.

How to Save Income Tax by Charitably Giving from your IRA

As we begin 2019, people aged 70 1/2 and older who own an Individual Retirement Account (IRA) will begin getting notices from their IRA providers about their Required Minimum Distribution (RMD) for 2019. The RMD is the amount (calculated on the owner’s life expectancy) the IRA owner must take out in 2019 to avoid a significant tax penalty of 50 percent of the RMD amount. The RMD is the government’s attempt to recover some of the tax deferral the owner has enjoyed over the years, as any distribution from an IRA is taxable to the owner in the year of distribution.

However, if you are an individual aged 70 1/2 or older with an IRA and have charitable inclinations, there is still a way to save income taxes for 2019: the qualified charitable distribution (QCD). The IRS allows your IRA provider to pay your RMD directly to a qualified charitable organization (like your church or other Baptist cause). If you elect to do this, the distribution paid to the charity is completely non-taxable to you, meaning you do not have to include it with the rest of your income for the year. Furthermore, the amount paid to the charitable organization is credited towards your RMD requirement for the year.

For example, Bank of Galilee notifies John T. Baptist he must take $10,000 from his IRA in 2019 in order to satisfy his RMD. John is in the 22 percent income tax bracket, and he already knows he will give at least this much to his church in 2019. Rather than taking the distribution, paying taxes on the distribution, and then writing a check to the church out of the remaining amount, John can direct the bank to send $10,000 from his IRA directly to the church. By doing so, John saves $2200 in income taxes, satisfies the RMD requirements and supports the Kingdom work of his church with the contribution.

This tax savings technique has become even more important in recent years due to the higher standard income tax deduction. While the higher standard deduction is better for the vast majority of Americans, it reduces and even eliminates the possible tax benefits of giving to a charity, since the amount given to charities (along with other deductible items) must exceed the standard deduction to produce a tax benefit to the donor. The standard deduction is even higher for persons over 65 ($13,600 for individuals, $26,600 for couples). Thus, the QCD is even more valuable for those who can utilize it.

A QCD does not have to be aggregated with other deductions before you receive a tax benefit. It is a standalone, dollar-for-dollar reduction in your taxable income. Even if you do not have deductions exceeding the standard deduction and are consequently unable to itemize your taxes, you still can take advantage of the tax savings in reduced income taxes created with a QCD. In fact, it may have even greater benefits for you, as you will be keeping your reported income lower, which might further lower your Medicare premiums for parts B and D that are based on household income.

As with any government tax strategy, there are rules to follow:

  • You can only distribute $100,000 from the IRA to qualify for QCD treatment.
  • You must have an accompanying receipt from the charitable organization to prove it received the distribution.
  • The distribution must be made directly to the charity to qualify (either the IRA provider sends the check directly to the charity or makes the check payable to the charity and gives it to the donor to deliver).

*Note that you cannot make an RMD from all types of IRAs, nor from other retirement plans, but your financial advisor will be able to advise you as to your eligibility.

With most of 2019 and the year’s charitable giving yet to be made, it is a great time to look at your RMD amount for this year. If you know you are going to be making contributions to your church or other charity, then it is worth a conversation with your financial advisor. This time next year, when you are calculating your 2019 income taxes, you will be glad you did.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

3 Reasons to Make Estate Planning Your Easiest New Year’s Resolution

The key to a successful new year’s resolution is to be realistic. It’s great to have goals, but going from never exercising to hour-long workouts seven days a week is probably not a sustainable resolution. One resolution you can easily accomplish this year is estate planning. Many people feel like they don’t own enough to warrant an estate plan. But the truth is, if you own anything, you have an estate, and if you don’t make a plan, the state gets to decide what happens to it. It might sound complicated, but creating an estate plan is a simpler than you think. And it’s something you can feel good about having gotten done, even if your other resolutions have gone by the wayside.

There are several reasons making an estate plan should be on your list of new year’s resolutions this year, because there are enormous benefits for you, your family and even your community when you put one in place:

  1. It takes stress off your family.
    Everyone has an estate, but not everyone has a plan. While it may be a bit uncomfortable to talk about at first, if you pass away without a plan in place, it can wreak havoc on your family. Not only will establishing an estate plan take one more thing off your plate this year, it will prevent future stress for your family members, especially as they will be already going through a tough time. Creating your plan will relieve worry and stress for you today as well as for your family tomorrow. It’s the new year’s resolution that keeps on giving.
  2. Your estate plan can bless the future generation of believers.
    In the same way creating an estate plan can have a ripple effect of blessing your family well into the future, it can also bless people you’ve never even met. While you’re setting up yourself and your family for peace of mind and security, you can also invest in the next generation of believers. By dedicating a portion of your estate to organizations or ministries you are passionate about, you in turn impact even more people for the Kingdom. Your new year’s resolution today will continue to change lives for years to come. While certainly other resolutions are beneficial, it’s hard to say something that powerful about cutting back on sugar or cleaning out the garage.
  3. Your estate plan can pour back into organizations and ministries that have poured into your life.
    When you do designate a portion of your estate to a ministry or organization you love, you’re not only impacting future generations, you’re saying “thank you” for the impact they have made on your own life. Whether it’s your church or other Baptist cause, the influence these leaders and the missions they pursued had on your life changed it for the better — perhaps even shifted its course. Estate plans are the perfect opportunity to give back to the organizations and ministries that have poured into your life so powerfully, whether your paths crossed decades ago or you’re still engaged today.

This year, make a new year’s resolution that is not only achievable, but has lasting affects on your family, community and the church at large. Creating an estate plan is easier than you think, and the Tennessee Baptist Foundation is here to help. Since 1938, we have been helping Baptists all over the state approach their estate plan from a biblical perspective, walking with them every step of the way to create a plan that works for their family and impacts the Kingdom of God.

3 Reasons Every Christian Needs an Estate Plan

While it is beneficial for every person to have an estate plan for the sake of their family, it is even more essential for followers of Christ. Though some people may be uncomfortable talking about the topic, it doesn’t have to be scary — especially for Christians, knowing that because of our faith and trust in Jesus, we have a glorious future to look forward to after death.

Throughout my career I have found there are three foundational reasons every Christian needs an estate plan:

1. Everyone has assets that must be distributed at death.

No matter your economic level, when you leave this life, the assets you have accumulated must be distributed somewhere. You may have heard the saying, “I have never seen a hearse pulling a U-Haul!” That is the reality. We do not take the material things of this life with us to heaven. That being said, it has to go somewhere, so we all need to make provisions to pass along the possessions we have. While many people might think they do not have very much, once they start listing all their assets on paper, most people soon realize they have more than they thought. Some assets will be distributed based on titling of the asset or beneficiary designation (real estate, life insurance, retirement accounts, etc.). Everything else needs to be distributed, and a last will and testament is the best way to do this. If you die without a will, the State of Tennessee will determine how your assets will be given away. So, it behooves all of us to have our own plan in place. After all, everyone has an estate, but not everyone has a plan!

2. It is an act of stewardship.

The Bible contains more than 2,000 verses related to money and stewardship. The Holman Bible Dictionary defines stewardship as “utilizing and managing all resources God provides for the glory of God and the betterment of His creation.”

One of the key words in this definition is managing. That is what the word stewardship boils down to. We are the managers of the resources God has given us. Every believer in Christ must understand the principle that God owns everything. Psalm 24:1 states, “The earth is the Lord’s, and the fullness thereof; the world, and they that dwell therein.” (KJV) A good manager will make provisions for things under his care. That does not stop at death. To be a faithful manager, we must make plans to pass along the assets under our care so they can be used to help others and proclaim the gospel of Jesus Christ. We all must be faithful stewards of our resources!

3. It is a powerful way for us to leave a legacy.

What do you want to be remembered for? I think it is intrinsic in all of us to want to leave some kind of legacy to our family and friends. One of the great opportunities we have as Christians is to designate something in our estate to take the Gospel to the next generation. The Tennessee Baptist Foundation is available to help any Tennessee Baptist learn how they can take care of their family and bless the next generation with a faith-based estate plan. Psalm 145:4 states, “One generation shall praise thy works to another, and shall declare thy mighty acts. (KJV) What greater way to help the next generation than to leave resources for them to proclaim the cause of Christ. It’s your faith and your legacy!

Give us a call today. We would love to help you steward your blessings well and leave a legacy of impact.

3 Tips to Build A Culture of Generosity in Your Church

In their book Contagious Generosity, Chris Willard and Jim Sheppard state, “generosity is at its core is a lifestyle, a lifestyle in which we share all that we have, are, and ever will become as a demonstration of God’s love and a response to God’s grace.” We serve a gracious and generous God. It should be only natural that every Christian have an attitude of generosity in all areas of life. Sadly, though, whether due to a shying away from financial matters or a fear of being seen as self-serving, this topic is not often discussed by church leadership. How can church leaders help bring about a culture of generosity in their church in a way that is both genuine and effective? Implementing these three practices is a great place to start:

  1. TEACH IT – As Baptists, teaching is important in the life of our church, and it’s the main focus of Sunday school and Bible studies. It is a part of our DNA to help us understand God’s Word and apply it our daily lives. Knowing that more than 2000 verses in the Bible concern money and finances, we need to teach what God’s Word says so we can make life changes in how we handle money. This will allow us to become better stewards and give us the freedom to be more generous with the material blessings God has given each one of us.
  2. TELL IT – They say a picture is worth a thousand words. I believe a story is better than 100 sermons! Stories come from our life experience, and we are able to share these to encourage others. We need to have members share their stories to show the impact of how generosity is making a Kingdom Impact, and not only that, but how they have been blessed to be the instrument of God’s love and grace. It is a way for members to grow in their own discipleship.
  3. PRAISE IT – Too often in the church, we do not say “thank you” as much as we should. Many of the secular nonprofits do a better job in donor relations than the church. We need to cultivate gratitude as well as generosity. Sending notes, emails and even, when warranted, a public expression of gratitude will foster more generosity in your congregation. In an age where everything we see focuses on “what’s in it for me,” gratitude is one of the greatest spiritual characteristics we can model for our members.

Willard and Sheppard also made this statement in their book about generosity:

“Generosity, when motivated by genuine love for God, is contagious, drawing others to wonder why people would give of themselves while expecting nothing in return. In fact, a life and a church community that is characterized by generosity may be the most compelling, effective evangelism strategy we have as followers of Christ.”

That is the type of lifestyle we should encourage within our congregations.

The Queen of Soul and The Bandit: A Tale of Two Estates

Over the last couple of months, we lost two American entertainment icons: Aretha Franklin and Burt Reynolds. Franklin’s musical talent made her one of the best-selling and most critically acclaimed musical artists of all time, with more than 75 million records sold worldwide, earning her the title of “Queen of Soul” and definitely earning our R-E-S-P-E-C-T (you’re welcome for now having that song in your head). While Reynolds may not have been the most critically acclaimed actor, he did have great commercial success in the box office and on the small screen with arguably his most iconic role, Bandit in Smokey and the Bandit, permanently embedded in the popular culture of the 1970s. While they both lived lives in the spotlight, in their deaths we see a big difference.

Like many other celebrities (Prince, Farrah Fawcett and James Brown to name a few), we now know that Franklin died without a will or trust in place. Some experts have estimated her estate to be worth approximately $80 million, with the possibility of it being worth even more depending on how her intellectual property (copyrights, licensing, etc.) is valued.

With an estate this size, one wonders why she didn’t have an estate plan to manage the complexities and uncertainties her family now faces. If nothing else, the tax liabilities of an estate this size would typically motivate a person to put a plan in place to at least reduce — if not completely eliminate — estate, inheritance and income taxes. When Franklin sang that iconic line “I’m about to give you all my money,” she might as well have been talking to the government about the enormous tax she was going to owe!

Franklin was single at the time of her death, so her four sons are equal heirs to her estate. Her niece has been appointed by the Court as executor. Early reports say that her longtime companion and her sons are taking adversarial positions against each other regarding how her estate should be divided. Franklin was known for being a private person when it came to her finances, but now, much of this information will be available for the world to see as the parties work through dividing her estate. Even if she had had a will or trust, there is certainly no guarantee that her family would not be in court, but these testamentary documents would certainly stand as a clear expression of her desires and would reduce the chances of disputes arising. Now, it will be up to the court to determine the best way for her estate to be decided.

What about Reynolds? While by his own admission, he earned and lost a fortune during his lifetime due to a couple of divorces and poor business decisions, he did apparently have a very well thought out plan as to what would happen to his assets when he died. In his last will and testament, he states he intentionally excluded his only son from the will. While at first this might sound harsh, Reynolds explains in his will that he did this because he had already provided for his son by other means. Apparently, Reynolds had a trust — a private document — already in place for the benefit of his son. By choosing this method of planning, it’s highly unlikely his assets will be fully known, and his son’s privacy is protected (trusts are often utilized in Florida due to the state’s unique probate rules). So just like the Bandit tried to avoid the governmental authorities in the movie, Reynolds, by careful planning, has minimized the court’s involvement with his family and his estate.

So what do these celebrities’ estates have to do with us who aren’t celebrities with vast fortunes? Statistics show the majority of Americans are like Franklin — no will or estate plan in place. While many of us think we do not own enough possessions to do much planning, the reality is we will all own something at our death — fortune or not — and not having a will creates all kinds of issues for family and friends. When a person dies without a will, the court decides on how estates will be divided — not according to the desires of the person who died (since there is no Will expressing those desires), but according to the default laws of the state. The court chooses who will administer the estate, even if the person who died knew who would do the job best. The court decides who will care for minor children as well.

Like Franklin’s estate, which may become tangled in litigation and discord for years to come, the estates of regular people are likewise ensnared with conflict and tension every day when the deceased person made no thoughtful provisions for his or her estate upon death.

By contrast, in estates like Reynolds’ in which a person has established a will or trust, there is certainty and peace of mind. Everyone knows who will be the executor. They know how the estate will be divided. A guardian who shares the values of the estate’s owner can be appointed to care for minors. Appropriate plans are made to accommodate complicated family situations (i.e. blended families, heirs with special needs, heirs with personal issues, etc.). An estate with a will or trust is not guaranteed to be free of all turmoil and conflict, but the problems are certainly reduced.

When asked why Franklin had no will, her attorney commented that he had talked to her for years about putting something in place, but she just never “got around to it.” So often when I meet with families after the death of a loved one, they respond the same way: “We talked about it, but never got around to doing it” or even, “We didn’t know where to start.” As that person’s estate is administered, the results are much different than what close family members know that the deceased person wanted; however, nothing is enforceable since these intentions were never formulated legally.

Thinking about developing and implementing an estate plan can seem overwhelming, and it normally takes some time as you consider all the things that must be evaluated in planning an estate. This is where an estate planning professional, like a lawyer, accountant, or a friendly estate planner with the Tennessee Baptist Foundation can help you begin the process and guide you through it. These advisors can help you consider all the facets of your life in light of your desires for your estate and advise accordingly regarding the best way to plan your estate.

To quote the great theologian Jerry Reed in the Smokey and the Bandit theme song, you may feel like you have “a long way to go and a short time” to get to planning your estate, but the key is to get started. Take one step forward today and know you’re on your way to a well-planned future for your family.

Bridging the Gap with Planned Giving

In the U.S. today, the whole idea of generosity is perceived differently than it was 50 years ago. As gen-Xers (born between 1965 and 1983) age and millennials become young adults, culture is evolving, and the landscape of giving — especially in churches — has shifted significantly. Overall, the percentage of tithing churchgoers is low — a problem for all generations — but it’s particularly true for millennials. Though millennials are typically passionate and often even give to churches and individual causes or nonprofits, they give significantly less financially to churches than their older counterparts.

  According to the Barna Group, it’s not that millennials are not generous; it’s that they understand and express generosity differently. While their income — and therefore their monetary giving — is lower, their dedication to hospitality and volunteering is higher. They see generosity as a wide-reaching mindset that encompasses their time and willingness to lend emotional or practical support in addition to their finances. In fact, when segmented by generations, millennials were least likely to associate generosity with monetary giving (13 percent).

Of the population of millennials as a whole, only 1 percent tithe regularly to their church, contrasted with 7 percent of elders (born before 1946) and 3 percent of boomers (born between 1946 and 1964). In addition, 84 percent of millennials report having given less than $50 in the past year to any cause or organization at all, contrasted with 37 percent of elders who would say the same.

One reason for this is millennials tend to gravitate toward supporting causes rather than institutions. The immediate feedback and transparency they have come to expect from organizations and public figures every day through their experiences with social media and technology has conditioned them to expect the same level of immediate feedback and transparency from their church — to know exactly where their money is going and how it is being used to make a difference. Giving to a general church fund to simply cover operations, while important, doesn’t always prompt them to give in the same ways as older adults who tend to have a greater sense of duty and long-term commitment. Millennials are often generous with relief efforts or particular causes or ministries impacting the community around them, but annual or monthly tithing does not resonate as deeply. They are more concerned with giving a “meaningful” gift, whereas older adults feel compelled by a call to give a “generous” gift.

Additionally, millennials are less likely to be regular attenders of church, even if they consider themselves Christian. A large portion of young adults who identify as Christian are resistant to church as a whole or do not see participation in a church as a necessity to their faith, and as a result, do not give regularly. Even a Generation X family who attends church twice a month is much less likely to give than the same family attending three times a month.

Regardless of the other ways in which millennials exhibit generosity, the fact is, younger generations are giving less financially — both in amount and frequency — to their churches. As the elder and boomer populations age, a gap has developed in the continuum of giving that, if left unaddressed, could cause many churches to undergo stalls or even financial hardship in the future. One significant way churches can help bridge that gap is by promoting among its members the impact of planned giving — designating a portion of your estate to be given to a cause or ministry you believe in.

While the future success of a church’s ministry does not rest entirely on elders’ and boomers’ shoulders (nor should it), planned giving is a powerful opportunity for these generations in particular to continue to expand the impact of the mission they supported so faithfully throughout their lives, even after they are gone. Not only does planned giving sustain the church itself, but it also impacts the next generation of believers, furthering the Kingdom of God well into the future. By being intentional with the resources God has given us through planned giving, we steward well his blessings — something that, as believers, we are all called to do.

The Difference Between an Estate Plan and a Will

We may think all we need is a Last Will and Testament to take care of our final wishes. While a Will is certainly an integral part of documenting these wishes (and it’s great that you have a Will—almost half of Americans do not!), there’s usually much more that goes into this process than simply having a Will. 

What we actually need is a comprehensive strategy that thoughtfully lays out our final desires, a blueprint that we call our “Estate Plan.” It’s important to pause here and note that while we normally think of an estate plan as only covering the time after we die, it should also cover critical issues we may face during our lifetime, such as incapacity and our wishes as to end-of-life medical treatments. Thus, an estate plan is a custom plan-of-action that provides direction for issues you may face during your lifetime as well as for the distribution of your assets after you are gone.

Through your plan, you are going to identify those persons whom you wish to inherit from you as well as the assets you want them to have. You will name those persons whom you trust to assist in the execution of your plan when the time comes during your lifetime and after you are gone. And you also have the opportunity to leave tangible reminders that reflect the importance that faith played in your life.

Various legal documents provide the framework by which your estate plan will be carried out. Most plans are constructed utilizing a Last Will and Testament and/or a Revocable Trust, a Power of Attorney for Financial Matters, a Power of Attorney for Health Care, and advance health directives. Each of these documents plays a key role in providing direction for the various components of your plan. In its simplest sense, the Will names an executor, states who gets your property at your death, and provides a place where you can name the guardian of minor children, if applicable. A Trust serves a similar purpose in that it names someone who can manage your estate during and after your life in addition to naming those people who will inherit your assets. Through a Power of Attorney for Financial Matters, you identify the person (or persons) you trust to handle financial matters during your lifetime if you are not able to manage them yourself. In a Power of Attorney for Health Care, you are appointing someone who can make health care decisions for you if you are not able to make them yourself. Finally, advanced health directives refer collectively to a variety of documents in which you provide guidance to those making health care decisions as to what kinds of treatments you may or may not want at the end of your life. Documents like Living Wills or Do Not Resuscitate directives fall into this category.

While these documents are certainly important (and we all should have them), some types of commonly-owned assets are passed along by other means. This means we need to ensure that we are familiar with how these types of accounts or property will transfer to others when we die. For example, some accounts, such as retirement accounts, life insurance policies, annuities, etc., allow you to pass them along utilizing a beneficiary designation form. This allows these assets to go directly to a beneficiary without having to go through probate court. Additionally, property that you may own jointly with someone else (i.e. land, bank accounts, etc.) will not be controlled by your legal documents, such as a Will. In many cases, the surviving owner becomes the sole owner when a joint owner dies. Thus, when you are assessing the things you own in view of your estate plan, it is important to ensure that your beneficiary forms are in correct form and that you are clear on what property you may own jointly with someone else.

Many times, much of our estate plan can be accomplished through by establishing joint accounts and by properly designating beneficiaries for those assets that allow you to do so. You just need to be fully apprised of the outcomes when you plan with these types of assets.

Is developing an estate plan hard to do? Yes, it can be. Envisioning a time when you are no longer here is difficult to do. You have to take inventory of everything you own and consider the legal means required to transfer it when you die. You also have to deal honestly with critical matters within your family. It can take considerable effort to consider and implement an estate plan, but in the end, it’s time well spent as you consider the peace of mind for yourself and your family that comes with having a well thought-out plan in place.

Why is Planned Giving Important to the Church?

Is incorporating planned giving into the stewardship ministries of a church worth the effort? 

To begin, let’s define planned giving simply as a method of giving to support a church or charity from resources other than just from a person’s income. In church life, when we talk and teach about stewardship and giving, most of the time that conversation centers around giving from our income. However, a planned gift is typically made with cash, securities, collectibles, or real estate. Planned giving can be a vital and regular part of a church’s stewardship ministry to not only benefit the church’s ministries, but also the lives of its members.

Before listing a few secular benefits for a charitable organization to promote planned gifts, we think it’s of primary importance to first note the spiritual dimension of planned giving for believers. Writing In Psalm 24:1, King David says, “The earth and everything in it, the world and its inhabitants, belong to the Lord.” (CSB) While most people in the pews of our churches would say that they believe God owns everything, how many truly live day-to-day with that truth in mind? In Baptist life, most of our stewardship emphases really start and stop with tithes and offerings. While tithes and offerings are the lifeblood of funding the ministries of our churches, an unintended consequence of only focusing on this type of giving is that it gives the idea that Biblical stewardship only revolves around how we manage the ten percent (10%) of our income (and maybe a little bit more for special offerings).  It doesn’t speak to a fuller understanding that everything a believer owns—the other 90 percent (90%) of income plus what he or she owns—has been entrusted to him or her as a steward. Thus, discussing and encouraging gifts from our other assets promotes a fuller understanding of stewardship.

With the spiritual component now considered, why else would a church want to expand its stewardship conversation to include planned giving? First, for a majority of donors, a planned gift is the largest single gift they will make to a church or charity. Since many planned gifts are made after someone’s death, it’s easier for the donor to consider larger gifts since, quite frankly, they’re not going to need the money any longer. In the case of lifetime gifts, people are also willing to make larger gifts to a charity as there may be significant tax consequences if they continue to hold the asset or sell it themselves. Making the large gift to a charity outweighs the detriment of paying a larger tax bill.

Secondly, planned giving can provide an additional source of revenue beyond tithes and offerings. Tithes and offerings come from one potential pool of funds: the aggregate total of all the church members’ incomes  (and usually we’re simply encouraging a percentage of it to be given). However, a planned gift comes from a completely different pool: the aggregate total of all the resources at the disposal of the church’s members.  If we’re not promoting planned giving and making it easy for people to give from their abundance, then this vast source of wealth is not being tapped. It’s rare to find a church that doesn’t have unfunded ministry dreams. What if planned gifts (from this immense pool of resources) could fund these Kingdom dreams?

Finally, studies show that charities that receive planned gifts (i.e. noncash, securities, etc.) grow their revenue/donations more quickly (like 30-40% more quickly!) than charities that only promote cash gifts.[note]“Why Cash Is Not King in Fundraising”, Russell James, III, J.D., Ph.D. Texas Tech University[/note]  Quite simply, in the aggregate, these larger gifts create momentum in gathering resources that “cash only” organizations do not experience.

Planned giving is an integral part of most charities and universities’ fundraising efforts. While all of these organizations represent great causes that serve the greater good of the physical and educational needs of society, how much more important is the church’s mission to provide spiritual light to a dark world?  And if our mission is important, are we doing all that we can to gather resources from all possible avenues to accomplish it? The Foundation would love to talk to you about how you can expand your church’s conversation about stewardship to include planned giving.

Will New Tax Legislation Affect Giving At My Church?

There’s been much in the news that has raised alarm for charities after the tax bill passed at the end of 2017. To establish the context for this discussion, we note that one of the key components of the tax legislation is the increase of the standard deduction in 2018 for individual taxpayers to $12,000 for singles and $24,000 for married filers (these figures were $6,350 and $12,700, respectively, in 2017). Because of this change, in order for a person to itemize deductions, the total of all deductions (i.e. mortgage interest, state and local taxes, charitable gifts, etc.) must exceed the standard deduction. Essentially, for 2018 and going forward, a person must have double the amount of deductions of previous years before he or she can itemize. For the taxpayer, this is generally great news. It may certainly make preparing personal income taxes much easier and more people will have less of their income taxed. However, for charities and churches, some claim this is bad news, believing that someone will not give if he or she is unable to deduct the charitable contribution from his or her tax returns. As a leader in the financial ministry of your church, you may have some of the same concerns. While we will probably experience some type of impact because of the changes, we don’t believe things will change much for our Tennessee Baptist churches and institutions, and here’s why:

1. First and foremost, Christians support the local work of the church because we are called to give of our financial resources to the work of the Kingdom on earth. We know that our giving is from a spiritual perspective and conviction rather than from one that only considers the deductibility of the contribution. Is it nice to be able to take the deduction, if you qualify? Yes. Of course, it is, but we’re not told in Scripture that the cheerful giver was happy only because he got to deduct his contribution! People will still regularly give to his or her church because they want to see the Gospel reach others.

2. Secondly, in addressing the idea that people will only give if they can deduct the contribution, it’s important to note that currently (under the old tax regime) only around thirty percent (30%) of all taxpayers itemize their federal income (it’s estimated that this number could drop to five percent (5%) under the new tax laws). Thus, historically, approximately seventy percent (70%) of taxpayers have not deducted their charitable contributions from their income tax returns. It would be hard to believe that none of this 70% of the population ever gave to a charity. Too, while the charitable deduction has been part of our tax code since 1917—just four years after the introduction of the income tax—churches still received support before then from its members. Why would we think that might change?

3. Additionally, Congress left intact two significant sources of charitable giving—the gift of appreciated assets (i.e. stocks, bonds, real estate, etc.) and the Qualified Charitable Distribution from IRAs. Using these strategies, a charitably-inclined taxpayer can significantly reduce or even completely eliminate taxes that he or she would otherwise be obligated to pay. These are still fantastic avenues of charitable giving!

4. Finally, studies show when people have more income available to them, they are generally inclined to be more charitable. When the standard deduction is coupled with lower income tax rates, more people will have more money in their pockets. Historically, this has usually bode well for charities. When people feel more optimistic about their economic situation, they are more likely to share their wealth with charitable causes they support. The people in our pews should have this same experience.

Do we foresee any impact on charities? We do believe that charities that solicit larger, once-a-year, annual gifts may experience some variance in giving. Many of our Baptist institutions receive these types of gifts. If a donor has been accustomed to making a larger, annual gift to their favorite Baptist cause each year, they might consider combining a couple years of gifts into one tax year. For example, if someone gives $10,000 at one time each year to a Baptist cause, they may make a $20,000 gift this year and forego next year’s gift, or they might wait until next year to make the $20,000 gift for both years. By making both gifts in one year, the donor is closer to surpassing the $24,000 standard deduction and may actually get to take a larger deduction (when combined with other deductible allowances) on their tax return.

While we know that we are in a new tax environment, overall, we believe that the changes are going to be positive for our Baptist churches and institutions. As a leader in a financial ministry, you will want to monitor your giving and ensure that you are engaging your people regularly about stewardship. Lead them in understanding that giving and generosity is part of our Christian walk, irrespective of our tax situation. And finally, even though we know we are dealing with some uncertainty in the charitable giving arena, more importantly, we also know that God will always be faithful in meeting our needs, both personally and in ministry (Philippians 4:19).  As we all know, God’s got this!

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