December 28, 2010 | Read Time: 2 minutes
Many gifts are made in the last few weeks of the year, but even so, fund raisers think Congress may have cut it too close even for procrastinating donors when it waited until mid-December to pass a key charity tax break.
President Obama signed a measure on December 17 that allows people age 70 1/2 or older to make tax-free charitable gifts of up to $100,000 from their individual retirement accounts.
Such a provision has been in effect since 2006, but until mid-December Congress had not taken any action to approve it for 2010 and beyond. Because the renewal of the tax measure came so late in the year, Congress decided to give donors until January 31 to make a gift that would count as a 2010 donation.
But that concession may not have made much of a difference because it probably came well after people had decided to take money from their retirement accounts. People age 70 1/2 and older are required by law to take at least some money out of their accounts every year.
Vaughn W. Henry, a Springfield, Ill., lawyer who specializes in planned gifts, says he doubts many donors will want to tap their accounts for a second time this year. He says he has already met with one such donor who has decided against using his IRA to make a gift in 2010 for that very reason.
But that is not the case for all donors.
At the University of Alabama, fund raisers sent an e-mail about the new law to 8,000 older alumni and other donors immediately after President Obama signed the legislation. Already, says Phillip Adcock, assistant vice president for development, “we have received $700,000.” Much of the money, he says, is from donors paying off large outstanding pledges.
The university expects to raise substantially more by the end of next month. Because many older donors are not active online, Mr. Adcock says, he is sending a direct-mail appeal about the IRA law to 5,300 older supporters.
“We have raised up to $3-million each year from IRA gifts,” says Mr. Adcock.
The year 2011 should be easier for Mr. Adcock and others: Congress not only passed the 2010 break but also said it would be in place for all of next year.
