40% Tax Credit Brings Outstanding Tax Incentive for Gifts by Businesses to EaND Synod Endowment Fund

The last Sunday in September has once again been designated as “Synod Endowment Offering Sunday”. By supporting this fund, you are helping future pastors and other church workers with their costs of seminary training. In addition, this fund assists pastors in our synod with their student loan debt and also subsidizes annual payments to their pension funds when their compensation is below certain levels. We encourage your support to the Synod Endowment Fund on this special Sunday in September.

Your Gifts Have Made a Difference

Since the inception of this fund, over 10 years ago, gifts of about $2.5 million have been received. The fund has made over $920,000 in payouts for the purposes for which it was established. On behalf of the many church leaders whose lives have been touched, the endowment committee extends its heartfelt thanks to those who have supported this initiative.

Special Tax Incentive for “Business Gifts” to This Fund

If you are a North Dakota individual taxpayer or an owner of a North Dakota farm or other business (if operated as a corporation, partnership or limited liability company, etc.), you have been presented with an unprecedented tax incentive if you make gifts to a newly-created endowment fund that our synod has established for the same above-stated purposes. The 2007 and 2011 ND Legislatures passed bills which allow a 40% state income tax credit for certain gifts made to “permanent, irrevocable” endowment funds of qualified North Dakota charitable organizations. Qualified donors will likely find that well over 50% of their gifts will be “subsidized” through State and Federal tax incentives!

Our synod’s endowment committee has worked closely with professional counsel so that gifts to this recently- established endowment fund will qualify for the major tax incentives under this legislation.

Your qualifying individual gift ($5,000 or more per year) or “business” gifts qualify for the income tax credit, it will be deposited into the newly-established second fund. Distributions from both funds will be used for the same purposes as in prior years.

Your gifts may be made through your church on or after the Synod Endowment Sunday. Otherwise, gifts may be forwarded to the EaND Synod Office, 1703 32nd Avenue S., Fargo, ND  58103.  It is best to make the checks payable to: “EaND Synod Endowment Fund”.

If you have any general questions on the above, please contact Julie Johnson, 701-388-4781 or by e-mail at: jandcjohnson@cableone.net. Donors should always rely on their own professional advisors for advice particular to their situations.

More information:

• 2011 Synod Endowment Sunday Resources
• Synod Endowment Informational Video
• Download a .pdf of this article

Synod Endowment Sunday  - September 25, 2011

$1,000,000!!! Milestones:

Do you remember when McDonalds displayed how many hamburgers they had sold on their signs? I remember when it changed to over one billion served. We have our own upcoming milestone in the Eastern North Dakota Synod. Thanks to a visionary leadership initiative that helps reduce the monumental debt facing our pastors, the EaND Synod Endowment Fund was created. Next year, the milestone of $1,000,000 in grants will be reached!

These grants will have gone out to provide scholarships for those called to ministry from our synod; to provide seminary debt reduction for those who serve in our synod; to supplement pensions of pastors serving in lower-paying calls; to provide assistance for rural internships; and to provide money for leadership development.

This is made possible by your generous support of the EaND Synod Endowment Fund.

Endowment Sunday will be September 25, 2011. That means that you’ll, once again, have the opportunity to continue your support. Through the money that is working through the endowment, we will continue to make a difference in the lives of those who serve us.

Thank you once again and keep up the good work!

Bishop Rindy

» Download: Synod Endowment Fund Milestones (download pdf file)

Learn more about the Synod Endowment Fund and download resources for your congregation…

by Craig M. Johnson, CPA, Fargo

The 2007 and 2011 North Dakota Legislatures have passed legislation which allows a significant income tax credit for certain gifts to “permanent, irrevocable” endowment funds of qualified North Dakota charitable organizations (including religious organizations). This legislation pertains to certain “business” gifts made in a taxable year beginning after December 31, 2006 and also to certain gifts made by individuals and “businesses” made in taxable years beginning after 2010. Qualified donors will likely find that well over 50% of their gifts will be “subsidized” through State and Federal tax incentives!

The purpose of an endowment fund is to provide ongoing financial support in furtherance of the mission of your congregation. The operating policies of a qualified endowment fund allow for only very limited distributions from the donors’ gift contributions (principal). The income and net appreciation (and a portion of principal in certain situations) from the fund’s invested assets may be used to support the mission of the charitable organization. Since many congregations have endowment funds which allow for major invasions of principal through a congregational vote, such existing funds would not be qualified for purposes of this tax credit. In such case, another special fund would have to be established to be in compliance with the legislation.

Eligible “Business” Donors

Gifts from the following entities may benefit from this tax legislation:

1. “C” corporations (pay tax at the corporate level)
2. “Pass-through” entities (tax credit usually claimed by owners)
   1. Subchapter “S” corporations
   2. Partnerships
   3. Limited liability companies
3. Estates (if file income tax return)
4. Trusts

The tax credit for gifts from estates and trusts will be allocated between these entities and their beneficiaries based on the portion of income which is distributed to those beneficiaries.

How the Tax Credit Works for “Business Gifts”

An income tax credit is far more valuable than a deduction since a credit offsets the computed income tax. This particular tax credit is claimed on the North Dakota income tax return. The amount of the credit is 40% of the value of a gift made to a qualified (permanent, irrevocable) endowment fund of a ND nonprofit organization, provided that the gift is deductible for Federal tax purposes. The tax credit allowed in any one year may not exceed the current year tax liability; unused credits may be carried forward for up to three additional tax years.

The annual limitation on this tax credit is $10,000, determined at the entity level. Therefore, eligible gifts totaling up to $25,000 per year will bring about the maximum annual credit.

Big News – Tax Credit Now Applies to Individual Donors

The 2011 legislation allows a 40% tax credit for gifts by individuals to a qualified endowment fund held by a qualifying North Dakota non-profit organization (including religious organizations). If an individual makes a
gift(s) to such an endowment fund, the aggregate of the year’s gifts to a particular fund must be $5,000 or more. The maximum credits that may be claimed under this subsection are $10,000 ($25,000 in gifts) for an individual or $20,000 ($50,000 in gifts) for married individuals filing jointly.

Example of Tax Benefit to Individual Taxpayer

Mrs. Smith, a North Dakota resident, donates $20,000 in cash to a qualified endowment fund. She receives an $8,000 tax credit (40%) on her ND return. If she is in the 28% Federal tax bracket, her Federal tax savings are $3,360 (28% of $12,000; $12,000 is the difference between the $20,000 charitable deduction offset by an $8,000 reduction in the state income tax deduction). The “cost” of her $20,000 gift is offset by $11,360 in tax savings (56.8% of the gift amount).

Call to Action for Eastern North Dakota Congregations, Donors and Advisors

It is important to realize that the 40% tax credit is a direct reduction of the previously – computed tax. Therefore, the tax benefit in North Dakota is usually far in excess of the Federal tax savings! Because of this unprecedented tax “subsidy”, congregations should seriously consider establishing a qualified endowment fund(s). The Eastern ND Synod has established such a fund as we work to sustain rural ministries and quality pastoral leadership. Several congregations in our Synod have also established the above-described qualified endowment fund.

If there is a decision to move forward, I suggest that congregations work with professional counsel to prepare appropriate documents so that your fund’s governing documents allow it to qualify as a “permanent, irrevocable fund” as required by this law. It is critical that your fund is operated as a “true endowment” rather than a “quasi endowment” fund in order that the favorable tax benefits can be achieved.

Once the fund has been properly established, donor benefits should be communicated through personal contacts, brochures, web sites, seminars and the like.

» Download: Congregational Endowment Funds and Tax Credits (download .pdf file)

The author of this article is a charitable giving consultant residing in Fargo. Craig is “of counsel” to our Synod. For questions regarding this article and the steps for moving forward, he can be reached at: 701-799- 1108 or by e-mail at: cmjohnson@hotmail.com

Disclaimer: The above article is intended to provide information of a general nature only. It should not be construed as legal, tax and/ financial advice. Readers are urged to consult their own professional advisors for their specific situations.

2010 Congregational Leadership Data

Complete and return to the synod office by March 3. This updated information is used for communication purposes.
Download the form now (download .pdf file)

2010 Synod Endowment Grant Application

For seminary student loan reduction and pension equity grants for eligible pastors. The deadline is March 15 (postmarked by that date).
More information and form…

2010 Congregational Reports

Passwords were sent to congregations; if you have not received your password, please call the synod office. Reports may be filled out online (external link). Send a copy of your report to the synod office or email it to kristi@eandsynod.org by February 15.

Statement of Intent for 2010 Mission Support

Congregational treasurers will receive the form for reporting your congregation’s 2010 mission support. Please return to the synod office by February 15 so it can be used for the assembly reporting.
More information about Mission Support…

2010 Report for Rostered Persons (Bishop’s Report)

All rostered persons may access the report through the ELCA website (external link) . After you have completed the appropriate form, email to jean@eandsynod.org by March 3.

2010 Board of Pensions Mayo Clinic Health Assessment Survey

The opportunity for us to each earn a 2% discount on ELCA health contributions is available from the ELCA Board of Pensions again in 2010, with a few changes. This year, each congregation will receive a 2% discount on health contributions if 65% of our eligible ELCA-primary plan members and spouses complete this confidential health assessment by April 30 (last year we were 8 people short from receiving a synod-wide discount). For our synod, that means our congregations can save over $32,600 if 132 members complete the health assessment by the deadline.

Remember, by taking the assessment, you (and your spouse) will earn $150 to offset out-of-pocket medical costs and will be taking stock of your health. Instructions for how to register on EmbodyHealth (external link) and take the assessment are available in Understand My Benefits (external link) on the ELCA Board of Pensions (external link) website.

Learn more about the Synod Endowment…

• Seminary on the Prairie information added to the Annual Events page
• New staff photos
• New 2009 Synod Endowment Sunday information added

The two main stories on the title page of the DVD convey the mission of the Synod and that of the greater ELCA. There are 12 chapter story videos detailing some of the ministries of the Eastern North Dakota Synod. Enjoy viewing them. We want you to know the ‘Synod Stories’ to feel good about enthusiastically supporting our work together. Each congregational president has received a copy of this DVD for use in their local congregation.

Watch online…
How to use the EaND “Us” DVD (Download .pdf file)

Video Chapters

• EaND “Us” :: Overview
• EaND “Us” :: Bible Camp
• EaND “Us” :: Call Process
• EaND “Us” :: Campus Ministry
• EaND “Us” :: Central African Republic
• EaND “Us” :: Dacotah O’yate
• EaND “Us” :: Dakota Boys and Girls Ranch
• EaND “Us” :: Lutheran Social Services
• EaND “Us” :: Planned Giving Partnership
• EaND “Us” :: the Project F-M
• EaND “Us” :: Resource Center
• EaND “Us” :: Seminarians
• EaND “Us” :: Synod Endowment
• EaND “Us” :: ELCA Churchwide
• EaND “Us” :: Bishop’s Thank You

The information in this article may be of great interest to you if you are over 70 1/2 years old and have one or more Individual Retirement Accounts. The information shared below may be pertinent to charitable gifts made to a variety of organizations, including annual church offerings, gifts to church endowment funds or capital campaigns, as well as gifts to the Eastern ND Synod Endowment Fund, ELCA social ministry organizations and ELCA churchwide initiatives (external link).

Overview

Many individuals have been interested in giving IRA assets to their favorite charities.  However, until the year 2006, their ability to use IRA assets to make gifts had been discouraged because such gifts were includable in income (even though there has been an offsetting charitable deduction).

Legislation passed in August, 2006 allowed certain tax-free IRA rollovers to charity through December 31, 2007.  Fortunately, the “Tax Extenders and Alternative Minimum Tax Relief Act of 2008″ (part of H.R. 1424), which became law in October, 2008, has extended this favorable tax incentive for the tax years 2008 and 2009. Although IRA account owners over age 70 1/2 are not required to take mandatory distributions during calendar year 2009, this incentive will still be valuable to many generous taxpayers.

Previous Problems

Prior to this favorable legislation, funding charitable gifts through IRA withdrawals had created many tax problems, including:

1. The charitable income tax deduction for cash gifts is limited to 50% of one’s “adjusted gross income” in the year of the gift.  Fortunately, unused deductions may be carried forward for up to five years. If the taxpayer was already subject to this limitation, additional gifts funded by IRA withdrawals received an unfavorable tax result.
2. For some smaller IRA gifts, there was no offsetting charitable deduction if the taxpayer(s) did not itemize deductions.  [Since the majority of Americans are unable to itemize deductions (and use the standard deduction instead), IRA rollover gifts are a wonderful opportunity for millions of Americans.]
3. The inclusion of IRA gifts in income may have increased the percentage of Social Security benefits that were taxable.
4. The inclusion of IRA gifts in income may have caused a reduction in such items as deductible medical expenses, overall itemized deductions and personal exemptions.

The Present Opportunity

The Pension Protection Act of 2006 (extended recently through 2009) allows some  individuals to make distributions to public charities directly from their IRA accounts without including the distribution in income.  This rule pertains to IRA owners over age 70 1/2 and is limited to charitable IRA “rollovers” of up to $100,000 per year, per person, through December 31, 2009

Pertinent Questions

Why is this new provision helpful?

Since qualified charitable distributions from IRAs are now not included in income, the “previous problems” listed above are eliminated.

What contributions qualify under this provision?

The contributions must be made directly from the IRA to “public charities” such as your own congregation.  For instance, gifts to private foundations, donor-advised funds, supporting organizations, charitable trusts and charitable gift annuities do not qualify.

How do I make a qualifying IRA “rollover”?

You should contact your IRA custodian to make the contribution directly from your IRA to the organization(s) you choose to favor.

How will this IRA “rollover” to charity affect my tax return?

It is essentially a “non-event” if it does not exceed the $100,000 annual limitation.  It is not reported as income, nor is it deductible as a charitable contribution.

In Summary

If you have an Individual Retirement Account, are over age 70 1/2 and want to make tax-favored gifts, you should strongly consider this new opportunity.  As noted above, you can utilize this planning during the rest of tax year 2008 and throughout 2009.

For more information or questions, please contact Julie Johnson, Lutheran Planned Giving Partnership Coordinator at: 701-232-1480 or 701-388-4781 or by e-mail at: jandcjohnson@cableone.net

Disclaimer: The above article is intended to provide information of a general nature only. It should not be construed as legal, tax and/or financial advice. Readers are urged to consult their own professional advisers for their specific situations.

Download a .pdf of this article (Download .pdf file)

Years ago, as a Church, we used to pay nearly all of a seminarian’s tuition each year. Today, a typical new pastor leaves seminary over $40,000 in debt. In faithful response to this situation, the Eastern North Dakota Synod Endowment Fund was established. Your participation is encouraged to sustain rural ministry and enhance quality pastoral leadership.

Your gift supports:

• Scholarship aid for seminarians
• Pastors’ student loan debt repayment
• Pastors’ pension equity contributions
• Rural internship assistance
• Leadership development

Get Involved:

• Download resources for your church, including posters and bulletin inserts
• Read the Synod Endowment Resource Guide
• Watch and share the Synod Endowment video
• Learn more about the Synod Endowment

Together we make a difference!