getting started with planned giving
TRANSCRIPT
Getting Started With Planned Giving
6/25/15 1pm Eastern
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Our guest presenter »Judi Smith, MA, CFRE
Judi Smith, MA, CFRE, caps a career of more than three decades in development by working with the Arizona Community Foundation in Sedona as a Regional Senior Philanthropic Advisor. She has been an independent consultant to nonprofits, an executive director and staff leader in higher education, arts organizations, and a national foundation. A sought-after speaker and trainer, Judi considers teaching others about topics in our field to be a special talent. A huge believer in planned giving and endowments, Judi loves to talk with individual donors and nonprofits about the planned gifts that build secure futures for nonprofit missions.
GETTING STARTED WITH PLANNED GIVING A WEBINAR FOR BLOOMERANG
JUDI SMITH, MA, CFRE
THE PRO’S AND CON’S OF STARTING PLANNED GIVING
PRO’S
• Positions your organization for the future
• Invites donors to consider significant gifts
• May offer donors income, capital gains, or estate tax advantages
• Creates opportunities to build endowment
• Creates opportunities for planning professionals to affiliate with your organization
• Receiving larger gifts advances your mission and the programs that support it.
PRO’S
• Great opportunity for planned giving
• About 2/3 of Americans have a will or trust
• Less than 10% age 55+ have a charitable bequest
• 2007 Campbell & Company study
• 1 in 3 would consider a charitable bequest if asked
• Intergenerational wealth transfer
• 10,000 Americans turn 65 every day for the next few years
CON’S
• Like any fundraising program, it costs money and takes time.
• Depending upon how deeply you dive, there can be lots to
learn.
• Documentation and paperwork is more stringent than for cash
gifts.
• You should maintain currency with legislation that affects
charitable taxation opportunities.
CON’S
• The type of organization you are may be a detriment
• New organization (not affiliated with a long-established organization)
• An organization that derives most of its funding from government
sources
IF YOU DECIDE TO GO FOR IT, WHAT IS “IT”?
PLANNED GIFTS TO PROMOTE FOR A NEW PROGRAM: BEQUESTS
• Bequest giving
• Consistently about 8% of gift dollars given
• Consistently about 75% of all planned gifts
If you do nothing else, ask your closest friends
to remember you in their will or trust.
MORE ON BEQUESTS
• Remember that bequests can be
• Specific – amount or asset
• Percentage of the estate after bills are paid and specific bequests made
• Remainder
• Contingent
PLANNED GIFTS TO PROMOTE FOR A NEW PROGRAM: BENEFICIARY DESIGNATIONS
• Beneficiary Designations
• Assets that transfer at death
• Usually by a simple form obtained by the custodian of the asset
• Can be the entire final balance or a percentage of the final balance
• Examples
• Life insurance policies
• Pension accounts
PLANNED GIFTS TO PROMOTE FOR A NEW PROGRAM CHARITABLE LIFE INSURANCE
• Charitable Life Insurance -- some thoughts
• Better to let donors work with their own agents rather than to adopt a
program from one company trying to sell your donors
• You will probably want to accept as gifts only policies that build and
maintain cash value.
• However, for recognition purposes, you could choose to recognize term life.
• Be aware that the PPA 2006 requires appraisal standards for life insurance
gifts
• Excellent guideline for evaluating charitable life insurance from PPP
PLANNED GIFTS TO PROMOTE FOR A NEW PROGRAM IRA CHARITABLE “ROLLOVER”
• Something to keep an eye on
• Introduced in two-year increments PPA 2206
• Not currently in effect. My guess, won’t be until late in the year if at
all
• Why you care:
• Easy gift for donors 70.5 and older who must take RMD
• Benefits donor in not paying income tax on distribution – but no charitable
deduction because they haven’t taken it as income
GIFTS YOU MAY NOT WANT IN A NEW PLANNED GIVING PROGRAM
• Real estate
• Many considerations
• Related use or selling
• Environmental considerations
• Cost of maintaining – insurance, upkeep, liability
• Cost of selling
Accepting gifts of real estate requires careful gift acceptance policies.
GIFTS YOU MAY NOT WANT IN A NEW PLANNED GIVING PROGRAM
• Charitable Gift Annuities
• Gift that provides income over one or two lives in exchange for a donor’s
gift of an asset – usually cash or stock
• Simple contract generated by the issuing organization
• Income received is based on age(s) of income recipients
• Donor gets an income tax deduction for a portion of the funding amount
and pays income taxes on a portion of the distribution.
GIFTS YOU MAY NOT WANT IN A NEW PLANNED GIVING PROGRAM
• Charitable Gift Annuities – Some important considerations
• Some state regulations are onerous
• All assets of the issuing charity are pledged to support annuities
• Will need software or a contractor
• There are investment considerations
• Great for repeat gifts
• Many donors are women
• Great resource: www.acga-web.org
RECAP OF POSSIBLE GIFTS
• Relatively easy to facilitate:
• Bequests
• Payable on Death transfers
• Life Insurance (some caveats)
• Requires more stringent oversight and involvement:
• Real estate
• Charitable Gift Annuities
PLANNED GIFTS: SOME CAUTIONS
• Promote the gift instead of the gift vehicle.
• Listen for the gift and suggest gift vehicles based on the
donor’s needs.
• Lose the jargon.
• Your donors don’t know the lingo and you’ll baffle them.
• Even the term “planned giving” is unknown to many donors.
• The term “gift planning” is better understood.
WHO ARE YOUR POTENTIAL PLANNED GIFT DONORS?
THE LATEST BEQUEST RESEARCH
• From Russell N. James III, American Charitable Bequest
Demographics (1992-2012), 2013
• 30% of wills with a charitable provision did not generate bequests
• Most charitable bequest donors die in their 80’s.
• Most wills that provide charitable bequests were completed in the last
five years of the donor’s life.
• However, those who plan at younger ages to leave a bequest and stick
with the plan provide 40% of bequest dollars.
MORE RUSSELL JAMES
• Once a charitable estate provision has been made, 55% retain
the charitable provision over time.
• An older age at death and having no surviving spouse is
associated with larger bequests.
• 2/3 by number
• 71% by dollar amount
OTHER RESEARCH
Campbell & Company 2007 study
• 1 in 3 who did not have a charitable bequest would consider one
• Sweet Spot: ages 40-60; at least a bachelor’s degree; motivated by
doing good
• Income was not a factor in consideration of a bequest.
• Individuals who have already named you in their will give twice as
much annually as those who haven’t ($2,000 average).
FREQUENCYregular smaller
SINGLE widowed Volunteer 9.4%
Single Volunteer
Childless 10,000 attend
college educated longtime
Relationship Loyalty 78 FREQUENCY
$500 annual gift regular smaller gifts
Will/Trust/POD 9.4%
CONVENTIONAL WISDOM
• It’s not the size of the gift.
• It’s not necessarily the recency of the gift.
• It’s the frequency of giving.
LET’S RECAP
• You’re looking for the faithful
• Regardless of whether they’ve attended or given recently.
• The size of their gifts is less important than the frequency.
• Don’t hesitate to look for growth in giving over time and that $2,000 number.
• Age is a factor to consider.
• Higher education is a factor to consider.
• Being spouseless and childless is a major indicator.
GETTING STARTED
INTERNAL PROCESSES
• ED / CEO must be on board with you. A planned giving
program will touch every facet of your operation.
• Update gift acceptance policies.
• Talk with your finance team or auditor about appropriate
booking and investing of planned gifts.
• Learn what your software will allow you to track and set
procedures for tracking planned gifts.
INTERNAL PROCESSES
• Your public relations team will need to help promote the
program on the website, in newsletters, in specialized
communication.
• Your receptionist must be prepared to appropriately direct
calls.
INTERNAL PROCESSES
• Determine your budget
• There is a plethora of existing off-the-shelf material
• Customized websites
• Customizable brochures and newsletters
• Utilize existing staff or hire a specialist?
• In 2012 the mean salary for a planned giving officer was $90,166
• Expect to add $ for CFRE, JD, years of experience, years with the org
• Other factors – area of the country; metropolitan vs. rural
INTERNAL PROCESSES
• Other budgetary considerations
• Attend to continuing professional education for appropriate staff
• Membership in the Partnership for Philanthropic Planning and local or
regional planned giving and/or estate planning councils
• Allocate funds for travel, even if it’s mostly local, there is still mileage
and entertaining.
• Provide planned giving staff the technological resources they need to do
their jobs, from the laptop to necessary software to remote access to
your database.
INTERNAL TO EXTERNAL
• Follow your approval process to begin involving volunteers.
• Board should be invited to become charter members of your
legacy or heritage society
• Possible names
• Qualifying gifts
• Documentation
• Benefits
INTERNAL TO EXTERNAL
• Professional Advisors are vital to your program
• Plan how you will engage them and inform them
• Will you have an advisory council?
• Will you send them a newsletter?
• Will you recognize them in some way?
• Will you offer seminars that help them attain continuing education
credits?
FINALLY. YOU CAN TALK TO A PROSPECTIVE DONOR
• Some possible approaches
• Endowing their annual gift
• A $1,000 annual gift with a 4% spending policy requires a $25,000
endowment.
• A $1,000 annual gift with a 5% spending policy requires a $20,000
endowment.
OTHER APPROACHES
• Make your charities one of your “children.”
• If there are three children, would each child really miss 3 1/3% ?
• That gives the donor 10% to continue taking care of those charities they
cared so much about and supported during their lifetime.
OTHER APPROACHES
• Create a deadline
• Open charter membership in your heritage society for at least 18 months
for people to get their plans in place.
• The deadline will push actions.
• If you list or invite heritage society members, those deadlines can
encourage finalizing documentation.
OTHER APPROACHES
• Help them create their legacy.
• People care deeply about how they will be remembered.
• Why do think that 4 of 5 won’t even tell you you’re in the will?
OTHER APPROACHES
• Help them effect tax-wise giving through their planning
professionals.
• Everyone wants to be “smart” about their financial decisions.
• Help them work with their planning professionals to accomplish their
charitable goals.
legacy D E A T H permanence impact organizational stability
I L L N E S S immortality memorial travel
YOU DO HAVE TO EDUCATE AND ASK
• This is not checkbook giving. This is lifetime asset giving.
• Your organization must be deemed worthy.
• Worthy or not, your donors must know you are “in the
business” of accepting charitable gifts.
• I encourage you to move your organization forward along the
path of promoting planned giving. You will never regret it.
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