planned giving: opportunities, success stories and the role of the board the xyz charity
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PLANNED GIVING:OPPORTUNITIES, SUCCESS STORIES and THE ROLE OF THE BOARD
THE XYZ Charity
The XYZ Charity
Planned Giving: How Does It Address The XYZ Charity’s Needs?
What is planned giving? Planned giving the process of best planning a gift which involves:
the donorthe donor’s professional advisorsthe charity
The planning allows the donor to:select the best assetselect the best method of making the giftdesign a gift that best meets the charity’s
needs
The XYZ Charity
American Association of Fund Raising Counsel Giving USA ‘99
Individuals
Bequests
Foundations
Corporations
$143.71$11.02$19.81
$15.61
The XYZ Charity
Giving USA ‘99Distribution of Charitable $’s
Religions
Education
Human Services
Health
Arts
Public Benefit
Religion: $81.78 Health: $17.95Education: $27.46 Art: $11.07Human Services: $17.36 Public Benefit: $10.94
The XYZ Charity
IRS Statistics and Income Bulletin for Spring, 2000
State # Tax Returns
# Itemized 1998 Deductions
Alabama 1,879,778 494,957 $1,652,502,000
Arkansas 1,095,998 236,683 $838,430,000
Florida 7,076,098 1,766,180 $5,807,358,000
Tennessee 2,491,859 483,394 $1,928,393,000
Texas 8,693,863 1,637,309 $6,184,870,000
All States $5,381,508,196,000
The XYZ Charity
Boston College Social Welfare Institute
Intergenerational transfer of wealth from 1998-2052
$41-$136 trillion in total dollars$6-$25 trillion in gifts to charity Interesting observations on giving
attitudes and practices of wealthy
The XYZ Charity
The Case For Endowment
Cyclical economic variances impact receipt of annual gifts
Increased operating costsNeed for additional research and
programs Increasing competition for fundsDependency on government or private
grantsLosing donors through mortality
The XYZ Charity
US Trust Study of Richest 1% Assets of $3 million or income of $225,000+
When polled on how wealth had increased happiness 55% said that it allowed them to give money to charity
When polled on greatest financial concerns
Next generation will have difficult financial timeInflationTaxesLong term investments unpredictableIncome Level
The XYZ Charity
Other Vital Info
70% of all Americans make a gift to charity on an annual basis
Only 5.71% of Americans leave a gift to charity under will
When polled by NCPG on reasons they did not leave gift to charity, they responded
No one asked them toNo one suggested that they doDidn’t think of it!
The XYZ Charity
The Size of the Nonprofit Sector:There’s a lot of competition!
In 1995, 1,235,905 exempt organizations in the United States (does not include churches which add about 300,000)
Approximately 626,226 are true charities
70,000 new applications for tax exempt status were filed in 1995
The XYZ Charity
What Motivates The Donor?
Commitment to the vital role that your nonprofit services in community
Appreciation of your organization because of its service
Understanding of non-profit’s contribution to quality of life
Gratitude for personal economic success
Perception of role in research/development
Interest in facilitating change
Establishing memorial Personal contact Recognition/attention Influence or control Guilt Tax incentives
The XYZ Charity
What Motivates The Donor?
Take care of and maintain their personal lifestyle
Take care of and maintain their family’s lifestyle
Leave A Legacy for charity
The XYZ Charity
The Ugly Truth: The Tax Bite 1999 Figures (Using Full Tax Credit)
Taxable Estate Tax Due Marginal Rate onExcess Dollars
$650,000 $0 37%
$750,000 $37,000 39%
$1,000,000 $134,500 41%
$1,500,000 $344,500 43%
$2,000,000 $569,500 49%
$2,500,000 $814,500 53%
$3,000,000 $1,079,500 55%
The XYZ Charity
Success In Planning: 3 Scenarios
Meet the Normal Family:
Dad Mom Tom Tim The
67 65 12 12 Dog
$2,000,000 Combined H & W Estate
The XYZ Charity
Estate Plan With Simple Will
Total Assets $2,000,000
At first death in 2018
Deceased Spouse’s Estate $1,806,111
Net to Survivor $1,805,111
At death of survivor in 2022$4,065,588
Estate Tax $1,531,074
Total To Family $2,534,515
The XYZ Charity
Estate Plan With Credit Shelter Trust/Marital Distribution
Total Assets $2,000,000
At first death in 2018
Deceased Spouse’s Estate $1,806,111
Credit Shelter Trust $1,000,000
Marital Share $806,111
At death of survivor in 2022$2,032,794
Estate Tax $913,242
Total To Family $3,152,346
Increased BenefitIncreased Benefit $617,831$617,831
The XYZ Charity
Estate Plan Adding 5% CRUT
Total Assets $2,000,000
Gift $100,000
Charitable Deduction $38,419
At first death in 2018 $1,729,545
Credit Shelter $1,000,000
Marital Share $729,545
At second death in 2022 $1,946,618
Estate Tax $821,895
Total to Family $3,071,340
The XYZ Charity
The Role of Planned Giving In The Development Plan
LEVEL OF DONORINVOLVEMENT
TYPE OF GIVING CHARACTER OFINVOLVEMENT
DONORCOMMITMENT
ESTATE ORPLANNED GIVING
INVESTMENT
DONOR GROWTH MAJOR GIVING INVOLVEMENT
DONOR CONTACT ANNUAL GIVING INFORMATION
IDENTIFICATION
The XYZ Charity
The Role Of Planned Giving In The Development Plan
Annual giving Most basic
fundraising function Designed to raise
operating funds Process dedicated to
identifying and retaining donors
Donors have first contact through annual campaign
Events Calling, letter
writing, company campaigns, direct mail
Special events Membership
societies
The XYZ Charity
The Role of Planned Giving In The Development Plan
Major Giving Significant
attention because of payoff
Big priority of The XYZ Charity
Area of great success in many cities
Events include Membership societies Special events Capital campaigns Endowment
campaigns Readiness
Planning and prep Clear goals and
mission Solid structure
The XYZ Charity
The Role of Planned Giving In The Development Plan
Planned Giving Last element of
development plan Rapidly growing as
“essential” Churches, schools
and hospitals lead the way
Characteristics Ongoing, rather
than event oriented Requires a different
approach Requires ongoing
donor contact and relationships
Must be staffed to succeed
The XYZ Charity
Why Does The XYZ Charity Need Planned Giving?
Demands for services and dollars have increased throughout the community
Planned giving generates currents gifts as well as future gifts
Planned giving provides a method of closer communication and a way to address needs and goals
Planned giving will provide substantial long term results
The XYZ Charity
The Birmingham United Way Success Story
75 Years OldLast Annual campaign raised $23.5 million5 County AreaGreatest increases in last five campaigns
has been leadership giving
The XYZ Charity
Growth of Planned Giving
1991 $1.6 Million in
assets One part time staff
member Planned giving
committee Policies and
procedures
1998 $7.3 million 3 full time staff
members Planned giving
committee Volunteers Professional asset
management
The XYZ Charity
Strategy
Build on the volunteer strengths of the organization
Identify and prioritize prospectsidentify volunteers and staff with
relationships with prospectsMakes calls!
The XYZ Charity
Activities included:
Creating the Covenant Society and setting goals for membership
Creating a special newsletter to focus on the planned giving message
Add staff!Focusing on potential donors and making
personal calls to ask those donors to participate
Looking for niches
The XYZ Charity
Advice From Birmingham
Best Advice: Develop a written
plan of action Build the
organization’s structure
Recruit volunteers Train staff and
volunteers
Avoid: Focusing on policy
for too long Assuming best
prospects are CEOs and Executives
Failing to set activity goals
The XYZ Charity
The Role of the Board
Make endowment building a priorityGet an education!Determine the types of planned gifts to be
offeredSpread the wordInsure support for the effort
The XYZ Charity
The Importance of Making A Plan
Launching a planned giving program can be daunting Complicated issues Takes time and money
Program must be introduced in stages, in a way that can be accommodated and managed
Program should be tailored to fit The XYZ Charity’s strengths and goals
The XYZ Charity
NCPG’s Survey of Donors: Selected Findings
Bequests Under Will 24% left gift of 1-
5% 20% left gift of 6-
10% 11% left gift of 11-
25% 25% were unsure of
percentage!
Other bequest findings Donors initiated
majority of bequests (77.1%)
Membership had the highest affiliation with the charity; personal benefit second
Only 25.5% had notified charity
The XYZ Charity
NCPG’s Survey of Donors: Selected Findings
Reasons Charity Was Not Notified Concern for privacy Did not want the attention Did not want to be asked for more Didn’t think about it Didn’t think it was important Not necessary now May change mind Other
The XYZ Charity
Myths In Planned Giving
Age Survey found high
activity in ages 45-69 More activity in
younger donor giving Charitable giving
peaks in the 55-65 year old age group
Many motivating factors at younger ages
Wealth Wealth alone does not
prompt a planned gift Large bequests
($100K+) are generally from middle to upper class individuals with history of giving and children
New wealthy are good potential donors
The XYZ Charity
Myths in Planned Giving: Selected Findings
Size of Gifts Charitable remainder trusts and charitable
lead trusts are generally larger gifts due to costs. These can be sizeable
Pooled income fund gifts range from $10,000 to $50,000. Some are as small as $5,000
Gift annuities average $17,000. These gifts generally range from $10,000 to $100,000
The XYZ Charity
Developing The Planned Giving Program
Stage One Create recognition society Draft written instruction for naming The
XYZ Charity - make it widely available Establish a method of tracking donors
and potential bequests Create publications and response cards
The XYZ Charity
Developing The Planned Giving Program
Stage Two: Split Interest Gifts - CRTs, CLTs, Gift Annuities, Pooled Income Funds Add educational component to program Create marketing plan Add technical resources to staff Create professional advisory board Purchase PGCalc, Crescendo or other
planning software
The XYZ Charity
Developing The Planned Giving Program
Stage Three: Sophisticated Planning Models Add staff Review marketing plan and expand Consider direct mail Add web site Add educational events
The XYZ Charity
Set Expectations And Measure Success
Set goals related to indirect revenue producing activities Qualify donors on records Identify potential donors Make personal visits Make calls with volunteers Conduct seminars Make follow up calls after seminars Mail brochures
The XYZ Charity
Set Expectations And Measure Success
Set goals related to revenue producing activities Count current gifts and designations Count irrevocable split interest gifts Count revocable gifts