Planned Giving: When It Is Not All That You Do JAMES K. PHELPS, J.D.,

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1 Planned Giving: When It Is Not All That You Do THURSDAY, NOVEMBER 19, 2015 JAMES K. PHELPS, J.D., ACFRE PRINCIPAL JKP FUNDRAISING LLC

2 Objectives learn basic components of a planned giving program determine their organization s current capacity for using planned giving vehicles explore some common and some innovative ways to market planned gifts discover some ways to engage volunteers in the planned giving solicitation process learn easy ways to recognize and steward planned giving donors

3 Definition A planned gift is: "a managed effort by charitable organizations to generate gifts of assets from individuals through the use of estate and financial planning vehicles" (Kelly, Kathleen S. Effective Fund-Raising Management 1998)

4 Considerations 1. Charitable Intent 2. Timing 3. Benefits to Donors 4. Benefits to Charitable Organizations

5 Considerations Advantages to the Donors Income and estate tax deduction Fixed or variable income Supplemental retirement income Avoid or lessen capital gains tax liabilities Increased income compared to other investments Competent management of assets Ability to pass an asset to an heir after organization use

6 Considerations Advantages to the Organization Establishes a long-term relationship with the donor Encourages the donor to think about gifts of assets Often provides future funds Enhances opportunities for charitable bequests

7 What Vehicles Should You Use? Bequests? Charitable Remainder Trusts? Publicly-Traded Stock? Retirement Account Beneficiary Designation? Personal Property? Life Estates? Stock in Closely-Held Companies? Life Insurance Policies? Charitable Gift Annuities? Pooled Income Fund? Real Estate? Charitable Lead Trust? Proceeds from Life Insurance? Gift under IRA Charitable Rollover?

8 Bequest Definition: Transfer of gift through will Revocable Benefit for donor: Charitable bequest not included in donors taxable estate

9 Designated Beneficiary on Retirement Account Definition: A legal contract with the provider of the retirement account to transfer a gift to the charitable organization upon the death of the donor Revocable Benefit for donor: Easy to set up

10 Charitable Gift Annuity Definition: A legal contract between the donor and the charitable organization through which the donor exchanges cash, stocks or other assets for an income for life Irrevocable Heavily regulated Typically has a minimum age and gift requirement Tax benefits: charitable deduction and portion of income tax-free

11 Charitable Remainder Trust Definition: Instrument to transfer legal title of assets to a charitable organization in some future time. The donor retains a fixed or variable income for for life. Irrevocable Benefit for donor: Unlimited number of beneficiaries Varying payout percentages No minimum age

12 Charitable Lead Trust Definition: Trust created to hold assets transferred by the donor to provide income to a nonprofit for a period of grants. At the end of period, the trust assets revert either to the donor or designee. Irrevocable May be tax-deductible depending upon level of control grantor gives up

13 Life Insurance Definition: Contract between a donor and an insurance company through which the donor agrees for the proceeds to be paid to a nonprofit organization at the time of the donor s or insured s death Revocable by signing new beneficiary form May give rise to estate tax liability

14 Pooled Income Fund Definition: A common trust in which many donors make contributions and retain a share of of the fund s earnings each year. As each beneficiary dies, the value of the fund attributable to that death is severed and paid to the organization Irrevocable Must receive income for life

15 Remainder Interest or Retained Life Interest Definition: Donor transfers an asset to the charitable organization by contract while reserving an interest in the use of the asset for life Irrevocable Tax deduction in the year of the gift Donor also retains responsibility for maintenance of the asset

16 Your Job Match the donor with the vehicle that fulfills their desires and is most advantageous to them

17 Steps for Planned Giving Program 1. Board and Staff commit to the concept of planned giving 2. Appoint committee to study the potential of a program and make recommendations to the Board 3. Board adopts plan and approves guidelines 4. Board approves a budget for planned giving

18 Steps for Starting Planned Giving Program 5. Establish and carry out training programs for the Board and staff 6. Identify prospects beginning with the organization s board and current major donors 7. Form a planned giving subcommittee 8. Prepare a marketing plan

19 What Vehicles Should You Use? Bequests? Charitable Remainder Trusts? Publicly-Traded Stock? Retirement Account Beneficiary Designation? Personal Property? Life Estates? Stock in Closely-Held Companies? Life Insurance Policies? Charitable Gift Annuities? Pooled Income Fund? Real Estate? Charitable Lead Trust? Proceeds from Life Insurance? Gift under IRA Charitable Rollover?

20 Start where you are. Use what you have. Do what you can. Arthur Ashe

21 Full Steam Ahead! At a minimum you should accept and request: Bequests Retirement Account Beneficiary Designation Gifts under IRA Charitable Rollover

22 A Little More Involved You should be able to accept the following gifts but they may require a little work: Charitable Remainder Trusts Charitable Lead Trusts Proceeds from Life Insurance Stock in Publicly-Traded Companies

23 You re Going to Need Some Help You should be able to accept these gifts, but you may need partners: Charitable Gift Annuities Pooled Income Fund Life Insurance Policies Life Estates Real Estate Personal Property Stock in Closely-Held Companies

24 How Will You Market Planned Gifts? Newsletters Website Direct Mail Signatures Events Thank You Notes

25 A Secret Weapon Consider offering a matching present-day gift for each planned gift as an incentive

26 A Case Study ACLU Legacy Challenge Donor issued a challenge offering a present-day matching gift for those who included the ACLU Foundation in their estate plan

27 A Case Study Qualifying Gifts Bequests Charitable Gift Annuities Charitable Remainder Trusts Donor had to fill out one-page form including estimate of value

28 A Case Study First round: January 2005 December 2006 Second round: June 2007 May 2009

29 A Case Study ACLU of Oregon Results: January 2005: 66 DeSilver Society Members May 2009: 134 DeSilver Society Members Identified and procured $15.5 million in planned gifts from Oregon donors Identified and procured $188 million planned gifts nationwide

30 A Case Study Lessons Learned: 1. The challenge provided an opportunity to talk to donors about planned gifts. 2. The matching requirements created a deadline that made it easier to close planned gifts. 3. People love matching gifts!

31 How Do You Solicit Planned Gifts? Identify Prospects Train Volunteers Conduct Combined Asks

32 Stewardship and Recognition Planned Giving Society Listing in Newsletters Donor walls or plaques Recognition Events Recognition at Annual Events

33 Questions? Contact Information: James K. Phelps, ACFRE (360)