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S HOULD P RESBYTERIANS I NCLUDE T HE C HURCH IN THEIR W ILLS ? The role of planned gifts and endowments in the financial life of the church Presented by.

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Presentation on theme: "S HOULD P RESBYTERIANS I NCLUDE T HE C HURCH IN THEIR W ILLS ? The role of planned gifts and endowments in the financial life of the church Presented by."— Presentation transcript:

1 S HOULD P RESBYTERIANS I NCLUDE T HE C HURCH IN THEIR W ILLS ? The role of planned gifts and endowments in the financial life of the church Presented by Marc Carmichael, J.D. R&R Newkirk Company

2 B EQUESTS A RE G ENERALLY V IEWED AS A G REAT B LESSING TO THE C HURCH

3 J OHN K NOX ’ S W ILL D IDN ’ T L EAVE A NYTHING TO THE C HURCH …But Today’s Presbyterians Should!

4 B EQUESTS A RE M OST P OPULAR P LANNED G IFT, R EPRESENTING 90% OF T OTAL Why are donors more receptive to making major gifts at death? What special motivations are there for making gifts through estate plans? “If I had known I was going to live this long, I would have taken better care of myself.”

5 “If we’re going to live a very long time, we need to take VERY good care of our money” - Bequest Donors

6 B EQUESTS = 90% OF P LANNED G IFTS Why are donors more receptive to making major gifts at death? What special motivations are there for making gifts through estate plans? “If I had known I was going to live this long, I would have taken better care of myself.”

7 G IFTS T HROUGH E STATE P LANS E NABLE C ONGREGANTS TO A CCOMPLISH G OALS : Plan a significant, future gift that doesn’t jeopardize current financial security Leave a legacy for good Provide a level of support that seemed impractical during life (e.g., tithing at death: “I bequeath 10% of my estate to Fairview Presbyterian Church”) Perpetuate their annual giving Fund underfunded ministries Expand mission and outreach of their church Reduce taxes on their estates

8 R EVOCABLE E STATE G IFTS : A P RACTICAL O PTION D URING T OUGH E CONOMIC T IMES Will bequests Life insurance beneficiary designations Retirement accounts Revocable living trusts Pay on death accounts

9 G IFTS T HROUGH E STATE P LANS E NABLE C ONGREGANTS TO A CCOMPLISH G OALS : Plan a significant, future gift that doesn’t jeopardize current financial security Leave a legacy for good Provide a level of support that seemed impractical during life: Tithing at death (“I bequeath 10% of my estate to Fairview Presbyterian Church”) Perpetuate their annual giving Fund underfunded ministries Expand mission and outreach of their church Reduce taxes on their estates

10 Y OUR B EQUEST C AN P ERPETUATE Y OUR A NNUAL C ONTRIBUTIONS TO O UR C HURCH If Your$ 500You Can$ 10,000 Annual$ 1,000Perpetuate$ 20,000 Gifts$ 1,500Them with a$ 30,000 Total:$ 2,000Bequest of$ 40,000 $ 3,000at Least:$ 60,000 $ 4,000$ 80,000 $ 5,000$100,000 $10,000$200,000 Leaving 20 times your annual gift total through your estate plan can perpetuate your giving (assuming a 5% annual return)

11 G IFTS T HROUGH E STATE P LANS E NABLE C ONGREGANTS TO A CCOMPLISH G OALS : Plan a significant, future gift that doesn’t jeopardize current financial security Leave a legacy for good Provide a level of support that seemed impractical during life: Tithing at death (“I bequeath 10% of my estate to…) Perpetuate their annual giving Fund underfunded ministries Expand mission and outreach of their church Reduce taxes on their estates

12 H EIRS N ORMALLY R ECEIVE I NHERITANCES F REE OF A NY I NCOME T AX – E XCEPT FOR …

13 M EMBERS S HOULD L EAVE I NCOME - T AX -B URDENED A SSETS TO T HE C HURCH U.S. Savings Bonds Retirement accounts, including IRAs Accounts receivable of professionals Installment payments on land sale contracts Unpaid commissions

14 C HARITABLE B EQUESTS ARE 100% D EDUCTIBLE AGAINST E STATE T AX

15 “What’s Congress going to do about the estate tax?”

16

17 I T ’ S T HANKSGIVING D AY 2009 AND R ICH U NCLE L OUIS F EELS U NWELL

18 Risky Year

19 S ELF -P RESERVATION W ILL C LAUSE FOR W EALTHY O LD P EOPLE IN 2010 “If I should die under suspicious or unnatural circumstances during the year 2010, then my entire estate shall pass to the Church...”

20 C OMING S OON : E STATE T AX L EGISLATION T HAT C ONTINUES 2009 R ULES IN 2010 AND B EYOND $3,500,000 gift and estate tax “exemption” 45% tax rate above the exemption level More relief for small businesses, farms and ranches (valuation, installment FET payment) Full step-up in basis for capital gains at death 100% marital/charitable deductions continued Gift tax annual exclusion remains ($13,000 in 2009) “Portable” credit inherited by surviving spouse

21 G IFTS T HROUGH E STATE P LANS E NABLE C ONGREGANTS TO A CCOMPLISH G OALS : Plan a significant, future gift that doesn’t jeopardize current financial security Leave a legacy for good Provide a level of support that seemed impractical during life: Tithing at death (“I bequeath 10% of my estate to…) Perpetuate their annual giving Fund underfunded ministries Expand mission and outreach of their church Reduce taxes on their estates A fast track to the Heavenly Kingdom (just kidding)

22 C URRENT T RENDS IN D ONOR A TTITUDES Preference for making major gifts after death, especially in today’s economy Desire to give to specific projects or ministries Frequent desire to give to endowment… the gift that goes on giving

23 Mom, did you know that a one-time gift of $10,000 could endow my allowance? R ISKS AND R EWARDS OF C HURCH E NDOWMENTS

24 D RAWING UPON THE W ISDOM OF M EN AND W OMEN E XPERIENCED IN E NDOWMENTS

25 Y OU ’ LL F IND D IFFERENT O PINIONS ABOUT C HURCH E NDOWMENTS “Endowments are the work of the devil!” “But not if they are thoughtfully created and properly managed.”

26 C OULD A L ARGE E NDOWMENT C AUSE A D ECLINE IN C HURCH I NVOLVEMENT BY C ONGREGANTS ? Would you want an endowment so large that members would never need to put another dollar in the collection plate?

27 C OULD E NDOWMENT R ESTRICTIONS D ISTORT C HURCH M INISTRIES AND P RIORITIES ? Purchase and maintenance of a parsonage (one of the town’s finest homes) Funding of full-time minister of music Program of musical performances by nationally known artists The Case of the Family Trust With private endowments, the church’s only choice may be to “take it or leave it.”

28 P OTENTIAL FOR D ISCORD IN C ONGREGATION OVER A PPLICATION OF E NDOWMENT F UNDS

29 T HE C HURCH WITH THE C OLLAPSING R OOF Two Methodist churches in same small town One church with $250,000 endowment faced closure after roof was declared unsafe Congregation’s choice: Exhaust endowment to rebuild the roof or merge with the other church Members chose merger, after sometimes-bitter debate

30 Y OU ’ LL F IND D IFFERENT O PINIONS ABOUT C HURCH E NDOWMENTS “Endowments are the work of the devil!” “But not if they are thoughtfully created and properly managed.”

31 G UIDELINES FOR S UCCESSFUL E NDOWMENTS – R EV. M ICHAEL J ANES Start with a sound strategic plan – with a vision for the future and the role endowment should play The purpose of an endowment should be to seize opportunities, not to solve financial problems that confront the congregation Outreach and mission should be the primary focus of an endowment fund, not operating expenses (salaries, heat, light, etc.), but capital improvements, including maintaining the physical plant in good condition, are a worthy purpose.

32 S EVEN E NDOWMENT E SSENTIALS – J OSEPH O. B ULL, P LANNED G IVING T ODAY 1. Know why you need (or have) an endowment 2. Know what your endowment is designed to accomplish 3. Develop consistent, coherent written policies 4. Develop investment policies 5. Develop gift acceptance procedures, including an information sheet and a draft gift agreement 6. Promote your endowment and opportunities to give to it 7. Plan for ongoing communications with endowment contributors and their families

33 B ARBARA G. W HEELER T HE M ONEY IN THE M ILK C AN Spend endowment (1) for the sake of others (2) to accomplish something important (3) that otherwise not have been possible. Recognize the special resources that endowment provides, not because you earned or deserved them, but because God is good and bountiful. Don’t hoard these resources, and don’t spend them on luxuries for yourselves or to exempt yourselves from the responsibilities that less fortunate congregations face every day. Spend them. Search out the kinds of mission that are unpopular, or unfashionable, or complicated or in need of continuing or extensive support

34 E LEMENTS OF S UCCESSFUL C HURCH E NDOWMENT P ROGRAMS – T. B RUCE W EAVER Program would consist of four separate funds: 1) General Endowment Fund 2) Designated Endowment Fund 3) Capital Facilities Fund 4) Programs, Mission and Benevolence Fund Theology DevelopmentManagement

35 E LEMENTS OF S UCCESSFUL C HURCH E NDOWMENT P ROGRAMS – T. B RUCE W EAVER Affirmed by clergy, lay leadership and congregation Managed in a social and fiduciary responsible manner Increasing in size through bequests Theology DevelopmentManagement

36 H OW D O Y OU G ET B EQUESTS ? Y OU ASK FOR THEM Obtain and distribute a basic wills brochure Change the church stationery to include the phrase: “Have you included the church in your will?” Promote bequests every way you can Consider a “Heritage Society” (bequest recognition)

37 M ESSAGE TO C HURCH M EMBERS You need a will Here’s how to get a will Review your will regularly Here’s how to name our church in your will (include your correct legal name and sample bequest language) Consider bequest alternatives that designate the church as beneficiary of life insurance, retirement accounts, financial deposits and brokerage accounts.

38 H OW D O Y OU G ET B EQUESTS ? Y OU ASK FOR THEM Obtain and distribute a basic wills brochure Change the church stationery to include the phrase: “Have you included the church in your will?” Promote bequests on a regular, ongoing basis Consider a “Heritage Society” (bequest recognition)

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40 I NCLUDE I NFORMATION ABOUT E STATE G IVING ON THE C HURCH W EBSITE The Church website should tell the world you are glad to receive bequests Provide your church’s correct legal name Other information about endowments and other planned gifts

41 E STATE P LANNING S EMINARS /W ILLS C LINICS 75% estate planning, 25% gift planning Schedule breaks Rotating roundtable discussions Individual Counseling?

42 T IPS FROM K IM W ARNER Wills poster Simple brochure Publicize planned gifts Include reports on endowment in mailings Minute for mission One or two seminars a year Bulletin inserts on wills and bequests Mailing reporting on results of planned gifts and their impact 42 Presbyterian Endowment Education and Resource Network: www.peernetwork.org

43 R ECOMMENDED R EADING ON E NDOWMENT C HALLENGES AND O PPORTUNITIES Elements of Successful Church Endowment Programs © by T. Bruce Weaver, Jr. The Money in the Milk Can, by Barbara G. Wheeler Creating a Commonwealth, by James Hudnut- Beumler. All can be found at www.peernetwork.org under “Library” section.www.peernetwork.org


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