Practical Planned Giving: DON’T BE INTIMIDATED! Southeast Tennessee Chapter Association of Fundraising Professionals February 24, 2016

 Integration of Donor’s Personal Goals Financial Goals Estate Planning Goals Charitable Goals  Culminates with a Gift to Your Charity that can have a meaningful impact

Why is Planned Giving Important?  Creates an opportunity for giving when a cash gift is not possible.  Creates an opportunity for maximizing giving when blended with major giving.  Creates an opportunity for donors to make the best impact for the organization they want to support.

Current GivingPlanned Giving “All or Nothing”“Something for Everyone” SimpleSimple to Complex CurrentCurrent or Deferred Well-KnownLesser Known Strict RequirementsFlexibility Few OptionsMany Options

Why You Need to Focus on Planned Giving  Giving USA – In 2014, Americans donated $ Billion to Charity (highest total in reports’ 60 year history)  $28.13 Billion of that giving was from bequests  This was an increase of 15.5 percent in bequest giving over 2013.

 The Chronicle of Philanthropy’s summary of top 50 donors in 2014 indicates that over 40% were at least 80 years old, and over 70% were 60 and older.

 According to Robert Sharpe, The Sharpe Group, when reviewing all the bequests from more than 100 representative organizations over time, 89% of bequest donors died at age 70 or older.

 Dr. Russell James, when conducting research regarding bequests for charity found that 80% of charitable bequest dollars are coming from people who make the relevant will at age 80 or older. His survey respondents indicated that 2/3 of all charitable estates came from those who reported having no charitable gift included in their plans within five years of death.

What does this mean for your organization?  You need to spend time cultivating relationships with those who are age 70 an older  With the oldest baby boomers reaching age 70, who are in their retirement years, they may be “asset rich” and “income poor”, so this may lead to considering types of planned gifts.

First Focus for Planned Giving Program  Identify those current donors to your organization who may be prospects  Do they volunteer?  Have they been involved for a long period of time?  Are they passionate about what you do?

 Look at their giving history  (giving for 10 consecutive years to the annual fund – even small amounts)  Look at their age  (remember the statistics – age 70 and older)

 Have a personal visit with the donor to assess and cultivate the relationship necessary to have the discussion about that donor’s personal goals, financial goals, estate planning goals, and charitable goals  There is no substitute for having the face to face conversation about giving and financial resources!

 Give your current donors the opportunity to tell you that you are included in their estate plans  checkbox on annual giving forms, online forms, etc.  E-newsletters, or other digital marketing, where the donor can respond and ask for information, brochure, etc.

Don’t let the techniques stop you  There are many ways to accomplish the donor’s intent through planned giving (with CRUTs, CRATs, CLTs, CRTs, CGAs, etc.)

 You don’t have to know the technique for each of these gifts, but you do need to recognize when one of these gifts might be useful for your donor

 Get help with the technique from their attorney, or get help from an advisory board for your organization if you don’t have someone with this expertise on staff

We Are All Planned Giving Officers  Everyone who raises money for your organization is a planned giving officer. Equip all of your fundraisers with basic information about the types of gifts available so they can recognize when a planned gift may be useful

Information for All Fundraisers is Key

Bequest (most common) Charitable Gift Annuity (CGA) Charitable Remainder Trust (CRT) Charitable Lead Trust (CLT) Life Estate Reserved/Gift of Remainder Pooled Income Fund (PIF) Bargain Sale Life Insurance Policies Other Gifts - IRAs

Most Common type of Planned Gift Donor includes a provision in the Will or Trust to benefit the charity upon the donor’s death The charity is designated as a beneficiary of the will or trust The donor can be specific about how the money will be used by the charity Provides donor lifetime flexibility Easy to implement Estate Tax Deduction available if needed

CGA is a Contract Between a Donor and a Charity. Donor Makes a Gift to Charity. Charity Agrees to Make Fixed Payments for Life of Income Beneficiaries. Charity must follow statutory requirements (Tenn. Code Ann. Sections , et seq., Tenn. Rule and Reg ) and registration in various states may be necessary

Older Donors Who Want Fixed Payments Cash Donors Asset Rich, But Cash Poor Donors Typically $10,000+

Donor Makes Gift to Trust Trust Makes Payments to Donor For One or More Lives For Term of Years Remainder to Charity

Cash Donors Asset Rich, Cash Poor Typically $100K+

Gift to Trust Trust Makes Payments to Charity For Term of Years Remainder to Donor or Family (may want to pass a specific property to family while avoiding tax liability) Gift is usually $1,000,000 or more

Draft Trust Document Donor Transfers Cash or Property to Trust Trust Makes Regular Payments to Charity Asset Passes to Donor or Family

Donor Gifts Property to Charity Donor Retains Right to Use or Live on Property for Lifetime Donor Receives a Current Tax Benefit Donor wants current income tax deduction Donor has enough liquid assets for living expenses

Donor Executes Deed Transferring Property to Charity Donor Reserves Life Estate Donor Executes MIT Agreement Maintenance, Insurance, Taxes At Donor’s Death, Asset Passes to Charity

Donor Gifts Cash or Stock to Charity Charity Invests Gift in Fund with Other Gifts Charity Pays Proportionate Share of Earnings to Donor Charity Receives Remainder at Donor’s Death Donor receives income during lifetime Donor gets income tax deduction and may bypass capital gains tax

Charity Buys Property for Less than Fair Market Value Donor Gets Income Tax Deduction for Difference Between Fair Market Value and Sale Price Benefits donors who have appreciated property or need cash or debt relief

Donor Deeds Property to Charity Charity Pays Donor Reduced Price Donor Takes Income Tax Deduction

Life Insurance Policies  Your organization should be the owner and the beneficiary of the policy  Your donor can make a gift to your organization for the premium payments and receive a charitable income tax deduction  Donors may donate paid up policies, or they may purchase a policy to donate to your organization  May be a great opportunity to get staff involved with policies purchased on their behalf by the organization – they make the organization the owner and beneficiary of their policy

IRA Rollover  December 2015 – Congress permanently passed legislation to allow IRA Rollover gifts to charity  Donor must be 70 ½ years old, and donor can give up to $100,000 to charity from his/her IRA

Allison A. Cardwell, J.D., CFRE Director of Gift Planning Sewanee: The University of the South 735 University Avenue Sewanee, TN (931)