Weaving Philanthropy Into Your Practice as a Trusted Advisor Trends, Tools, and Takeaways You Can Use Today Russ Shaw, Philanthropic Specialist, Wells Fargo Private Bank, Philanthropic Services

2 Helene Whitlock Alley and her husband, Reuben E. Alley Jr. “Fire Victim Leaves Millions” Washington Post, February 7, 2008  $7.3 million bequest gift to Juvenile Diabetes Research Foundation (largest bequest in organization’s history).  “The bequest’s size stunned the foundation, which had known Alley as a dedicated “hundred-dollar donor,” said Alan Berkowitz, the group’s national director of planned giving. ‘I was shocked, shocked,’ Berkowitz said. ‘We had no idea what her wealth was.’”  Reason: her brother had Type 1 diabetes. His battle with diabetes was “heart rending, frightening, and inspiring.”

3 “Big Donation Saved Bit by Bit” Grand Junction, Colorado The Daily Sentinel, February 10, 2008  Lena Sammons Read died at the age of 96 on Feb. 19, 2007, preceded in death by her husband Clarence.  “She lived very frugally in a small trailer in Crawford, about 12 by 5 feet, which she and her husband bought,” [the estate executor] said. “She lived there for 40 years or more, close to the school, and most of the time she walked.”  She left $565,000 in scholarships to help Crawford students pay for higher education for the next 50 years.  Also left bequests for Crawford’s ambulance service, library, fire department, Methodist church, and cemetery district. Crawford, Colorado. Delta County. Population 366 in 2000 census.

4 Multiple Studies on Philanthropic Behavior 1.Planned Giving in the United States NCPG / NFO Research, Inc. (Partnership for Philanthropic Planning) 2.Bank of America High Net Worth Philanthropy Studies , 2008, 2010, and 2012 (The Center on Philanthropy at Indiana University) 3.Bequest Donors: Demographics and Motivations of Potential and Actual Donors. Campbell & Company / The Center on Philanthropy at Indiana University, Iceberg Philanthropy, Green / McDonald / Van Herpt (Direct Mail Donors) 5. The Stelter Company (donors aged 40+) Discovering the Secret Giver, 2008 What Makes Them Give?, The 2011 Study of High Net Worth Women’s Philanthropy and The Impact of Women’s Giving Networks, The Center on Philanthropy at Indiana University, The U.S. Trust Study of The Philanthropic Conversation, Donor Advised Fund Report, National Philanthropic Trust, Giving USA 2014 – Giving USA Foundation, June 17, 2014

5 HNW Households Giving to Charity 2012 Bank of America Study of High Net Worth Philanthropy, The Center on Philanthropy at Indiana University, November 2012.

6 Giving as a % of HNW Household Income 2012 Bank of America Study of High Net Worth Philanthropy, The Center on Philanthropy at Indiana University, November 2012.

7 Benefits of Offering a Philanthropy Service Source: The role of wealth advisors in offering philanthropy services to high-net-worth clients. Scorpio Partnership, 2008

8 The Role of Advisors 2012 Bank of America Study of High Net Worth Philanthropy, The Center on Philanthropy at Indiana University, November Where are individuals going for advice on giving?

9 Intergenerational Transfer of Wealth 1999 Estimate: $41 Trillion, 1998 – 2052 ~$6 Trillion in charitable bequests 2014 Estimate: $59 Trillion, 2007 – 2061 $6.3 Trillion in charitable bequests $20.6 Trillion in lifetime giving $26.9 Trillion (in 2007 dollars) Source: John Havens / Paul Schervish: Boston College: “Millionaires and the Millennium: New Estimates of the Forthcoming Wealth Transfer and the Prospects for a Golden Age of Philanthropy,” 1999 “Why the $41 Trillion Wealth Transfer Estimate is Still Valid: A Review of Challenges and Questions,” 2003 “A Golden Age of Philanthropy Still Beckons: National Wealth Transfer and Potential for Philanthropy,” 2014 The Role of Advisors

10 The Planning Horizon Why? How?

11 Gift Planning Strategies / Vehicles / Assets Vehicles:  Donor Advised Funds  Supporting Organizations  Private Operating Foundations  Private Non-Operating Foundations Assets:  Cash  Marketable Securities  Life Insurance  Closely-held Securities  Real Estate  Tangible Personal Property  Unusual assets  Retirement Assets

12 Gift Planning Strategies Bequests Gifts by Beneficiary Designation  Retirement Accounts  Life Insurance  Other Financial Accounts Life Income Gifts  Charitable Gift Annuities  Pooled Income Funds  Charitable Remainder Trusts  Retained Life Estates Charitable Lead Trusts Conservation Easements

13 IRA Charitable Rollover  Pension Protection Act of 2006 allowed for qualified charitable rollover  Expired in 2009, made retroactive in 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, then by the American Taxpayer Relief Act of 2012 through 12/31/13  Donors are permitted to satisfy their required minimum distribution of an IRA plan by having the plan administrator make a QCD (qualified charitable distribution)  Qualified Charitable Distribution  Donor must be at least age 70 ½  Plan must be a Traditional IRA or Roth IRA  Distribution must be $100k or less and made directly to public charity  Gift must be made to a public charity (not private foundations, donor advised funds)  The donor cannot receive a benefit in exchange for the gift (lifetime split interest gifts will not qualify)  NOT YET EXTENDED TO 2014

14 1. What percentage of people have created a planned gift? Percentage of respondents who have created a planned gift: Campbell, 2007: ~8% PPP, 2001: ~11% Iceberg (Direct Mail), 2007: ~17% Stelter, 2012: 21% to 27% BOA (HNW), 2012: 43%

15 2. What percentage of people would consider leaving a planned gift? Percentage of respondents who would consider leaving a planned gift: Iceberg (Direct Mail), 2007: ~18% Campbell, 2007: ~31% Stelter, % to 40%

16 3. Most Planned Gifts are Bequests and Beneficiary Designations TRUE TRUE or FALSE?

17 Bequest used as Vehicle: PPP (survey of donors), 2001 : ~80% Iceberg (survey of nonprofits), 2007 : 90% to 100% 2012 Stelter Donor Insight Report: ~50% Bank of America Studies of High Net-Worth Philanthropy: Vehicles used by High Net-Worth Households: Bequest55.9%46.5%43.0% Donor-Advised Fund20.6%17.5%17.1% CRT / CLT17.3%15.4%*15.5%* Foundation13.9%12.0% 9.0% Charitable Gift Annuity 8.4% * * *Note: In the 2010 & 2012 studies, CGAs were included with CRTs / CLTs TRUE: Bequests & Beneficiary Designations

18 Giving Vehicle Use by HNW Households 2012 Bank of America Study of High Net Worth Philanthropy, The Center on Philanthropy at Indiana University, November 2012.

19 Donor Advised Funds are Popular! 2013 Donor-Advised Fund Report, National Philanthropic Trust

20 Charitable Vehicles Recent Usage 2013 Donor-Advised Fund Report, National Philanthropic Trust

21 4. Most people tell the charity about their planned gift. FALSE TRUE or FALSE?

22 Percentage who have informed charity: Iceberg (Direct Mail), 2007: ~8% PPP, 2001: ~33% Stelter (age 40+), 2008: ~36% Stelter (age 40+), 2012: ~40% Current Planned Givers:~49% Best Prospects: ~36% Myth: Most People will Tell The Charity 2012 Stelter Donor Insight Report Definitions: Current Planned Givers: “People who have a planned gift in place” Best Prospects: “People who say they will definitely or probably make a planned gift in the future”

23 5. Most Planned Gifts are made by WEALTHY people FALSE: At time of bequest commitment, 58% of bequest donors had income of less than $75,000. Partnership for Philanthropic Planning 2001 survey TRUE or FALSE?

24 Income at time of bequest commitment: <$20k 11% $ % $ % $ % $ % $ % $ % $ % $175+ 8% Median: $60.4 / Mean: $75.9 Myth: Only Wealthy People 58% Partnership for Philanthropic Planning 2001 survey

25 6. Most Planned Gifts are made by OLDER people FALSE Partnership for Philanthropic Planning 2001 survey TRUE or FALSE?

26 PPP, 2001 Survey: Age at time of bequest commitment: % % % % % % Mean age: 58 Myth: Only Older People Campbell & Company, 2007: Has charity named in will: <30 0.7% % % % % % % 65% 60%

27 Myth: Only Older People Age 40-49Age 50-59Age 60-69Age 70+ Current Planned Givers 21%26%27%26% Best Prospects 40%32%18%10% 2012 Stelter Donor Insight Report Definitions: Current Planned Givers: “People who have a planned gift in place” Best Prospects: “People who say they will definitely or probably make a planned gift in the future”

28 7. A long history of giving is the hallmark of a planned giver. Not Necessarily Among people who have a PG in place, when gift was made: Had been donating to nonprofit for 10+ years: 40% Had been donating to nonprofit for less than 5 years:20% Had never donated to the charity:21% 2012 Stelter Donor Insight Report TRUE or FALSE?

29 8. The Best indicator that a person is likely to leave a planned gift is: A.Their WEALTH B.Their AGE C.Their Church Attendance D.Their LOYALTY to a cause E.Lack of Living Children F.Their VEHICLE - SUV vs Sedan G.FREQUENCY of Giving Multiple Choice

30 Loyalty The best predictor of willingness to make a planned gift: long-term loyalty to an institution or cause. Over 90% of planned giving donors exhibit loyal patterns of giving. Source: Samuel D. Caldwell, President, The Planned Giving Company. “The Old Gray Mare Ain’t What She Used to Be: The Revolution in Planned Giving Marketing.” 2007, 2008 © 2007 The Planned Giving Company LLC (used with permission)

31 9. The PRIMARY way that donors hear about gift planning options is through their legal or financial advisor FALSE TRUE or FALSE?

32 How Learned About How Donors First Learned about Gift Options The Charity through its published materials 34% A legal or financial advisor21% Family or Friends 20% The Charity through an individual visit 11% Speaker at a financial planning seminar 8% General knowledge / self 7% Another donor 6% Other 6% Don’t Know / no answer 9% Partnership for Philanthropic Planning 2001 survey

33 Initiating the Philanthropic Conversation 2013 The U.S. Trust Study of the Philanthropic Conversation: Understanding advisor approaches and client expectations, October 2013

34 Focus of Philanthropic Conversations 2013 The U.S. Trust Study of the Philanthropic Conversation: Understanding advisor approaches and client expectations, October 2013 % of Advisors who raise the philanthropic discussion: From a Technical Perspective: 71% From a Goals / Passions Perspective: 35%

For most people, tax reduction is the most important motivation for their giving. False TRUE or FALSE?

36 Motivation Desire to support the charity 97% The ultimate use of gift by the charity 82% Desire to reduce taxes 35% Long-range estate / planning issues 35% Create a lasting memorial for self or loved one 33% FALSE: Desire to Reduce Taxes Partnership for Philanthropic Planning 2001 survey

37 Trends in Philanthropy: Donor Motivation 2012 Bank of America Study of High Net Worth Philanthropy, The Center on Philanthropy at Indiana University, November 2012

38 Donor Motivation: Women and Men The 2011 Study of High Net Worth Women’s Philanthropy and The Impact of Women’s Giving Networks, The Center on Philanthropy at Indiana University, December 2011, sponsored by Bank of America Merrill Lynch * The difference between men and women was found to be statistically significant.

39 What if the Tax Deduction was Eliminated? 2012 Bank of America Study of High Net Worth Philanthropy, The Center on Philanthropy at Indiana University, November 2012

40 Tax Benefits as a Motivation for Giving 2013 The U.S. Trust Study of the Philanthropic Conversation: Understanding advisor approaches and client expectations, October 2013

41 Women and Philanthropy  Increasing visibility and involvement in philanthropy  Two key predictors of philanthropy:  Education  Income Women give differently than men:  Different motivations  Higher expectations  Loyalty? The 2011 Study of High Net Worth Women’s Philanthropy and the Impact of Women’s Giving Networks

42  43% of the nation’s top wealth holders are women 1  ~40% of all businesses in the US are owned (50% or more) by Women 2  Women live longer than men by ~5.2 years on average 3  Women are responsible for 83% of all consumer purchases 4  Charitable Decisions in High Net Worth households:  Women are sole decision-maker or equal partner: ~87% 5  Gender Differences in Philanthropy are Real 6  Single women more likely to give than single men  Married men and married women more likely to give than single men Sources: 1. IRS, Personal Wealth Tables, Center for Women’s Business Research 3. Center for Philanthropy at Indiana University, Women’s Philanthropy Institute 4. Diversity Best Practices & Business Women’s Network Study of High Net Worth Women’s Philanthropy 6. Center for Philanthropy at Indiana University, Women’s Philanthropy Institute Women & Philanthropy

43  Women who give want to: 1. Create something in response to needs 2. Change society for the better; make a difference 3. Commit with shared vision 4. Connect, build relationships 5. Collaborate, build partnerships 6. Celebrate; have fun 7. Control their finances and their lives 8. Gain confidence in making decisions and influencing family and friends 9. Finding courage to take risks to transform society Women’s Motivations for Giving Sondra Shaw-Hardy and Martha Taylor, co-founders Women’s Philanthropy Institute, authors of The Transformative Power of Women’s Philanthropy.

SOURCE: Giving USA Foundation | GIVING USA 2014 Total giving, (in billions of dollars) Giving USA 2014 Data Slides Use of the Giving USA 2014 content is subject to the Giving USA 2014 Service Agreement, which prohibits us from distributing the slides in handouts. Please download the free Giving USA 2014 report Highlights at

SOURCE: Giving USA Foundation | GIVING USA 2014 Total charitable giving graphed with the Standard and Poor's 500 Index, (in billions of inflation-adjusted dollars, 2013 = $100) Giving USA 2014 Data Slides Use of the Giving USA 2014 content is subject to the Giving USA 2014 Service Agreement, which prohibits us from distributing the slides in handouts. Please download the free Giving USA 2014 report Highlights at

SOURCE: Giving USA Foundation | GIVING USA 2014 Giving by source: Percentage of the total in five-year spans, (in inflation-adjusted dollars, 2013 = $100) Giving USA 2014 Data Slides Use of the Giving USA 2014 content is subject to the Giving USA 2014 Service Agreement, which prohibits us from distributing the slides in handouts. Please download the free Giving USA 2014 report Highlights at

SOURCE: Giving USA Foundation | GIVING USA contributions: $ billion by type of recipient organization (in billions of dollars – all figures are rounded) Giving USA 2014 Data Slides Use of the Giving USA 2014 content is subject to the Giving USA 2014 Service Agreement, which prohibits us from distributing the slides in handouts. Please download the free Giving USA 2014 report Highlights at

SOURCE: Giving USA Foundation | GIVING USA 2014 Giving by type of recipient: Percentage of the total in five-year spans, * (adjusted for inflation, 2013 = $100, does not include “unallocated”) Giving USA 2014 Data Slides Use of the Giving USA 2014 content is subject to the Giving USA 2014 Service Agreement, which prohibits us from distributing the slides in handouts. Please download the free Giving USA 2014 report Highlights at

49 Trends Among the Ultra HNW Bill & Melinda Gates Foundation ($40.2b as of 9/30/13) Change in timeline for spending: From lifetimes plus 50 years To lifetimes plus 20 years Warren Buffett: $3.6 billion to NoVo Foundation, the Howard G. Buffett Foundation, and the Sherwood Foundation $13 billion to the Bill & Melinda Gates Foundation ( ) The Giving Pledge: To commit at least 50% of their wealth during lifetime or in will 127 signers as of 5/12/14 Not without critics Spot a Trend?

50 More Trends in Philanthropy… #GivingTuesday “Black Friday,” “Cyber Monday,” and… December 2, 2014 Related “Day of Giving” events: Love UT Give UT Day: March 20, ~$1,060,000 Give Local America: May 9, $53M+ Foundation Gifts to Higher Ed: ~$9.2 billion, accounting for 29.5% of all gifts to higher ed Between 2011 and 2012: increase of 5.5% Spending Rates: Most foundations have maintained assets; minority spending down 2007 to 2009: 90% grant at least 5% 19% had payout rates of 10% or more Foundation Source : small foundations: 11.6% toward grants & other charitable expenses

51 More Trends in Philanthropy… Mega Bequests in 2012 (selected) Fred Fields: $166 M to The Oregon Community Foundation Coe Manufacturing Company Guy David Gundlach: $140 M to Elkhart County Community Foundation Insurance company entrepreneur Sisters Jean & Nancy Davis, and husband / wife Junius & Zella Allen: $20M total to The Pittsburgh Foundation (unrestricted) Richard & Geri Brawerman: $20M to The Jewish Federation of Greater Los Angeles (scholarships) Dr. Louis and Violet Rubin: $15M to the Community Foundation of Northern Illinois (DAF to support local programs) Garthe & Grace Brown: $10M+ to The Oregon Community Foundation (DAF to support cardiac research at Oregon Health & Science University)

52 More Trends in Philanthropy… Impact Investing: Increasing “Investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial gain.” - J.P. Morgan & the Global Impact Investing Network (G.I.I.N.) 2012 Survey: 99 Impact investors $8 billion invested in 2012 for social impact Plans: $9 billion in 2013 Community Foundation of Utah: Mission Related Investments Issue Funds The Utah Fund Social Investors Forum The Utah Social Enterprise Collaborative The 2010 Social Innovation Challenge

53 Worldview: Values & Bridging Generations © The New Yorker Defined by Experiences Between Ages 17-23

54 Generational Cohorts Age Traditionalists:  Depression ( )~93 to 100+  World War II ( )~86 to 93  Post War ( )~69 to 85 New Philanthropists:  Older Boomer ( )~59 to 68  Younger Boomer ( )~50 to 58  Generation X ( )~38 to 49  Millennials ( )~30 to 37 The Philanthropic Planning Companion - Brian M. Sagrestano and Robert E. Wahlers

55 World War II Cohort (1922 – 1927) Patriotic Respectful Romantic Self-Reliant

56 Post War Cohort (1928 – 1945) The American Dream Conformity Stability Family Self- fulfillment

57 Generation X (1965 – 1976) Free Agency Independence Friends over Family Cynical Street Smart Quality of Life Acceptance of Sex and Violence

58 Millennials (1977 – 1984) Hopeful Fearful Adaptable Tolerant Diversity

59 Values Comparison by Cohort World War IIPost-WarGeneration XMillennials Self-reliant Self- fulfillment IndependentAdaptable Patriotic The American Dream Cynical about future Hopeful about future RomanticFamily Friends over Family Change is good RespectfulConforming Free agent / street smart Tolerant

60 Additional Ideas  “Strategic Philanthropy” Definition?  Checkbook Philanthropy?  Having a “plan” for philanthropy (DAF, PF, CRT, etc.)?  Giving with focus?  Outcome evaluation, based on a theory of change?  “Transformational philanthropy” vs. “Incremental philanthropy?”  Buying vs Building

61 Weaving Philanthropy Into Your Practice  Start the conversation!  Philanthropy is very important to most HNW / UHNW clients  Philanthropic values can bridge the generations  Focus on the “WHY?”  Values are everything  Discovery Starter Questions  What nonprofits have you been supporting, and why?  What inspires you to make your charitable gifts?  Which of your recent gifts have given you the most satisfaction, and why? Why? How?

62 Weaving Philanthropy Into Your Practice  Women are changing the face of philanthropy  DAFs are increasingly popular  A “philanthropy practice” can be extremely rewarding! Thank You

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