1. Demystifying Planned Giving THE CULTIVATION PROCESS: Ways to Engage Let’s Begin the Conversation Clyde W. Kunz, CFRE Planned Giving Roundtable of Southern Arizona Strengthening our community by promoting charitable gift planning

2. Course Objectives  Identify good planned gifts candidates  Understand their profile & which types of gifts likely “match” which donors  Generate ideas for cultivating candidates  Learn ideas for starting the conversation!  Understand ways to used planned gifts (i.e., for endowment-building)  Develop strategies for ongoing appreciation of planned gift donors Demystifying Planned Giving 2011

3. Types of Planned Gifts  Bequests  Beneficiary Designations  Life income/split interest gifts  Pooled Income fund  Life Insurance  Bargain Sale  Gifts of Remainder Interest in a Residence or Farm– a.k.a. Life Estate Demystifying Planned Giving 2011

4. Identifying Planned Gift Prospects  Those with a multi-year history of giving to your organization (at least 3 years+)  Those with a multi-year history of volunteerism with your organization  Those whose gifts are small in size, but consistent  Those whose life circumstances dictate changes Demystifying Planned Giving 2011

5. Which Gifts for Which Prospect?  Bequests (frequency score = 10)  Almost anyone; easiest path; inexpensive  Simple to do; Will or codicil to Will  Specific amount; percentage of remainder  Beneficiary Designations (FS = 8)  Also easy and inexpensive (or no cost)!  IRAs or other retirement accounts  Life insurance policy  Specific amount; percentage of remainder Demystifying Planned Giving 2011

6. Which Gifts for Which Prospect?  Life Insurance (FS = 5)  Is insurance need still valid?  Can make charity both the owner and the beneficiary of policy (whole life only)  Easy; inexpensive  Bargain Sale (FS = 1)  Can be complicated  Charity needs to have legal counsel  May generate UBIT Demystifying Planned Giving 2011

7. Which Gifts for Which Prospect?  Gifts of Remainder Interest in a Residence or Farm– a.k.a. Life Estate (FS = 3)  Gives donor a HUGE tax deduction in year of donation  Have to think about end-of-life issues  Pooled Income Fund (FS = 1)  Similar to a mutual fund for donors  Incurs administrative fees; spread over the donor pool  Can benefit higher-end donors to the detriment of smaller donors. Demystifying Planned Giving 2011

8. Which Gifts for Which Prospect?  Life income/split interest gifts  Charitable Gift Annuities (CGA) (FS = 9) Simple contract Low cost Guarantees income Good place to “park” appreciated assets May require an outside administrator Demystifying Planned Giving 2011

9. Which Gifts for Which Prospect?  Life income/split interest gifts  Charitable Remainder Trusts (CRT) (FS = 7) Rule of thumb: $200,000+ Give donor more control Good place to “park” appreciated assets Requires legal counsel to set up Requires administration Requires additional tax filing Demystifying Planned Giving 2011

10. Which Gifts for Which Prospect?  Life income/split interest gifts  Charitable Lead Trusts (FS = 1) Very rare For very large estates ($2M+) Used as a way to pass assets between generations A good place to “park” appreciated assets Definitely requires legal counsel Demystifying Planned Giving 2011

11. PRACTICE!  An elderly couple  Have moderate size investments in highly- appreciated stocks  Do not have sufficient income to meet their monthly needs. Demystifying Planned Giving 2011

12. PRACTICE!  A young business professional and her husband  High income, but have a young family  Want to support the organizations on whose boards they both serve, but want the flexibility to modify those gifts if the organizations don’t hold their interest in the long-term Demystifying Planned Giving 2011

13. PRACTICE!  A 60-something couple with many assets; do not need additional income; just sold a business for several milllion dollars  Recently moved into their lovely, but smaller “last home”  Children are working professionals; live across the country; have been ‘taken care of’ through assets in the couple’s stock portfolio Demystifying Planned Giving 2011

14. PRACTICE!  An elderly couple with many assets; do not need income  Have a developmentally-disabled adult child for whom they provide care Demystifying Planned Giving 2011

15. PRACTICE!  A 50-something board member with a business he wants to donate; business is valued at $1.5 million  Still owes approximately $750,000 on a mortgage loan on the building in which the business is housed  Plans to focus on his other business, which is where his passion now lies Demystifying Planned Giving 2011

16. PRACTICE!  An elderly gentleman with modest assets  Lives comfortably with income from pension fund, social security, and annual distributions from an IRA to which he contributed over many years.  Children are grown and do not need his financial assistance Demystifying Planned Giving 2011

17. Talking About Planned Gifts  Passion for Mission  “You have been volunteering with us for so long; I don’t know what we’ll do when you’re gone!”  “We appreciate your gifts to our annual fund so much; have you ever considered a gift through your estate that might continue to provide support for the X program you care about so much?”  Peer Pressure: “A number of our other volunteers (donors) have chosen to remember the agency through their estate plans. Could I provide you with some information about that as well?” Demystifying Planned Giving 2011

18. Talking About Planned Gifts  Creating a Legacy:  “Can you give the full names of all 4 of your grandparents? Your 8 great-grandparents?”  “Who’s going to miss you when you’re gone?”  “After you’ve taken care of your family’s needs, would you consider…….?”  When you die, everything you have accumulated in your life will go one of three places: Your family - The government - Charities you care about Pick any two! Demystifying Planned Giving 2011

19. How Planned Gifts Are Used  As Part of a Campaign  Make sure that using planned gifts for that purpose is approved  Consider “adding” a planned gift option to a campaign as a way to broaden participation  To Build Endowment  Donors may assume their gift goes to endowment  Make sure they understand how to restrict their gift Demystifying Planned Giving 2011

20. Donor Giving Options Donor Cash Assets Restricted (endowment) Unrestricted Deferred/ planned Deferred/ planned Current Demystifying Planned Giving 2011

21. Recognizing Planned Gifts  Donor Recognition “Club” or “Society”  Annual or semi-annual event  Program book listing / donor wall listing  Ongoing Planned Giving Information  Planned giving newsletters  Seminars / speakers  Other  Lapel pin, desk set, etc. Demystifying Planned Giving 2011

22. THANK YOU! Presentation Handouts at www.ClydeKunz.com (520) 977-4019 Kunz@cox.net