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Creating a Strategy for Planned Giving

Creating a Strategy for Planned Giving. Kathryn W. Miree Kathryn W. Miree & Associates, Inc. The Role of Gift Planning In Your Development Program. What Is Planned Giving?. Gift planning that considers Donor’s personal goals Donor’s charitable goals Most effective gifts

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Creating a Strategy for Planned Giving

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  1. Creating a Strategy for Planned Giving Kathryn W. Miree Kathryn W. Miree & Associates, Inc.

  2. The Role of Gift Planning In Your Development Program

  3. What Is Planned Giving? • Gift planning that considers • Donor’s personal goals • Donor’s charitable goals • Most effective gifts • Effective planning enhances all gifts • Expands opportunities for major gifts • No longer narrow definition • Not deferred alone • Involves donors, advisor, and charity

  4. The Value of Gift Planning for Major and Planned Gifts • Gift planning is the rising star of fundraising in this market. • Gift planning involves: • The donor • The donor’s advisor • The charity • Working together to create the most effective gift for the donor and the charity.

  5. Revisiting the Pyramid Donor Commitment Gift Officer Involvement PLANNED GIVING MAJOR GIVING ANNUAL GIVING

  6. The Benefits of Planned Giving • It opens the door to the wealth transfer • The IRS Statistics of Income Bulletin - data from 2008 tax year • Boston College Social Welfare Institute

  7. IRS Statistics of Income Bulletin

  8. Boston College Social Welfare Institute • Boston College Social Welfare Institute measured the transfer of wealth expected from generation to generation between 1998 and 2052. • Assuming 2% growth - $41 trillion • Assuming 4% growth - $136 trillion • Between $6 trillion - $25 trillion to charity • Updated in 2003 - stood by numbers

  9. The Opportunity Gap • Independent Sector: 89% of all households give to charity • Independent Sector: 44% of all adults volunteer • NCPG: 8% have made a gift to charity under will • The gap is the opportunity!

  10. Why Planned Giving? It Connects You with Givers

  11. Charitable Giving Potential: Giving USA 2010 Corporations $14.10 Foundations $38.44 Individuals $227.41 Bequests $23.8 Total: $303.75 Billion

  12. Why Planned Giving? It Connects You with Givers

  13. Why Planned Giving? • It creates donor visions for the community • It creates resources for the future • It focuses you on donor relationships • It allows you to engage with donors

  14. Making the Case for Planned Giving • There are two cases for planned giving: • The internal case - focused on the board and staff - those internal to the organization that must provide the support • The external case - the case to donors - the statement in which they will be moved to contribute long-term funds

  15. The Internal Case • This case focuses on WHY you need a planned giving program • Community charitable needs are increasing and you need additional permanent funds to meet those needs • Community giving is decreasing and the foundation needs to stimulate more giving • The foundations needs resources for community disasters • The foundation needs to be positioned to capture the transfer of wealth • The foundation needs resources to serve a leadership role in the community

  16. The External Case • The community foundation is the strongest platform for perpetual gifts - cy pres power • The community foundation’s board is comprised of community leaders who know the needs of the community • You can support your favorite fields of interest - more flexible • You can give to multiple organizations through the foundation • You can - and should - make a difference in the community’s future

  17. Are You Ready for Planned Giving?

  18. A review of your current planned giving activities and their effectiveness • A review of your infrastructure such as gift acceptance policies, donor data policies endowment structure and policies, staffing budget, reporting, board involvement board committees • A review of your messaging such as marketing materials, donors stewardship, etc. • Recommendations for change

  19. A Checklist of Essentials • A strategic plan • A visible organization • Staff to talk with donors • Standard fund documents • Clear instructions on how to name the foundation in gift documents • An effective donor database to manage donor relationships • A legacy society to recognize donors

  20. A Checklist of Essentials • Basic marketing materials • Key policies governing gifts and gift management : 1) gift acceptance, 2) investment management, 3) stewardship, and 4) donor data • Available counsel when you need help • Annual reports and measures • Strong relationships with professional advisors: 1) database, 2) one pager, 3)sample language 4) council

  21. Gathering the Data • A fundraising history • An organizational history • Giving patterns:

  22. Gathering the Data

  23. Donor Potential • Who’s in charge of your donor data? • Can you use the data? • Is the information extensive enough to help distinguish one donor from another? • Long-term giving history • Gift commitment records • Call data • Marketing response information • Ages • Family connections • Personal and programmatic interests • Event attendance

  24. What to Measure • The number of donors in the database by type • Corporate • Foundation • Individual • The number of active donors • The number of repeat donors • Segments by age sex, connections location, and other characteristics

  25. Grant Patterns • The number of grants committed to each sector - by type of fund (unrestricted, FOI, DD, DAF) • The dollars committed to each charitable sector - by type of fund (unrestricted, FOI, DD, DAF) • The number and amount of unfunded grant requests each year (and sectors)

  26. Key Community Needs • Position the foundation as the “go to” in the community • Do the research - look for a university partner (use a grant to fund it) • Also - great way to connect with the charitable community and know it better

  27. Evaluate the Board • They hold the reins, make the decisions, have the fiduciary responsibility • Critical Board Skills • Leadership • Financial skills • Fundraising experience • Grant analysis • Organizational skills • Staff/program evaluation skills • Political/social connections • Program administration experience • Prior experience nonprofit boards • Planned giving donors

  28. Review the Current Board’s Strengths and Weaknesses • What skill sets do you have on the board? • What are the critical skills you need to move forward? • Development several names for each of the skill sets you need • Then, select the individual that best fits, has the broadest giving experience, and the time to participate

  29. The Staff Evaluation • You don’t just need bodies - you need the right bodies • Job description • Title • Supervisor, subordinates • Education • Experience • Licenses, certifications • Technical Skills • Personal qualities • Duties and responsibilities

  30. The Staff Evaluation • NCPG’s study of planned giving officers

  31. The Staff Evaluation • Goals • Calls • Gift proposals • Completed gifts • Annual Evaluation

  32. Marketing Messages - How Do You Position the Foundation? • A community foundation is a difficult concept • Only a fraction of the community knows who you are and what you do • Even your board would be hard pressed to explain a community foundation in an elevator speech • What are your five key messages you convey now? • Gather your marketing materials

  33. Marketing Messages • Organization and community needs • Clear call for support • Financial and program information - current and future community needs • Current strategic plan • Use and impact of funds • Basic financial information • Detail on fundraising revenue • Detail and long-term holdings • Investment performance • How funds are spent

  34. Marketing Messages • Recognition of Donors • Who do you recognize - and how? • How do you encourage giving through recognition? • How do you recognize planned giving donors • How do you recognize volunteers? • Ease of Giving • Clear communication that gifts at all levels are welcome • How to give • Encouragement to call • Information for professional advisors

  35. Using the Audit Information to Build the Program • Make an implementation plan that includes: • Each step • Person responsible • $$ required • Volunteers required • Timeline

  36. The Tools of the Trade

  37. Outright Gifts • Gifts that Pay Income • Deferred Gifts

  38. Publicly Traded Securities • Publicly Traded Securities • Valued at average of high and low on date of gift • Mail - Date of postmark • Special carrier - Date of dispatch • DTC - Date of Delivery • Nonprofits need disposition policies 100 Shares Merck on Monday, holiday Preceding Friday: High/Low $21/$19 Mean $20 Following Tuesday: High/Low $22/$20 Mean $21 Average $20.5 Gift Value: $2,050

  39. Mutual Funds • Valuation: Net asset value at end of day of gift • Transfer difficult • Issues on receipt by nonprofit • Sell? • Hold? • How?

  40. What are they? • Valuation issues • Practical issues • Partnership Interests

  41. Valuation and Substantiation • Congressional Issues • Transfer • Special Donor Issues • Does the item have a related use? Personal property to CRT not deductible if donor/donor’s family receive income

  42. Donor contributed $100,000 painting to local museum to satisfy $100,000 campaign pledge • Painting had basis of $10,000 • Transferred, sold for $105,000 • What was donor’s deduction?

  43. Special Nonprofit Issues • Does the property fulfill the mission of the organization? • Is the property marketable? Under what conditions? • Are there any undue restrictions on use? • Are there any carrying costs?

  44. Why is real estate a good gift? • Valuation & Substantiation • Other Issues • Environmental Liability • Mortgages • Restrictions • Type of charitable gift

  45. Types • EE Patriot Bonds (can no longer rolled over tax free after August 31, 2004) • Series HH • Series I

  46. Remainder interest only in home or farm (no other types of property) • Generates current income tax deduction for remainder interest • Invokes the issues with real estate • Must run the numbers- see page 46

  47. Split interest gifts are those that split the income and principal benefits of a gift among charitable and non-charitable beneficiaries Mom & Dad Normal Charity

  48. Irrevocable Trust • Specified distribution, at least annually to non-charitable beneficiary(s) • Measures distribution as sum certain (annuity), or fixed percentage (unitrust) • Continues for a time measured by years or lives • Pays remainder to charitable beneficiary • Has 10% + remainder

  49. Charitable Remainder Annuity Trust • Income interest expressed as a specific sum, usually as a% of initial market value • Income interest can be no less than 5%, no more than 50% • No additions to trust once executed $100,000 Trust with a 6% Annuity Amount = Annual Distribution of $6,000 for Life of Trust

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