Inspired Planning Case Study

1. Inspired Planning Case Study TRACY GARY, Founder of Inspired Legacies and PHIL CUBETA, CLU, ChFC, MSFS, CAP Sallie B. and William B. Wallace Chair in Philanthropy at The American College WITH SPECIAL THANKS TO RANDY FOX AT INKNOWVISION

2. Purpose, Process, Payoff Purpose: Help you, as fundraiser or advisor, find your place at the planning table where the big dollars are planned. Process Review trends in gift planning. Introduce an opportunity on Main Street. Present a case study of a Main Street client. Invite your comments. Payoff Happier donors and clients. Larger gifts, better plans, and better world.

3. And how to capitalize on them Trends in Gift Planning

4. The Future of Gift Planning NCPG Task Force Report 2007 • Planned Giving is “eroding” within charities as a specialization. • Number of Planned Giving Specialists is “dwindling.” • PGOs have less control of the process. • Information on giving tools is widely available. • Many gifts are being structured by advisors with no nonprofit involvement.

5. A Major Shift • “One of the most striking differences between the 2006 and 2008 study is the dramatic increase in donors use of legal and financial professionals to help them make charitable decisions.” • “Nonprofit personnel’s involvement dropped from 41% of cases to 29%.” Bank of America Survey of 700 High Net Worth Households, 2008

6. Causes of Present Decline Donors access information on charitable tools via the internet. Donors get sophisticated planning from advisors. Gift planners have to wear many hats, only one of which is planned giving. High turnover among nonprofit gift planners. Nonprofit management is short term focused and demands immediate results. Donors prefer more consultative, donor-centered, or transformational approach.

7. Advisors Not Perfect 2/3 of highly experienced advisors interviewed have limited philanthropic toolboxes, relying on one or two planned giving vehicles. 50%+ do not discuss their clients’ personal or social values, or help them develop a philanthropic mission. Overwhelmingly, donors reported it is they who typically raise the philanthropic question. Many donors say saving taxes is important, but that they are weary of the “tax lead.” From studies done by The Philanthropic Initiative, 1999-2003

8. Nonprofit Edge • Bank of America 2008 study of high wealth families: • 95.9% instruct children in giving. • 80% of parents say their children learn about giving from a religious organization. • What role does your nonprofit play in raising flourishing families?

9. NCPG – Desired Future • “In the future, sophisticated planned giving officers have changed their focus from structure of the gift to impact, becoming more donor centered and holistic in their approach.” • “Planned giving officers are viewed as part of the support team for serving the donor.” • Changing NCPG name to “Partnership for Philanthropic Planning.”

10. PLANNING CO N F I D E C O N F E R A S K S E L L EXPERT ADVICE Your Seat at the Planning Table From Todd and Scott Fithian: The Right Side of the Table: Where do you Sit in the Minds of the Affluent?

11. Steps for legacy mentors and leaders

12. The Three Stages of Philanthropy Dormant but Receptive Will give if asked – basically passive Engaged/Getting Organized May have a transactional vehicle, foundation, donor-advised fund, beginning to be pro-active Committed/ Becomes a Learner Committed to philanthropy, to making a difference Via H. Peter Karoff, Founder of The Philanthropic Initiative

13. An Opportunity on Main Street The Closely Held Business Market

14. Opportunity on Main Street • 90% of US Firms are family owned. • 64% of GNP. • 33% make it to next generation. • 15% to third generation. • 25% will transfer control over next 5 years. • 40% over 10 years. • 71% have not completed succession plans. • 93% have little income outside business. • 80% want business to stay in family. • Many want to leave a legacy and make a difference. Source: David Leibell and Dan Daniels of Wiggin and Dana

15. What is on Their Minds? • When and how will we exit the business? • Will we have enough for us? • How much is enough for heirs? • How do we transfer assets with minimal tax? • How do we transfer values with valuables? • What is next for us after we “retire”? • “Is that all there is……?” – Peggy Lee

16. Inspired Estate and Financial Planning Prudent Plan Inspired plan for Impact • Takes care of self. • And heirs. • And the money. • Preserve it. • Grow it. • Reduce tax bite. • Has a positive impact on self, heirs, and society. • Now, later, at death. • Beyond death. • Gets social results.

17. The FitzsimmonsVia Randy Fox at InKnowVision Case Study

18. Gerald and Eileen Fitzsimmons Facts Goals • Own a business and will sell it over 5 years. • Approaching 60. • Several children and grandchildren. • Live on $90,000 after tax. • Net worth: $4.5 – $12 million, depending valuation of business. • Financial security. • 85% to charity. • Enough for kids but not too much. • Reduce income and estate tax.

19. Philanthropic Info Per Randy Fox What We Know What was not asked • Started a pre-school. • Want to do something more for education. • Current total giving is $1,300 a year. • When they want an impact? • How? (Through what nonprofit?) • With what personal engagement? • With what involvement of heirs?

20. Planning Team Financial Advisor Back Office Randy Fox for the Financial Advisor -------------------- Potential Teammates Phil as “synthesizing generalist” Tracy as coach, philanthropic expert -------------------- Your role? Clients Attorney CPA

21. Where We are in the Planning Process per Randy • Financial advisor got the facts and the goals. • Family Wealth Diagnostic showed not all goals being met. • Family Wealth Goal Achiever: • Iteration #1 has been run. • Further iterations are in process.

22. Download: From Blackboard for this Assignment • The fact finder (blank). • The Diagnostic (complete). • The Wealth Achiever (complete).

38. The State of the Case What is in the plan Your Thoughts • IRA to charity at death. • CRT with remainder to charity at death. • Charitable Lead Trust starting at death. • $10 million of life insurance to heirs at death. • What could be added? • Where might you position your organization? • Your next move?

39. Tracy’s observations

40. Phil’s Observations • Impact? • On what cause? (education) • When? • How? • With what nonprofit? • 85% to charity? • Enough or too much for heirs?

41. Tracy to Phil and Randy • Nonprofit engagement? • Donor networks? • Inter-generational communication? • Both husband and wife engaged? • Coach to keep case moving as they transition from business to philanthropic engagement? • Coach for the kids? • Can the family deepen its joy and capacity to collaborate through family philanthropy?

42. Phil and Tracy to Randy • What if….. • We calculated how much current giving (direct to, say, a school) they could afford? • We got them engaged with good works now • We got the children engaged? • We used the life insurance to endow the current giving? • We sparked this family’s potential to co-create? • We positioned the advisors as an active and vital planning team?

43. How Would Randy React? • Sure. • Thanks, Tracy. • Thanks, Phil. • Let’s ask the advisor. • We can run the numbers. • Who else should be at the planning table as we move to planning for near-term impact on education? • Now that there is better family, nonprofit, and advisor communication who else can we help?

44. What is your seat? Will you convene? With whom will you partner? Planning Team Financial Advisor Clients Attorney You CPA