Case Studies: Integration of Planned Giving and Major Giving Greg Lichti, CFRE Associate Director, Gift Planning, PMHF

1. Case Studies: Integration of Planned Giving and Major GivingGreg Lichti, CFREAssociate Director, Gift Planning, PMHF

2. Traditional Definitions � Major Gifts and Planned Gifts Major Gifts: large gifts from wealthy individuals, often pledged Typically includes gifts from corporations and foundations Planned Gifts: Planned giving deals with structured deferred gifts from older, middle-class individuals* * Thanks to Malcolm Burrows for these definitions.

3. Trends toward Gift Planning Increasing understanding that nearly all major gifts are planned gifts, and vice versa Increasing focus on relationship-based fundraising � a new model beyond Capital Campaign and traditional Planned Giving

4. Trends toward Gift Planning Many charities pursuing some form of merger between major giving and planned giving departments Smaller charities having one staff person who is responsible for both major and planned gifts

5. Trends toward Gift Planning Understanding of social donors (campaign donors motivated significantly by recognition, peer reinforcement and campaign-based asks) VS personal donors (self-motivated, often growing out of a personal experience with a cause) Increased focus on individual donors � largest donations

6. Gift Planning � An Emerging Model A model which is donor centred and which seeks to help donors to maximize charitable contributions which are appropriate and meaningful to them over the course of their lives A model which is focused on the needs of the donor, while also serving the needs of the institution

7. Gift Planning � Some Characteristics Builds on strengths of traditional major gift fundraising including sales model, prospect research, solicitation and utilizing community networks Builds on strengths of traditional planned giving including face-to-face donor contact, technical knowledge, a planning focus and collaboration with professional advisors

8. Gift Planning � Some Characteristics Thoughtful planning � related to the framing of the project in line with the donor�s interests and the institution�s needs, recognition, tax issues, stewardship, etc. � is a part of the gifting process An ongoing relationship building model � a more holistic, long-term model than the concept of moves management

9. Gift Planning � Some Characteristics Assumes a contact manager model, where a particular donor manager relates to a donor in an ongoing way Both current and deferred giving options are discussed with donors, as appropriate Can often involve the use of named funds � both expendable and endowed � as a giving vehicle for both current and deferred gifts

10. Gift Planning � Some Characteristics Ongoing development model, not just campaign focused Can include a strong emphasis on securing current major gifts Provides options to top up current gifts with deferred gifts when a larger current gift is not possible Provides for the option of significant deferred gifts � an often missed opportunity

11. Case Study #1 = Mr. King Review of Case Scenario Small group discussion Reporting back from small groups

12. Case Study #1 = Mr. King Giving Options Current Cash Current gift of securities Provides a better way of dealing with capital gains

13. Giving Options 3. Gift of Residual Interest - Cottage Involves signing an irrevocable gift agreement that would retain use of cottage during life and 1-2 years after death After the 1-2 year period, a trustee would sell the property and divide the proceeds among Princess Margaret Hospital Foundation and any other charitable beneficiary

14. Giving Options Gift of Residual Interest - Cottage Provides for a current tax receipt, with the amount determined using a formula that takes into account the value of the property, the number of years the property will be used and the applicable discount rate.

15. Giving Options Gift of Testamentary Trust � Cottage A gift established in the will The will would instruct the executor to set up a testamentary trust to enable the spouse to use the property for 1-2 years At the end of the 1-2 years, the trustee would sell the cottage and divide the proceeds among the charities The charities would issue the estate a receipt for the value of the gift

16. Giving Options 5. Gift in Will Could take the form of simple cash (including a portion of the proceeds of the sale of the cottage) or a gift of securities in the estate 6. Gift of Life Insurance Could include the proceeds of an existing personal policy or a policy held by his former company

17. Other Considerations Engaging Dr. Sherman to develop a proposal for the King Fellowship and communicating this to donor Securing support of the Hospital Health of Mr. King and sensitivity of language related to talking about future The role of Mr. King�s spouse and advisors Ethical issues

18. Steps in the Gift Planning Process Communication with Mr. King and his advisors Communication through phone calls, emails and fax Introduction of the concept of the King Fellowship endowed fund Education regarding gifting options Use of gift illustrations Life expectancy

19. Ultimate Gift Scenario Ultimately, rejected idea of more complex gifts Current vs Deferred of $500,000 � chose a deferred gift of $500,000 in will Additional gift of $500,000 � partial proceeds of corporate life insurance policy Worked with Mr. King and lawyer to draft will Arranged for fund agreement to be drafted and signed

20. Later Developments Mr. King died in 2003 and PMHF received $1 million gift shortly thereafter At his request, pursued gift from his former company Former colleague and Mrs. King have become volunteers on fundraising team Campaign to raise additional funds for King Fellowship Additional current and deferred gifts

21. Case Study #2 = Smith Family Case scenario involving all current gifts � lots of planning involved. Proposed endowed fund to honour Mr. Hall in meeting with Ms. Smith and her father Mr. Smith Trouble � not enough recognition in Fund Dr. Sherman proposes $2 million Chair, $1.5 million Professorship or $1 million Fellowship as alternatives

22. Case Study #2 = Smith Family Counter proposal - $500,000 gift over 5 years Challenge � Want to name a $2 million Chair Proposal and gift chart - $600,000 gift over 6 years and fundraise a minimum of $400,000 � PMHF will commit to raising $1 million Meeting to discuss, followed by donor agreement

23. Ultimate Gift Scenario Smith Family Foundation committed to gift of $600,000 over 6 years Mr. Smith and his daughter Ms. Smith became fundraising volunteers and raised an additional $450,000 in pledge gifts. PMHF is in process of raising $1 million to match - $450,000 raised to date Hall Chair to established in 2004 Ongoing stewardship of family and donors

24. Discussion � Opportunities, Questions, Barriers related to Gift Planning Opportunity for wonderful planning with donors Does the need for money �now!� get in the way of deferred gifts and gift planning in general? Need for cross training of staff Goals and administrative systems that reward current and deferred gifts Development of solutions to match the charity and people involved

25. Conclusions � Gift Planning A model which is donor centred and which seeks to help donors to maximize charitable contributions which are appropriate and meaningful to them over the course of their lives A model which is focused on the needs of the donor, while also serving the needs of the institution

26. Resources for Gift Planning Consider purchasing Planned Giving for Canadians by Frank Minton and Lorna Somers (Somersmith Books � 905-689-2538 Consider joining the Canadian Association of Gift Planners and attending the CAGP national conference in Toronto, April 14-17, 2004: www.cagp-acpdp.org