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Welcome back.

My name is Jason Wohlman.

I'm the Associate Vice Chancellor for University Development at UC Davis.

The last time we were together we talked a little bit about

how to build effective case statements.

And today, I'd like to talk to you a little bit about building a planned

giving program.

The objectives for our session today are to define what planned giving is and

discuss a little bit more about why it's so

critically important to development today.

To talk a little bit about how to establish a planned giving program from

scratch, if your organization does not have one.

We'll start with a conversation about bequests,

which are the simplest form of planned giving.

And then, move into higher level plan giving and

the gift instruments that are involved.

We'll move into a little bit about how we identify plan giving prospects for

your program.

And finally,

we'll discuss how to effectively market your brand new plan giving program.

Plan giving defined.

Many individuals who are new to fund raising often misunderstand

planned giving or exchange it with the term deferred giving,

considering the gift that can only come at the time of the death of their donor.

When in reality planned giving can also lead to current outright contributions

from your donors in the manner in which they're structured.

Essentially, planned giving defined means that we involve three types

of gifting methods.

The first would be outright gifts, that would include gifts some stocks,

real estate or other tangible personal property that are giving for current use.

Not simply looking at your perspective donors current cash availability, but

looking at these types of vehicles that would provide them

a lower cost of their contribution and some significant tax benefits.

The second type of gifting method involves expectancies.

These are the traditional deferred gift models that most people think about.

They involve that promise to make a gift at some future date, however,

they can be revoked at any time.

This would include bequests, retirement plans and IRAs, and

gifts of life insurance.

Finally, deferred gifts.

Deferred gifts involve those irrevocable transfers of cash or another asset, but

the proceeds of the gift are not available to the charity until some future date,

typically the death of the donor or a specified term.

Those would include charitable trusts, annuity and other more complex giving

vehicles that we'll discuss a little later on, in this class section.

Planned giving programs take a commitment of time, resources and

effort that may not turn into an immediate result, however,

the opportunity for planned giving is far too great to pass up.

Consider this, in the first 50 years of this century,

at least $41 trillion will be transferred via estates.

It's projected that $6 trillion of that will be bequests to charity.

$6 trillion in the next 50 years is far too much of an opportunity for

any organization to pass up.

So let's talk a little bit about establishing a planned giving program.

In the event that your organization is not currently working in this arena,

there are some things that you need to consider.

As I mentioned, building a comprehensive planned giving program takes time.

The most simple start that you can use is the development of a bequest program.

In fact, over 90% of planned gifts in the US come from bequests and expectencies.

In 2014, that total was $28.13 billion,

which actually represented an increase in 15.5% over 2013.

Remember, expectancies are those vehicles which involve a promise to make a gift

at some time in the future, however, they can be revoked by your donor at any time.

This would include naming your organization in their estate as a bequest.

Naming your organization as a beneficiary of a retirement plan or an IRA,

or name you as the beneficiary of a life insurance policy.

The revocable nature of these gifts are important to remember in that they will

require ongoing stewardship of your donor, to insure that they still maintain

a connection to you, your organization, your vision and your mission.

Also, understand that with a revocable gift,

such as a bequest, it's very important to have secure documentation in place

that outlines the purposes the donor has for their contribution.

As they will not be there to speak for

themselves a the time the gift is received.

Are you ready to establish a plan giving program?

A few questions to ask before you jump into the arena, even of simple bequests.

First, has your organization been operating more than ten years?

Why is that important?

Keep in mind, many of these gifts that are coming at a deferred or

much later date, donors want to ensure that you will be there,

that you have a stable organization, and that you can provide excellent stewardship

of their gift 20, 30, or 40 years down the road.

Secondly, have the members of your leadership board passed a resolution that

supports your plan giving program?

And have a dedicated financial resources adequate to support the marketing effort?

Keep in mind, again, planned giving takes time,

there is not an immediate return on investment.

Making certain that the administration and

leadership of your organization is not seeking an immediate ROI is

very important in launching a successful planned giving program.

Does your organization have gift acceptance policies?

Have they established how to disposed gifts of stocks and securities?

Real property or tangible personal property?

Without these policies in place, questions like, who can sell a stock?

When do we sell a stock?

Who has signature authority over these events, is very important,

especially as it's the type of funding vehicle that will be most likely used for

many of your planned gifts.

Do you have a stock brokerage account in place?

Do you have a holding vehicle to accept these types of contributions

when they come to your organization?

Does your annual fund or membership program have a consistent record of

growth, both in number of donors and number of gifts?

This is going to help you establish your prospect pool for planned giving.

Most of your planned giving prospects,

as we'll discuss later, have a tendency to have made consistent, regular,

if not very large, annual fund contributions to your organization.

Ask yourself the question, does my pool of prospects have a diverse age range?

And are my oldest prospects retired or approaching retirement?

The reality for most planned giving programs is that you will be dealing with

individuals of the ages of 55 or older from most of this gift instruments.

The diversity of your age range, however,

comes into play as you're going to wanting to be moving a pipeline of individuals

through your donor pool to ensure that you always have a robust pool of individuals

within that age range to market your planned giving program, too.

Do you communicate on a regular basis with your prospect constituency through

written messages, phone, your website or face-to-face efforts?

Planned giving vehicles can be complex and

need to be marketed on a steady and ongoing basis to your audience.

If you do not have those vehicles in place,

establishing them will be important before you can launch a planned giving program.

And finally, is your organization willing to undertake legal action to resolve

a legacy gift, if necessary?

Keep in mind, that you have a fiduciary responsibility to your donor,

to ensure that their wishes are taken into account,

when their gift ultimately is made at the time of their passing.

In the event that there are family members or other outside interests who wish to

contest the estate and the contribution from your donor,

is your organization to take their fiduciary responsibility to heart and

ensure that your donor's wishes are followed?

Evolving from a simple bequest based planned giving program to a more complex

and comprehensive program will require an additional commitment of resources

and time.

Let's talk a little bit about how you can move toward that next level

of planned giving.

First and foremost, it does involve an introduction of more complex gift

structure which will require a level of professional expertise

that perhaps your organization does not currently possess.

Keep in mind some of the gift vehicles that we'll be discussing will require

regulatory approval with state governments.

And will require the organization to again to develop more complex and

thorough written policies and guidelines to govern the program.

Things that your organization will need to consider.

What will be our minimum amounts and limitations for

gifts using these vehicles?

Will we offer charitable gift annuities,

a vehicle that we'll be discussing in just a moment or two?

Again, outlining and defining the clear authority to receive and

liquidate gifts of appreciated property.

And finally, who has the authority to negotiate the terms of planned giving

instrument with our perspective donors on behalf of your organization?

Some of the most basic gift instruments that are utilized in these next level of

plan gifts would include the charitable gift annuity, the charitable remainder

trust, a charitable lead trust, reserve life estates and the bargain sale.

Let's take a look at each one of these in a little bit more detail.

First, to determine which vehicle is best for

your donor, keep in mind that each donor is completely unique and

there is not a one size fits all method to planned giving.

It's very important to have a conversation with your donors about not only their

philanthropic goals for your organization, but what are their personal and

philanthropic goals for their family, friends and

other charitable organizations that they may have an interest in?

While tax and other financial benefits are helpful,

they are rarely the primary motivation for an individual to make a gift.

A charitable gift annuity, perhaps the most widely used of the complex gift

agreements that we'll be talking about, is a simple contract between the donor and

the charity.

Where in exchange for an irrevocable transfer of an asset,

the charity provides a fixed amount of income each year for a lifetime.

Those payout rates are generally determined by the American Council of

Gift Annuities.

The reason for

that, historically individuals may do what was known as rate shopping.

They would go from charity to charity simply looking for

a better annuity payout.

The standardization by the American Council of Gift Annuities

allows all charitable organizations to be on a level playing

field when administering charitable gift annuities.

The income from this contract can be provided to one donor or two for

their lifetimes.

The payments are deferred or can be deferred to accrue a higher annual payout.

All of these instruments provide an immediate tax deduction to your donor, and

a portion of the annual income is considered to be tax free.

They are regulated, again, by most state governments.

And will require a registration,

not only in the state that your charity resides, but also in the state that any of

your donors may reside in that are administering charitable gift annuities.

Annual payments out of a charitable gift annuity for

your perspective donors are guaranteed by the total assets of the charity.

A tangible example of a charitable gift annuity would include a donor, for

example, who's 65 years of age,

who would like to enter into an annuity agreement with your organization.

They make an initial contribution to you in the amount of $100, 000.

Based on the rates of the American Council of Gift Annuities, the distribution for

that contract would be 4.7%, on an annual basis, for

the remainder of that individual's lifetime.

Meaning you donor would receive, from your charitable organization,

an annual income distribution of $4,700.

In the event that this individual say, is married And their spouse is,

say, 60 years old, the contract would now be for two lifetimes.

And the distribution rate would be determined at 4%, based on the fact that

the contract would be considered to be a longer time frame for

the two lifetimes of the individuals involved.

Planned Giving Programs (Part 1)

Fundraising and Development Foundations

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