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A charitable remainder trust, charitable remainder trusts are a much more complex

gift and they do require a more significant amount of a gift to be viable

to offset the management fees and other legal expenses to establish a trust.

The trust is an irrevocable transfer of an asset to a trustee, and

in return the donor or their designees will receive an income from the trust for

a lifetime or for a specific period of years.

The maximum of that term of years would be 20.

The minimum payment distribution in a charitable remainder trust is 5%, and

is negotiated with the charity if they serve as a trustee.

There are two types of charitable remainder trusts to consider, first,

the charitable annuity trust.

In this particular situation, annual payments are fixed based upon the initial

market value of the gift, and this trust cannot receive additional contributions.

So for example, in the event an individual were to place for

round number purposes $100,000 into a charitable annuity trust.

At a 5% distribution this individual would be receiving $5,000 a year for

their lifetime or for the term of years that are established in the trust.

That payment amount of 5% is fixed, and

it is fixed on the initial market value of the contribution,

meaning the $5,000 would remain a static payment for the lifetime of the trust.

In contrast, the charitable remainder unitrust, the annual payments are variable

based upon the trust market value evaluated on an annual basis.

And in difference to the charitable annuity trust,

additional contributions can be made to the trust over time.

Again, as an example for the charitable remainder unitrust, while the percentage

distribution would remain the same at 5% and is locked in, in that same scenario

of $100,000 contribution, the initial distribution would be $5,000.

One year later we would revalue the trust assets and provide a 5% distribution

of the new value, allowing an individual to take advantage of market growth.

Please keep in mind that along with market growth, can come market retraction.

So it is possible that that 5% from a charitable remainder unitrust

may decrease in time as well.

Perhaps the most complex of all trust gifts are the charitable lead trust.

It is a trust that pays a current income on an annual basis

to the charitable organization for a predetermined number of years.

At the conclusion of that trust term,

the trust assets are then returned to the donor, or the donor's family.

This provides a current income tax deduction for your donor, and

is often providing considerable estate planning benefits as well.

An example for a charitable lead trust, in the event you would have a donor within

your organization who had a rental property, for example, that they were

interested in placing in a charitable lead trust for a period of ten years.

The income stream from that property through the trust

would be paid out in the form of an annual contribution to your organization for

that ten-year period of time.

At the end of the term of the trust, that

property would revert back to the donors family or back to that donor themself.

A reserve life estate, a reserve life estate is another unique

type of gift where it provides an irrevocable transfer of a personal

residential property to a charitable organization whereas the donor, however,

reserves the right to use the property during their lifetime.

During that period of time, the donor retains all of the responsibilities for

the property, property taxes, maintenance, etc., but it does provide them

with a current income tax deduction that is based upon the age of the donor.

A bargain sale, a bargain sale, as the name implies, is a gift structure that

provides for the sale of property to a charitable organization for

less than the fair market value.

Your donor will receive a tax deduction based upon the difference between the sale

price and the fair market value of the property gifted.

Gifts of real estate and other illiquid assets will require a qualified appraisal

prior to entering into a bargain sale.

And it is very important to note that donors are required by law to notify

an intent to make a gift prior to the sale with the IRS to ensure

that they receive a tax deduction for a bargain sale contribution.

Now that we've discussed the various vehicles involved in planned giving,

let's spend some time talking about how we might identify prospects to discuss

planned gifts with.

It's important to remember that planned giving prospects come in all ages,

various levels of affluence, and family situations.

More often, they can look dramatically different than what you might see

in a current major gift donor.

The first suggestion is to begin with your current donors and

those who have a relationship with your organization.

Have a conversation with your board members and volunteers, those closest to

your organization, and share with them the benefits of these types of gifts.

Former staff members of your organization are always a good place to start, and

finally, annual fund donors who have persistent giving.

This is the area where a prospective plan giving donor can look much

different than a current major gift donor.

In these particular instances, if you have someone who's been making a consistent

annual gift over a multi-year period of time, 10,

15 to 20 years, even if the gift has been as little as $100 a year,

it shows long-term commitment to the mission and vision of your organization.

These are the types of individuals who may

consider a larger gift to your organization but

have never considered the various vehicles that are available to allow them to do so.

I encourage you to network with professional advisors In your community.

Financial advisors and insurance agents are networked with many of their clients,

who during the course of their conversations on estate planning,

are having discussions about charitable contributions.

But often are looking for

worthy organizations within their community to support.

Finally planned giving opportunities should be included with requests for

current use gifts.

They are not an either/or decision.

Individuals who are being current supporters of your organization

should also be talked to about how they can make permanent sustaining and

institutional changing gifts for your organization via some of these vehicles.

How do we go about marketing a planned giving program once it's established?

First of all, a goal of a marketing program is to educate and inform your

prospective donors, and encourage inquiries about these various vehicles.

The most important component to remember is that it must be

sustained to be effective, and it will not produce immediate results.

These are somewhat complex vehicles.

Sometimes individuals consider them to be too good to be true.

Having to see them on an ongoing basis and a consistent stream of communication

is very important to an effective marketing program.

The first step is please make certain that you've built awareness amongst your staff,

not just your fundraisers but your entire staff of your organization

as to what planned giving is, what planned giving isn't,

and how they may have a conversation with a prospective donor.

Always take the opportunity to piggyback on your existing vehicles.

By that I mean annual giving solicitations,

annual reports, your website, even the back of your business cards

to ensure that individuals are aware of simple bequest language.

How do I make a gift in my will?

Put that documentation on the back of your business card and

share it with a prospective donor.

Take advantage of all of the other things that you're already putting out into

a communication stream to talk about these various gift vehicles

Print materials are important.

They can be purchased via a vendor and personalized to your organization.

There are a number of private vendors who provide those types of materials.

They can be either comprehensive,

outlining all of these various gift vehicles we discussed or

they can be tailored to a specific gift vehicle, for example, a brochure that's

only sent to individuals who may be marketed a charitable gift annuity.

Always include a response device in anything that you would send out.

Give your donors the opportunity to respond back asking for more information,

for an illustration, or

the opportunity to visit with one of your planned giving professionals.

Planned giving seminars are also another

unique opportunity to market your planned giving program.

Whenever you have a group of volunteers together, take the opportunity to walk

them through planned giving devices as an example of how they may be looking for

other perspective donors.

By training them how to look at others, you're also sharing with them very

specific information about what they may be doing for you.

Recognition societies are another important member of your marketing

program, considering the fact that it puts a name and a face to the individuals who

are making these types of contributions to your organization.

Keep in mind, the ongoing stewardship and

recognition, especially of those revocable gifts, are very important.

Recognition societies that formally acknowledge those contributions

ensure that individuals who have the opportunity to change their mind

will continue to remain connected to your organization.

And finally, please keep in mind there is no substitute for the personal visit.

Any time you have an opportunity to sit face to face with a perspective donor and

talk to them about these opportunities,

it's perhaps the most effective form of marketing of your planned giving program.

So in summary,

please remember that planned giving is more than just deferred giving.

Current outright gifts are planned, as well.

Those gifts of appreciated assets, stock, real estate, and tangible property,

are also part of an effective and comprehensive planned giving program.

The opportunity of wealth transfer is far too large to ignore for your organization.

It's important that your leadership and

the adminstration of your board of your organization understand why planned

giving will help lead to significant growth in your fundraising initiatives.

All organizations are capable of establishing even a basic program

focused on bequests.

More comprehensive programs, however, do require that higher level of professional

expertise, resource development, and patience.

All planned giving programs do require that long term commitment

from the organization to be truly successful.

Remember selecting the appropriate gift vehicle requires knowing

your prospect's goals.

Have you had a broad conversation with them about what they want to accomplish

with their legacy?

Remember, planned giving prospects can be unique.

They are unique and they may not look like your current major gift prospect.

And finally, keep in mind that marketing your program is key to its success.

These complex gift vehicles require Multiple exposures for

your donors to become comfortable with them.

Planned Giving Programs (Part 2)

Fundraising and Development Foundations

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