Heaton smith issuu nov 26 2014

1Notes on Gift Planning

R e a d D i s c o v e r I m p l e m e n t

NOVEMBER 2014

Heaton Smith is the leader in documented and naming gifts in the legacy and charitable estate planning space.

Seven Figure Giftfor The Seed Fund for Advanced Pediatric Care.

Updated ground breaking study regarding the pending Wealth Transfer.

In this Issuu - November 2014

Excerpts from

A Golden Age

of Philanthropy

Still Beckons

MeetJoe Beyel

Heaton Smith

$1M giftto The Seed Fund for Advanced Pediatric Care

Our new client list.

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SENIORCONSULTINGASSOCIATE

Items of interest

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Heaton Smith Group, LLC

1380 West Paces Ferry Road Suite 1100 Atlanta, Georgia 30327

404.812.1722

www.heatonsmithgroup.com

[email protected]

3In each quarterly issue we will share:

An article by a thought-leader in the field of philanthropy A story about one of our recent gifts Introductions to our consulting team and new clients Links to resources we think you will find useful

As you will see in this issue, the latest update on 1999s groundbreaking research by Drs. John Havens and Paul Schervish at the Center on Wealth and Philanthropy, Boston College demonstrates that combination gifts made up of transfers to charity in lifetime combined with testamentary gifts have increased dramatically over the past several years. Our gift example, a gift to launch The Seed Fund for Advanced Pediatric Care at Greenville Childrens Hospital, Greenville, provides insight into how a gift like this can arise based on thoughtful conversations between the donor, the organization, and Heaton Smith.

What differentiates Heaton Smiths work in our space is the number of documented and naming gifts we secure with and on behalf of our clients. Part of that comes from our willingness to discuss inter vivos as well as testamentary commitments but only after donors determine what they want to do for their family or other heirs. Not only does Heaton Smith have a systematic way of helping donors determine what they want to do for heirs, we also have a systematic way to help donors determine the nonprofits they want to support and how and when.

Our goal is to make Heaton Smith: Notes on Gift Planning a valued resource for you and your team as you read, discover and implement an idea or two from each issue. Please share your feedback, and we look forward to hearing from you.Best regards,

Dave SmithPresident, Heaton Smith Group

[email protected]

WELCOME to our inaugural issue of Heaton Smith: Notes on Gift Planning. We are

pleased to share with our broad network what we

are learning as a firm, what we are hearing from

clients, and giving trends in the donor community.

4A GOLDENAGE OF PHILANTHROPYSTILL BECKONS

Excerpts from:

by John J. Havens & Paul G. Schervish

In 1999 the Center on Wealth and Philanthropy (CWP) released Millionaires

and the Millennium: New Estimates of the Forthcoming Wealth Transfer

and the Prospect for a Golden Age of Philanthropy. In it, authors John J.

Havens and Paul G. Schervish of the Boston College Center on Wealth and

Philanthropy conservatively estimated that national wealth transfer in the 55

years from 1998-2052 would amount to $40.6 trillion in 1998 dollars which

translates into $58.66 trillion in 2014 dollars. In May 2014, CWP released an

update on their landmark work.

The updated study begins in 2007, in the days immediately preceding the

recession and the related loss of wealth, jobs, financial security, and consumer

confidence that affected most households through the United States.

Since our original work on wealth transfer in 1998, we have found that as

wealth holders planned for the eventual transfer of their assets their plans

expanded from the confines of their will and their estate to include transfers

during their own lifetime of some assets that would have been part of their

estates in prior decades.

In general the greater the wealth of the deceased, the greater the proportion of their wealth, on average, is transferred to charity, both during their lifetime and through their estates at death.

A new element of the current study is tracking what we call accelerated wealth transfer the trend for a portion of wealth

transfer that previously took place in estates to occur during lifetime. High net-worth households are increasingly allocating

greater amounts of their wealth to trusts, foundations, charity, family limited partnerships, and other vehicles as part of

estate planning during their lifetime. The new trend reduces what otherwise and previously would have shown up as wealth

transfer via final estates including estate taxes, transfers to heirs, and charitable bequests.

This non-charitable accelerated transfer is another one of those fertile fields for growth in giving beyond our estimates. The

more that charities and financial planners help people discover and fulfill their charitable aspirations, the more people will shift

Paul G. Schervish

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6non-charitable accelerated transfers to charity, especially when doing so helps bring the next generation into the life of charity.

The estimates of wealth and philanthropy we highlight in the report are conservative and probably represent the floor

rather than the ceiling of what is in store for philanthropic giving. The most important finding in the study is the continued,

abundant, and growing financial capacity for philanthropy. However, the most important implication of the study is that

channeling these resources into effective outcomes will allow us to make the greatest inroads in history on solving, and not

just attending to our nations and our worlds most pressing problems and prospects.

Updated Study Highlights modeling for a modest 2% annual real growth in GDP over the 55-year period:

Through estates, heirs will receive $36 trillion.

Federal estate tax will claim $5.6 trillion.

The sum directed from final estates (for which there is no surviving spouse) toward charity is estimated at $6.3 trillion.

Total gifts to charity during the study period are vastly greater, according to the updated study, which estimates that

lifetime giving will yield an additional $20.6 trillion for charity from 2007-2061.

All estimates expressed in 2007 purchasing power.

The bottom line: Wealth transfer adjusted for the recession exceeds 1999 estimates.

In 1999, we estimated that 2% growth would result in a transfer of wealth amounting to $52.0 trillion in 2007 dollars ($40.6

trillion in 1998 dollars) for the 55-year period from 1998 through 2052. The current estimate of wealth transfer for the 2%

growth scenario is $58.1 trillion in 2007 dollars ($58.66 trillion in 2014 dollars) for the 55-year period from 2007 through

2061 12% greater than the original estimate. The above estimates take into account the massive decline in wealth during

the recession.

In all of our analysis, we assume that fundraisers and charitable causes continue their current level of effort to obtain

charitable donations and bequests. If the approach to fundraising becomes more effective, then there is an opportunity to

increase the amount that goes to charity well above our estimates.

TO READ THE FULLSTUDY, CLICK HERE

TO READ THE MAY28, 2014 PRESS RELEASE SUMMARIZING FINDINGS,

CLICK HERE

UK HealthCareLexington, Kentucky

Established in 1957, UK HealthCare is the brand name for the University of Kentuckys health care system. UK HealthCare represents the hospitals, clinics, outreach locations, and patient care services and activities of the universitys six health profession colleges (Medicine, Nursing, Health Sciences, Public Health, Dentistry and Pharmacy).

UK HealthCare is committed to the pillars of academic health care research, education and clinical care and includes the University of Kentucky School of Medicine and the Markey Comprehensive Cancer Center. UK HealthCare offers 80+ specialized clinics, 143 outreach programs and a team of 9,000 physicians, nurses, pharmacists and health care workers dedicated to patient health.

Catholic CharitiesWashington, DC

Catholic Charities is the social ministry outreach of the Archdiocese of Washington. Motivated by the Gospel Message of Jesus Christ, and guided by Catholic social and moral teaching, Catholic Charities strengthens lives of all in need by giving help that empowers and hope that lasts. Their work helps people develop the skills and strength to move from crisis or isolation to stability and growth through comprehensive, integrated and culturally competent services. To that end, the ministry affirms and supports the dignity of all human life, strengthens families, and serves the poor and most vulnerable; especially the homeless, at-risk immigrant newcomers, and persons with mental and developmental disabilities.

Catholic Community FoundationCleveland, Ohio

The Catholic Community Foundation supports the mission of the Diocese of Cleveland to provide for the spiritual, educational and charitable needs of people throughout Northeast Ohio. Since its inception in 2000, the Foundation has raised more than $230 million to support our seminarians in their priestly formation, provide financial assistance to Catholic school students, and offer social services to our neighbors in need.

Columbus Regional HospitalColumbus, Indiana

Incorporated in 1951, Columbus Regional Health Foundation today works through public awareness, building community partnerships, and raising charitable contributions for community health initiatives and innovative Hospital-based projects that promote excellence in patient care. CRH Foundation is a key fundraising partner for vital community resources including REACH Healthy Communities and Volunteers in Medicine Clinic and for the Columbus Regional Health System. Columbus Regional Health System serves a 10-county region in southeastern Indiana. The Health System includes more than 2,100 employees, 225 physicians on medical staff, and 250 volunteers. Columbus Regional Hospital, the Systems flagship facility, is a 225-bed not-for-profit hospital that provides emergency and surgical services and comprehensive care in numerous specialty areas. Columbus Regional Health Physicians offers a network of primary and specialty care physicians.

Our new clients

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8CASE STUDY: $1 Million Gift

CLIENT: Greenville Health System - Greenville Childrens Hospital, Greenville, South Carolina

GIFT: Combination Gift an Inter Vivos Charitable Lead Trust and a Bequest

Donor Profile: A practicing physician and his spouse. Physician serves in a leadership capacity at the hospital and has been engaged in philanthropy through the health

systems physician engagement/grateful patient program for several years.

Consecutive-year giving donors to the Greenville Childrens Hospital.

Both spouses are currently in their 60s.

They also want to benefit their children.

Donors Goals Lifetime financial independence.

Give majority of their estates to heirs at death of remaining spouse.

Make a large gift to Greenville Childrens Hospital. The donors were unsure of their capacity to make a seven-figure gift

since he is a self-described poor pediatrician.

Reduce their tax liability.

Make a portion of their $1 million gift now and provide the balance at death.

Inspire other Greenville Childrens Hospital donors to support an endowed fund that the physician and his spouse would

launch. Donors expressed a desire to start something that would support childrens healthcare in the upstate region.

Donors did not have an interest in having their name on the endowed fund.

SolutionA combination gift that allows the donors to support The Seed Fund for Advanced Pediatric Care (The Fund) while they are

alive and to provide the balance at the death of remaining spouse. Income from a grantor charitable lead trust will support

The Fund for a term of years. At the end of the trusts term, the assets in the trust will return to the donors and thus be

preserved long-term for their family. The donors get a current income tax deduction from the present value of the gift since

the charitable trust is a grantor trust. The balance of their $1 million gift will be satisfied through the physicians retirement

assets. Importantly, this gift agreement was written to allow the donors to pay down the testamentary portion of their gift

at their discretion, which was very attractive to them.

Documented and naming gifts range from $50,000 to a minimum $10,000,000.

Heaton Smithis the leader in documented and naming gifts in the legacy and charitable estate planning space.

Case Study: $1M giftto The Seed Fund for Advanced Pediatric Care

Documented and naming gifts range from $50,000 to a minimum $10,000,000.

Heaton Smithis the leader in documented and naming gifts in the legacy and charitable estate planning space.

OutcomesThe above-described grantor charitable lead trust was executed in August 2014 and Greenville Childrens Hospital was added

as a beneficiary of the physicians traditional IRA. Combined, the two gifts met the goals of the donors, integrated their

philanthropic giving into their overall estate planning goals, and satisfied Greenville Health Systems requirements to launch

this type of endowed fund.

Since the announcement of the initial gift, two additional donors with whom Heaton Smith worked have documented gifts

in support of The Fund: a $100,000 gift and another $1,000,000 gift. The development team expects many more gifts to

follow.

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Heaton Smith Group is a values-based legacy planning consultancy that

routinely helps nonprofits secure six and seven figure gifts.

WHY? We do what we do to help donors fulfill their legacies and nonprofits achieve their missions.

HOW? By asking donors the right questions about their family, financial and philanthropic legacies. We then make recommendations tailored to each donors objectives.

WHAT? The process is unique and works - and results in meaningful gifts and closer donor-institution relationships.

Joe concentrates his efforts on secondary and higher education institutions and academic medical centers.

He has more than 36 years of institutional advancement experience in higher education and academic medicine and fully

appreciates and comprehends the complexities these organizations face in reaching regional and national constituencies.

WE ASKED JOE A FEW QUESTIONS TO GET TO KNOW THE PERSONBEHIND THE IMPRESSIVE RESUME.

1. What do you enjoy most about the fundraising profession? Whats kept you engaged through the years?Working with donors who truly are committed to an organization and consider it part of their family commitment; personal

competitiveness, plus people that Ive met, plus the excitement of working with interesting people especially researchers

engaged in advancing science.

2. Who has taught you the most about philanthropy in your career?John Piva, VP at Duke. He took the long view of engagement with donors.

3. You recently celebrated your fourth anniversary with Heaton Smith. Whats been your biggest surprise with regard to your work with our clients and their donors?I am never discouraged and find every situation refreshingly different. I truly believe we are delivering a tremendous service

to our client organizations and their donors.

4. You worked with donors to Anne Arundel Medical Center in Annapolis, Maryland who disclosed a minimum $10,000,000 combination gift to the hospital last year. What motivated this couple to disclose their gift?

Meet Joe BeyelSENIOR CONSULTING ASSOCIATE

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There were several motivations: Among others, they were asked by a person they valued and trusted in Lisa Hillman; they

wanted to demonstrate to their community that they are and will continue to be invested in its welfare; and, they wanted to

motivate others.

5. What book have you recently read?The autobiography by Ralph Branca (A Moment in Time: An American Story of Baseball, Heartbreak, and Grace). As a

perpetual Yankee fan, I was humbled by the Brooklyn Dodgers humility, courage and his respect for himself and the game

of baseball.

6. Tell us one thing that most people dont know about you but may find interesting.While it is evident in my personal biography, I am one of the few Americans to take an advancement position in the UK in

the mid-2000s. I was able to witness the historic presidential election of the first black president from the perspective of an

embedded person (rather than an ex-pat). It made me exceedingly proud of our country.

THE IRA CHARITABLE ROLLOVER, WHICH ALLOWS TAX-FREE ROLLOVERS TO

CHARITABLE ORGANIZATIONS, IS STILL BEING CONSIDERED BY CONGRESS.

In fact, on 17 July 2014, the House of Representatives approved H.R. 4719, The America Gives

More Act. H.R. 4719 includes both a retroactive and permanent extension of the IRA Charitable

Rollover provision of the tax code. Please contact your U.S. Senator to encourage him/her to

support the retroactive and permanent extension of the Charitable IRA Rollover, which would end

uncertainly around this giving opportunity.

President Obamas Fiscal Year 2015 budget once again sought to limit the value of the charitable

deduction, a position also supported by many Democrats in Congress. Specifically, his budget

would cap all itemized deductions, including the charitable deduction, at 28 percent.

However, one-third of the United States Senate 33 Senators, 16 Democrats and 17 Republicans

signed a letter publicly calling for the protection of the full value and scope of the charitable

deduction in any comprehensive tax reform legislation that is ultimately considered by Congress.

The release of this letter marked a significant accomplishment for the charitable sector and

demonstrated remarkable support for the charitable deduction.

Mark your calendar!The 2015 National

Conference on Philanthropic

Planning will be held

in Orlando, Florida

on October 21-23.

Heaton Smith Items of Interest

Compiled by Phil Purcell, JD, Senior Consultant.

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404.812.1722 | www.heatonsmithgroup.com | [email protected]

Heaton Smith Group, LLC 1380 West Paces Ferry Road Suite 1100 Atlanta, Georgia 30327

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