Planned Giving Programs for Nonprofits• A well-managed planned giving program helps potential donors leave money or assets to your organization • Even small nonprofits can manage

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Planned Giving Programs for NonprofitsA starter guide © 2017 Erin Johnson Attorney at Law LLC

Your Organization Needs to Nurture Giving Opportunities► Lifetime Giving (Build Relationships)► Estate Planning (Wills and Trusts)► Legacy Planning (Wills and Trusts on Steroids)► Economic Windfall (Lottery, Insurance, Inheritance, etc.)► End of Life ► Probate► Fulfilling Family Charitable objectives

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It all starts with estate planning• …this cartoon is as far as

some family estate planning efforts get…

• If your organization wants to receive donations, your target donors need to get a few steps beyond “talking about it”

• It takes a lot of effort to create a successful planned giving program

Donor Side Perspective

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What is Legacy Estate Planning???Estate Planning for Generations:► Transferring values, dreams and wisdom to your “future family”

► Creating your own legacy

► Going beyond wealth and assets –getting to what is really important

What does “really important” mean???• A few common objectives:

• Control (and keep) property while you are alive and well• Plan for yourself and your loved ones if you become incapacitated• Streamline financial matters• Leave a legacy for your family• Fulfill charitable objectives

• Giving what you have -- to whom you want, the way you want, and when you want!

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Doesn’t that sound great?• “Giving what you have -- to whom you want, the way you want, and when you want!”

• Unfortunately, “you” are out of the picture when it happens• It is very difficult to “plan for” your own incapacity and death• Only 50% of Americans have an estate plan

The problem with estate planning• No one “plans” to die – you can only plan what happens

when you die• The LAST thing that anyone wants to think about is their

own failing health, incapacity, and death• The focus has to be on what is being left behind, and not the

leaving part• For nonprofits, this means that if you want a donation or

gift -- the mission, function or purpose of your organization has to fit into or create someone’s plan for their legacy

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Estate planning involves complex and competing planning goals:

• Care for yourself during life• Manage the risks of incapacity• Delegate health care decisions• Provide for the needs of the surviving partner and children• Control when and how your beneficiaries inherit• Provide liquidity at disability and death • Fulfill your charitable intentions• Promote family harmony • Plan for children, including children with special needs• Protect assets from creditors for generations to come• Maximize distribution of assets to your loved ones

What could possibly go wrong?

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What else could go wrong?

Where Does Your Organization Fit In?With all of that complexity, how does your organization stay in the estate planning process?

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Will your organization be in this picture?

Current focus of estate planning• Nobody pays estate tax any more

• …but almost everyone has a “death tax” problem

• Minimize capital gains tax• Business and farm/ranch succession plans• Lifetime gifting• Charitable giving for tax benefits• Plan for the future!

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Charitable giving• Make your loved ones aware of your long term

goals, personal values, and desires:• Charitable giving; religious beliefs; pets

• Make gifts and donations during your life and after you die• Realize tax benefits of charitable giving

• Authorize gifting in your powers of attorney

Some nuts and bolts –The traditional estate plan• A generation or two ago, a will was the centerpiece of an estate plan• Wills do nothing until you die – no planning for incapacity• Will-centered plans have to be probated – a public process to distribute

your assets• Family feuds common and you can’t do anything to calm them !

(Because you are dead…)• Creditors and predators are everywhere ! !• Wills have to be probated, even if they create a testamentary trust• Wills provide direction and protection for a short time, but not long-

term guidance for the lives of the surviving spouse, children, and grandchildren

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The modern estate plan• Revocable living trust• Pour-over Will• Financial power of attorney• Advance health care directives• Living will• HIPAA authorization• Transfer of personal property• Life insurance trust• Charitable giving• Planning your own memorial• Provides “Fair” (vs “Equal”) inheritance

Integration with financial planning goals…it takes a team

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Opportunities for Organizations► Build relationships with estate planning team members

- Let them know you exist- Show them your value to the community- Show them that you can manage donations responsibly- Help them refer clients to you

… And now a word from Chuck

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Organization PerspectiveHow do you participate in the estate planning process?

Why do people make gifts to charity?• To get an income tax deduction for lifetime gifts• To visibly support a charity• To set an example for their children and grandchildren• To support a favorite charity related to a family value or goal• To make their community a better place to raise their children• Because they are solicited by their work place, church, or friends• To avoid capital gains taxes when assets are converted into income producing

property• To avoid having their children inherit too much money• To allow their children to manage their private foundation and to give their children

a sense of purpose

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Common charitable giving tools• Lifetime gifts• Private foundations• Donor advised funds• Bequests• Charitable remainder trusts• Charitable lead trusts• Charitable gift annuities• Pooled income fund• Deferred payment gift annuities• Life insurance

Your charitable objectives help define your legacy

Expect the unexpected: Grumpy CatReal name: Tardar Sauce- Image went viral- Sudden wealth for owner- Target for claims and

lawsuits- Millions in potential $$ lost

due to lack of protection- Owner a waitress, didn’t

know how to handle the windfall

- Unusual situation, but also occurs with lottery wins, unmanaged inheritance, insurance settlements, etc.

- Don’t overlook opportunities for charitable giving

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Goals for nonprofits – Lifetime giving:• Encourage lifetime giving• Involve potential donors in your activities and events• Create personal relationships• Establish programs and purposes that people want to support• Manage them efficiently and effectively• Make it easy for donors to donate• Differentiate between asking for support and soliciting money

Goals for nonprofits – Probate giving• The potential donor needs to have a will or trust estate plan

• No estate plan = no charitable gifts, except as an afterthought by family members

• It is in the nonprofit’s interest to encourage people to have estate plans• The charitable intent needs to be included in the will or trust

• This means advance planning before people are incapacitated• Also include authority for gifting in power of attorney documents

• Percentage gifts work better than stated amounts• Division of the “pie” so that everyone gets something, no matter what

assets are in the “pie”

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Alternatives to probate giving• Small Estates

• If the person who died owns no real estate and has assets that total less than $66,000, the estate can be managed through the small estate procedure.

• An affidavit (form an instructions available on Colorado Courts website) will allow the responsible person to access bank accounts, transfer car titles, collect and pay debts, make donations, etc.

• Joint Tenancy Assets• If assets are held in joint tenancy with right of survivorship:

• Real estate, bank, investment accounts, etc.• The assets automatically pass to the other joint tenant(s) at the time of

death, by operation of law

More alternatives to probate giving• Beneficiary Designations

• Bank and investment accounts, titles, beneficiary deeds, etc.• The charity is named as the beneficiary on the account• Or as an alternate beneficiary

• Gifts of Real Estate, Art, Vehicles, Stocks, etc.• Donor keeps them during lifetime, specific bequest to charity on death

• Memorials and Tribute Gifts• Honor a person’s life with a gift to support charity, or a legacy gift

like the dedication of a park, memorial, or other public facility

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… And more possibilities• Endowed Gifts

• Donated funds are invested in honor of the donor• Earnings are used for charitable purposes

• Usually large gifts• Donor Advised Funds

• Easy, cost-effective and professionally managed• Works well for any size of charitable intent• Onward!! Community Foundation is one example

• Charitable Trusts• For more extensive estate assets

Fully funded living trusts• Flexible Planning Tool

• Amendable / revocable while grantors are alive• Assets can be freely transferred in and out by grantors

• Can include specific bequests to charity organizations• Like a packed suitcase for a trip

• Filled with items that may or may not be needed• Holds property for ease of transfer to heirs and others• Ability to put in and take out property as needed

• Managed by a Trustee• Can be any individual, set of individuals, bank or corporate trustee of your choosing.• Trustees replaced as necessary due to incapacity, death, change in circumstances, etc.

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Amending an existing estate plan• Good opportunity to add in a charitable gift• Estate plans should be reviewed periodically or when a life

change occurs• Marriage, remarriage, new child, loss of child• The 5 Ds: death, disease, divorce, disability, disaster)

• Revise to stay on track with established goals• Re-evaluation of goals from updated life perspective• Keep up with new laws

End of life situations“Mr. Frosty, it’s March. Time to talk about estate planning”

….Is it “March” for you or a loved one - ???

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End of life charitable gift planning• Time for the donor to really decide what is really important

• May include setting up charitable gifts

• Review existing wills and trusts• Determine if they reflect current goals

• Establish an estate plan if there isn’t one• Very emotional – use care and compassion

• Define and create a person’s legacy

Legal Assistance• It is an emotional time for everyone involved when someone

dies – family dynamics change, old battles reawakened• Legal assistance on behalf of the estate can be very helpful to

resolve disputes informally and keep the procedure objective• Administering an estate is also a complex process that you

may need help with to avoid costly mistakes• Professional help is typically involved, good relationships with

attorneys, CPAs, financial advisors etc will increase your organization’s chances of being on the radar screen regarding donations

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What does all of this mean for nonprofits that rely on donations to support its functions and services??

Planned giving programs for nonprofits• A well-managed planned giving program helps potential

donors leave money or assets to your organization• Even small nonprofits can manage a simple bequest program• Get professional assistance to help people achieve more

sophisticated tax planning objectives• Start small and let the program expand as the nonprofit

grows• It will take time to get the program established and more time to see

real results

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Things to consider• While making a gift is altruistic, it is generally motivated by

a desire to be remembered after death• Your nonprofit organization can be the vehicle for accomplishing this

• Your nonprofit needs to demonstrate that it will be able to fulfill the donor’s objectives and remain viable into the future• You need to earn the donor’s trust and support

• A master plan, strategic plan and business plan are important elements of a successful planned giving program• Be sure to budget for marketing and other expenses!

Some ideas• Make use of the communication tools that you already have

• Publications, direct appeals, website, special events• Slowly build your marketing program

• Focus on how you are going to gain the trust of potential donors• Educate your entire board and staff to be familiar with the program• Have them funnel inquiries to a trained representative who can

answer detailed questions and interact with outside professionals• CPAs, Tax and Investment Advisors, Attorneys, etc.

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More ideas• Have a budget• Use methods that work

• This may take some trial and error

• Refine the organization’s objectives to attract donations• Encourage and enable people to have estate plans

• This helps them to attain their goals and supports donations for your organization’s services and functions

• Use seminars to educate, enlighten and motivate people

Your mission is important• The results of your planned giving efforts will be used to

sustain your programs and facilities, add capacity, establish endowments, and launch major new initiatives. • Make your programs worth investing in !!!• Establish specific objectives for the use of donations

• Research, Learn and Plan• Lots of resources out there

• Websites, books etc designed to assist planned giving programs• Other planned giving programs as examples

• Get up to speed on basic estate planning principles

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???What is YOUR plan?

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Thank You !Erin Johnson, Attorney at [email protected] Affordable flat-fee plans available- In-home consultations- No charge for initial interviews- www.JohnsonLaw.com- www.EstatePlanning.com© 2017 Erin Johnson Attorney at Law LLC.

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