What You Need to Know About Planned Giving When Planned Giving Is Not All That You Do Presented by: Timothy D. Logan, FAHP, ACFRE August 12, 2015 1:00 – 2:30 p.m. Eastern Noon – 1:30 p.m. Central 11:00 a.m. – 12:30 p.m. Mountain 10:00 –11:30 a.m. Pacific 9:00 – 10:30 a.m. Alaska Association of Fundraising Professionals 4300 Wilson Boulevard, Suite 300, Arlington, VA 22203-4168 800-666-3863 (U.S. & Canada) • 866-837-1948 (Mexico) www.afpnet.org Association of Fundraising Professionals 2015 WEB/AUDIOCONFERENCES Educating Fundraisers in the 21 st Century
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What You Need to Know About Planned Giving
When Planned Giving Is Not All That You Do
Presented by:
Timothy D. Logan, FAHP, ACFRE
August 12, 2015
1:00 – 2:30 p.m. Eastern
Noon – 1:30 p.m. Central
11:00 a.m. – 12:30 p.m. Mountain
10:00 –11:30 a.m. Pacific
9:00 – 10:30 a.m. Alaska
Association of Fundraising Professionals 4300 Wilson Boulevard, Suite 300, Arlington, VA 22203-4168
Timothy D. Logan, FAHP, ACFRE is Vice President, Donor Engagement Strategy at Innovairre Communications where he develops multichannel strategy for data-driven digital fundraising and donor-engagement. His passion is using data to connect donors with nonprofit philanthropy. Tim has been a leader in developing innovative multichannel direct response programs targeted to major and planned giving donors and has worked extensively in developing grateful patient programs for hospitals. His most recent work focuses on omnichannel donor communication using social channels and digital communication to increase fundraising and donor engagement. Tim has worked in both the for-profit and nonprofit sectors and has 35 years’ experience in fund raising and nonprofit management. He holds a Masters of Nonprofit Management (MNO) from Case Western Reserve University, Cleveland, OH. He holds ACFRE advanced certification from the Association of Fund Raising Professionals and is a Fellow of the Association of Healthcare Philanthropy (FAHP). Tim is one of only six fundraising professionals to hold both advanced certifications. Tim’s background in the nonprofit sector includes 17 years’ experience working for national health organizations. His roles have ranged from local chapter fundraising to Chief Development Officer positions at the national level. Tim’s experience includes working for USO, Muscular Dystrophy Association, American Diabetes Association, and the National Osteoporosis Foundation, among others. Tim has also spent 18 years as a direct response fund raising consultant managing multi-million dollar direct response programs. An AFP certified Master Instructor since 2002, he is a seasoned lecturer and author on fundraising and nonprofit management.
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AFP WebinarAugust 12, 2015
What You Need to Know About Planned Giving:
When Planned Giving Is Not All You Do®
Presented by Timothy D. Logan, FAHP, ACFREVice President, Donor Retention
Innovairre Communications
TIMOTHY D. LOGAN, FAHP, ACFREVICE PRESIDENT, DONOR RETENTION STRATEGY
INNOVAIRRE COMMUNICATIONS
Timothy D. Logan, FAHP, ACFRE is Vice President, Donor Engagement Strategy at Innovairre Communications where he develops multichannel strategy for data-driven digital fundraising and donor-engagement. Tim has been a leader in developing innovative multichannel direct response programs targeted to major and planned giving donors. He has 35 years’ experience in fund raising and nonprofit management and holds a Masters of Nonprofit Management (MNO) from Case Western Reserve University.
An AFP certified Master Instructor since 2002, he is a seasoned lecturer and author on fundraising and nonprofit management.
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Session Objectives
• Discuss the most common planned gift properties• Bequests
• Charitable Gift Annuities
• Charitable Remainder Trusts
• Charitable Lead Trusts
• Look at donor characteristics of each gift
• Look at ways to market each gift
Donors Know about Planned
Giving
• 8 % Have made
• 14% Considering
• 7% Never heard of
• 34% learn about bequests from
Charities’ published materials
Source: NCPG Survey (now NPPP)
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Planned Giving Defined
• Requires Advisor
• Gift of an asset
– We don’t want their money, we want their. . .
Planned Giving Defined
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Or Their….
Our Donors Can Donate Their…
Farm Mineral Rights Business
Ranch Timber Rights Livestock, crops
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The Donor’s Team
• Attorney
• Accountant
• Broker(s)
• Financial Planner
• Life Insurance Agent
• Family
Donors’ Fears
• Outliving Assets
• Paying Capital Gains Taxes
• Control
• Family members/special needs
• Children/Grandchildren’s college
• Possibility of extended illness
• Giving it all away
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Planned Giving Officers
• Wear bow-ties or scarves
• Are sail boaters, not power boaters
• Are concerned with relationships—not
transactions
• Embrace processes not actions
• Eat dinner with donors at 4pm
The Three Stages of Planned
Giving
• Marketing
• Stewardship
• Gift Planning
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The Planned Giving Funnel
• Every donor—has capacity to make a bequest
• Many donors—have capacity to fund a charitable gift annuity (CGA)
• Some donors—can also fund other gift instruments (charitable lead trust, charitable remainder trust, etc.)
Planned Giving Alphabet
SoupBequest
RLE
CGA, Deferred CGA, Simple CGA, Dual CGA
CRAT, CRUT
CLAT, CLUT
NIMCRAT, NIMCRUT
NIMCRUT with flip provision
LIG
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Types of Gifts
Bequest Gift
Property—land, home, farm, ranch
Stocks
Life Income Gifts
Retained (or partial) interest
Rights (mineral, timber)
Insurance (insured interest, paid-up
policy, beneficiary)
What you need to know
1. Revocable vs Irrevocable Gifts
2. What a Testamentary Gift is
3. What a Life Income Gift is
4. Types of Gifts
5. What a Codicil is
6. Pension Beneficiary Designations
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What you need to know
7. Difference between a bequest and a living trust
8. Difference between a living trust and a trust
9. Three types of CGA and how they work
10. Trusts
-- Charitable Lead Trust vs Charitable Remainder Trust
--Annuity trust vs Unitrust
—
Planned Gifts
• Bequest
• Charitable Gift Annuity*
• Charitable Remainder Trust*
• Life Estate Contract
• Charitable Lead Trust
• Life Insurance Policy
• Pooled Income Funds*
• Donor Advised Fund
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Life Income Gifts
• Gifts in Green (*) are Life Income Gifts
• Gift provides payment to donor during
life
– Charitable Gift Annuity
– Charitable Remainder Trust
– Pooled Income Fund
Revocable Gifts
• Revocable--Gift can be retracted
– Bequest
– Revocable Trust
– Pension beneficiary
– Life Insurance beneficiary
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Irrevocable Gifts
• Gift cannot be reversed
– Donor has lost control
– This provides the tax benefits
– All Life Income Gifts
• CGA
• CRAT, CRUT
• CLAT, CLUT
• Pooled Income Fund
• Donor Advised Fund
• Life Estate Contract
Bequests
• Bequests—gift through a will
• Testamentary Gift—realized at death
• Easily revised through a codicil
• Accommodates a variety of assets
• Drafted properly, reduces estate taxes
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Three Types of Bequests
• Specific—restricted
• Specific—Unrestricted
– Specific amount
– Specific piece of property
• Residuary
– Usually a percentage
• Contingency
– Something else must come to pass
Sample Bequest Language
• Do you provide to your donors
• Is it on your website
• Legal name and address
• Contact information
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Will vs Trust
• Will
– Probate process
• Trusts
– Work like a will
– Protect family assets
Bequest Donor
• Desires flexibility or revocable gift
• Likes privacy of will/trust
• Possibility gift will grow as estate grows
• Wants to remain anonymous
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Charitable Gift Annuities
• Three types
• Simple, Dual-life, Deferred
• Fixed payment for life
• Mix of ordinary, capital-gain and tax free
income
• A moderate income tax deduction
• Average age is 79
CGA Rates
• Guaranteed payment for life
• Rates recommended by American
Council on Gift Annuities (ACGA)
• Donor’s age is the key factor
• Institution to retain one-half of gift
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CGA Rate Table• Single Life CGA Rate Table
Age Rate
66 4.8
67 4.8
68 4.9
69 5
70 5.1
75 5.8
80 6.8
85 7.8
90 9
95 and Over 9
Source: ACGA
CGA Donors
• Wants immediate income
• Likes simplicity of CGA agreement
• Wants to provide beneficiary with partly
tax free income
• Makes small, often repeat gifts
• Wants the greater income this option
gives older annuitants
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Charitable Remainder Trusts
• Consult a Professional
• Remainder Trusts
– Charity keeps the remainder
• Lead Trusts
– Charity receives interest for a period of
years
– Principal reverts to donor or designee
Charitable Remainder Trusts
• Income for life (variable or fixed)
• High Minimum--$100,000 and up
• Funded by cash or highly appreciated
securities or real estate
• A separately invested trust
• Flexible, specific investment possibilities
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Annuity Trust vs Unitrust
• A unitrust pays the beneficiary a fixed
percentage of the principal of the trust as it is
revalued annually
• Able to make additional contributions to the
trust
• A charitable remainder annuity trust pays the
beneficiary a fixed dollar amount, which is
determined when the trust is established
• Not able to make additional contributions
Annuity vs Unitrust Donor
• Annuity Trust Donor prefers a fixed payment
• Has giving ability of $100,000 or more
• Has property that has grown substantially in value
• Unitrust Donor want to see income rise as value of
trust increases
• Makes small repeat gifts
• Will tolerate some risk
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Charitable Lead Trust
• Income to charity for term of years
• Fits with estate plan
• Provided tax relief
• Flexible to return assets or to pass on
• Funded by securities, businesses, real
estate
Charitable Lead Trust Donors
• Want to make a current gift
• Has income producing assets
• Has given to charities in the past
• Needs to transfer assets to heirs
• Has more income than can consume
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MARKETING PLANNED GIFTS
(Back to) The Planned Giving
Funnel• Where do you spend your
resources:
• Every donor—has capacity to make a bequest
• Many donors—have capacity to fund a charitable gift annuity (CGA)
• Some donors—can also fund other gift instruments (charitable lead trust, charitable remainder trust, etc.)