FORTY - FIRST

ANNUAL CONFERENCE Development

Don’t Leave Money on the Table! How to Incorporate Planned Giving in a Campaign

P hilip M . P urcell, CFR E, M P A/ JD Vice-P resident, Ball State Foundation Copyright 2015@All rights reserved .

Planned Giving in a Comprehensive Campaign Comprehensive Campaign Planning 1. Counting and Reporting Gifts 2. Goal Setting 3. The Challenge Match 4. Policies and Procedures 5. Donor Recognition  Making the “Ask” for Planned Gifts 1. Setting the Stage 2. The Five W’s 3. Blended Proposals 

Comprehensive Campaign Planning

Show Me the Money!

Comprehensive Capital – Buildings and Equipment  Program Restricted  Endowment – Programs, Scholarships, Staff Salaries/Support, Building Maintenance  Unrestricted Support  Increased Annual Fund  Long Term Support – Planned Gifts 

Counting and Reporting Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted. – Albert Einstein

Beauty and the Beast Beauty: The use of planned gifts to support charitable missions.  Beast: Understanding how to count planned gifts toward campaign goals. 

Beholding Beauty … … Beauty is in the eye of the Beholder…

Definitions: Accounting Accounting is a process of keeping financial statements based on a set of generally accepted guidelines and principles, in order to present a fair, comparable and understandable picture of an organization’s financial position at any given time.  See FASB (Financial Accounting Standards Board) and GASB Statements. 

Definitions: Valuation Valuation is an assessment of the actual value of an item to the person or organization that possesses it.  PPP defines valuation as a reflection of the present value of the ultimate purchasing power of the gift.  Personalized based on your organization’s experience.  See PPP Valuation Standards at www.pppnet.org. 

Definitions: Charitable Tax Benefit Value The value of tax benefits available pursuant to federal and state law for charitable gifts including the federal income tax deduction, federal capital gains tax savings, federal estate/gift tax deduction, state income tax credits and state death tax benefits.

Definitions: Work Performance Goals Annual evaluation of fundraising staff is often based on financial results, contacts, approved activities, etc.  Performance goals must be personalized to staff and the organization.  Planned giving success requires special considerations: history of charity and fundraising program, donor base, sophistication of program, staff ability, time allocated to planned giving, etc. 

Rising Tide Lifts All Boats Allow planned gifts to count toward work goals of all appropriate staff.  Consider the broader definition of planned gift (current and deferred). 

Definitions: Recognition Crediting Crediting is institution-specific and represents the way each organization grants recognition to its donors.  Such recognition need not stem from any of the factors of counting, accounting, tax benefits or valuation, although a given organization may use any of these calculations as the basis of its donor recognition policies. 

Definitions: Counting and Reporting Counting and reporting are arithmetic activities.  Counting is the numeric summary of activity, results and progress toward goals.  Reporting is the process of conveying to a lay audience clearly and transparently what has happened during a specific timeframe. 

Definitions: Campaign A campaign may encompass not only multi-year comprehensive or focused efforts, but any time frame in which a non-profit elects to report fundraising activity, i.e. a specific “reporting period.”

Campaign Evolution

Evolution of Campaigns Originally: 1. Cash Gifts Only 2. Short in Duration 3. Single Focus 4. Outside Counsel does it all 5. Staffed by Volunteers 6. “Unusual” Events in the Life of the Charity

Currently: 1. All Types of Gifts 2. 3-7 Years 3. Multi-Purpose 4. Outside Counsel Guides/Manages 5. Professional Staff 6. On-Going

Ways of Addressing These Changes … 1. CASE (Council for Advancement and Support of Education) 2. PPP (Partnership for Philanthropic Planning)

Recommendations 1. Fundraising campaigns of whatever duration, should set three separate and complementary goals and should report fundraising results along three complementary dimensions:

Recommendations 

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An outright goal for gifts usable or that become usable for institutional purposes during the reporting period (whether one or more years). Irrevocable gift goals, for gifts committed during the reporting period but usable by the organization at some point after the end of the period. Revocable gift goals for gifts solicited and committed during the reporting period but in which the donor retains the right to change the commitment and/or beneficiary.

Recommendations 2. Charities should report their progress toward each of these goals separately, using face value numbers.

So W hat Goes I nto The Three Categories?

CATEGORY A: OUTRIGHT GIFTS          

CASH MARKETABLE SECURITIES OTHER NON-CASH ASSETS THE GIFT PORTION OF BARGAIN SALES REALIZED BEQUESTS REALIZED INSURANCE OR RETIREMENT PLAN BENEFITS EXISTING CASH VALUE OF INSURANCE CURRENT LEAD TRUST DISTRIBUTIONS LEGALLY ENFORCEABLE PLEDGES CGA, CRAT, CRUT, PIF MATURATIONS PREVIOUSLY REPORTED IN CATEGORY B

CATEGORY B: IRREVOCABLE DEFERRED GIFTS SPLIT INTEREST LIFE INCOME GIFTS  LIFE ESTATES  DEATH BENEFIT OF INSURANCE (in excess of cash value in Category A)  IRREVOCABLE TESTAMENTARY PLEDGES  FUTURE LEAD TRUST DISTRIBUTIONS 

CATEGORY C: REVOCABLE GIFTS    

  

ESTATE PROVISIONS CRT’S IN WHICH DONOR RETAINS RIGHT TO CHANGE BENEFICIARY LIVING TRUSTS QUALIFIED RETIREMENT PLAN ASSETS IN WHICH DONOR RETAINS RIGHT TO CHANGE BENEFICIARY LIFE INSURANCE IN WHICH DONOR RETAINS OWNERSHIP DONOR ADVISED FUND ASSETS COMING TO THE CHARITY REVOCABLE PLEDGES

Not Beauty and the Beast!

Rather Beauty and the Beholder Charitable organizations and their campaigns are diverse.  PPP and CASE encourages you to evaluate a methodology that is the best match for your organization. 

Goal Setting Feasibility Study  Comprehensive Goals  Capital Goals  Endowment Goals  Annual Goals  Major Gift Goals  Planned Gift Goals  The Challenge Match 

Feasibility Interviews and Report  Goal-testing  Major gift inquiries  Planned gift consideration? 

Comprehensive Goal Based on strategic priorities  Consider strategic planning process to create subgoals  Summation of sub-goals  Planned gift component 

Capital Goals Goal based on capital construction costs.  Deferred gifts for future operating costs, maintenance endowment funds, payments toward loans or bonding. 

Endowment Goals Determine annual need for salaries, building maintenance, operating support, scholarships.  Assume growth rate based on counsel.  Assume spending rate of 3-5%.  Planned gift component 

Annual Goals Based on needs.  Based on history.  All forms of annual support: 1. Annual Fund (Direct Mail, Phone, Web) 2. Grants 3. Sponsorships 4. Special Events 5. Matured Planned Gifts 6. Major Gifts 

Major Gift Goals Feasibility study results  Strategic planning process results  “Quiet phase” results  Fundraising pyramid – 70% of comprehensive goal?  Consider current use planned gifts: assets, lead trusts, pledges  Combination with deferred gifts. 

Planned Gift Goals Consider age/sophistication of organization and program.  Evaluate in terms of investment and long-term benefits.  For new programs consider activity goals (e.g., number of contacts, program elements) and not dollar goals.  Develop a dollar goal and action plan worksheet for mature programs. 

The Challenge Match Choose strategic priorities or unpopular needs (e.g., annual operating fund).  Match outright and planned gifts and pledges.  Matching funds provided by donors, board members, related foundation. 

Match Example For outright gift pledge of $12,500 (e.g., 4 years x $3,125/year) plus planned gift pledge of $25,000 to create an endowment.  Charity deposits $12,500 into named endowment at completion now.  Meets named endowment minimum of $25,000.  Planned gift adds inflation hedge. 

Policies/Procedures 

 1. 2.

Gift Acceptance Policies and Procedures: On-going or campaign-specific. Campaign Policies and Procedures: Campaign Counting and Reporting. Donor Recognition.

I ntegrated Donor Recognition

Integrated Donor Recognition Recognition Acceptance Protocol: Forms  Planned Giving Societies  Annual/Loyal Giving Societies  Cumulative Giving Societies: Adding Planned Gifts at Face or Present Value  Campaign Recognition  Naming Recognition for Buildings  Perpetual Endowments 

Sample Integrated Recognition Values used for lifetime cumulative gift recognition societies, campaign counting or naming opportunities.  Recognize now for future pledges.  Face value of irrevocable planned gift for any age.  Face value of revocable planned gift for donors age 55 and over. Discounted present value for donors under age 55. 

Integrated Donor Recognition Annual Lists (Annual Report)  Plaques on Public Display  Website Display  Special Gifts  Coordinated Recognition Events 

Planned Gifts: To Ask or Not To Ask?

An Impossible Dream?

Producing a Success! 1. Setting the Stage

2. Preparing the Script  The 5 W’s for the Ask  Proposal Format 3. Effective Rehearsal 4. Excellent Elocution 5. Dealing with Critical Reviews

Setting the Stage

Needles in the Haystack!

Three Ways to Identify Planned Gift Prospects 1. SelfIdentification. 2. Staff and Volunteer Leads. 3. Prospect Identification.

Self-Identification Multi-Channel Marketing Plan:  Newsletters – Campaign, Gift Planning  Brochures: Overview, Specific, Recognitions  Target Mailings  Website, Email blasts, Media (TV, Radio, etc.)  Seminars for Donors, Board, Others  Events: Celebrations, Recognition, Other  Annual Fund Responses/Replies  Phone Calling

Integrated Publications What?  Segment by Age  Advertisements or Testimonials.  Descriptions of Techniques  Contact Information  Recognition  Donor Lists

Where?  Fundraising Brochures  Newsletters  Magazines  Website  Annual Report  Campaign Reports

Fundraising Pyramid 

Planned Gifts _____________



M ajor Gifts _____________

R epeat/ I ncreased Annual Gifts______________ 

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First Tim e Gifts_____________

Secrets of The Pyramid Number of donors?  Average size of gift?  Nature of the relationship?  Marketing strategies?  Can donors make all types of gifts?  Can strategies be integrated by the charitable organization? 

The Magic Box  I have included a

gift to _____ in m y estate plans.

 I w ould like m ore

inform ation on how to include a gift in m y estate plans.

Personal Visits Maximize time with donors.  Scripted.  Role of Volunteers, Board, Others. The Blended Proposal.  The Blended Thank You.  Follow-Up. 

Staff and Volunteer Training Led by planned giving officer or other planned gift “point person”.  Carefully use volunteers (board, etc.).  Regular in-house training/social time.  Paid consultants or seminars.  Regular sharing of periodicals , emails, and other updates on planned giving.  Membership in PPP and local council. 

Staff and Volunteer Coordination Access to current planned gift information.  Process/acceptance forms for all types of gifts: Planned, Endowment, NonCash, Stock, IRA Rollover.  Contact sheets to review cues and clues. 

Donor Prospecting Are you looking for the cues and clues to all types of gift potential? Linkage  Ability  Interest 

Cues and Clues: Estate Planning      

Currently planning estate Writing will/trust Advisors’ names Investigating life insurance Concerned about providing for loved ones Asks about will, living will, living trust, power of attorney, executors

Cues and Clues: Personal Assets/Income       

Owns business Plans to sell business Retirement plan Owns collection(s) Recently received inheritance Personal residence(s) Appreciated real estate (commercial, farm, etc.)

       

Appreciated stock Depreciated stock Government bonds (tax-free?) Savings bonds Corporate bonds Commercial annuities Mutual funds High Income $_____

Cues and Clues: Tax Concerns Income tax  Capital gains tax  Estate tax  Gift tax  Taxes on retirement plan 

Cues and Clues: Personal Information Single  No or few children  Concern for income for spouse or children (special needs?)  Moved or planning to move  Retired or planning to retire soon 

Cues and Clues: Charitable Interests History of experience with your charity: Served? Volunteer? Family served?  Giving history  Linkage to similar charities  Interest in specific programs  Interest in naming opportunity for self or loved ones  Interest in perpetual endowment 

Asking for Gifts  W ho  W hat  W hen  W here  W hy

Who? Who can make an offer that cannot be refused?  Relationship !  Door Opening vs. Ask Closing  Board Chair, CEO, CDO, Other  The Ask Team 

I s Your Board “On Board”? Show M e The M oney!

Is Your Board “On Board”? Donor identification, cultivation, solicitation, recognition and stewardship.  Committee involvement.  Comprehensive budget.  Goal-setting: outright and planned gifts  Personal giving: 100% with pledge of outright AND planned gifts! 

What?   

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Too much or too little? That is the question! Assess ability to give. Describe need in detail – budget for equipment, building, endowment. Naming policy approved by governing board. Consider self-selected amount by donor. Consider blending your asks!

Blending Proposals

Semantics? Is a “planned gift” a “major gift”?  In the eyes of your organization?  In the eyes of your board?  In the eyes of your donor(s)? Are “planned gifts” only “deferred”?  Endowments.  Lead trusts.  Non-cash gifts.  Current use of deferred gifts.

Planned Gifts That Help Now 1. Cash. 2. Gifts or Bargain Sales - Non-Cash Assets.  Real Estate. Outright or Easements.  Tangible Personal Property (artwork, collections, equipment, etc.)  Intangible Personal Property (stock, bonds, intellectual property). 3. Charitable Lead Trusts. 4. Endowments.

Planned Gifts That Help Later: Deferred Gifts 1. Bequests in a Will or Trust. 2. Payments on Death of Bank or Stock Account. 3. Life Insurance. 4. Retirement Plan Designations. 5. Remainder Interest with Retained Life Estate in Home or Farm.

Planned Gifts That Pay Income 1. Charitable Gift Annuities. 2. Charitable Remainder Unitrusts. 3. Charitable Remainder Annuity Trusts. 4. Pooled Income Funds.

Maximizing Integrated Philanthropy

Support for Blending High correlation of loyal annual giving and planned giving.  Major givers are invested – and may consider a planned gift to enhance endowment, assist established program, maintain building, etc.  Note: For many planned gift donors, it will be their largest gift.  See Appendix for sample ways to incorporate the planned gift “ask”! 

Too Much in the Blender? Objections: 1. Too confusing. 2. Diminishes the current gift. 3. Creates delay. 4. Planned gifts are only for retirees. 5. “Either/or”.

Too Much in the Blender? Responses: 1. Use a simple format. 2. Planned gifts rarely come from current income (annual gifts) or have different motivations from major gifts. 3. Format of pledge allows for quick action followed by details. 4. Most bequests -Age 45-60 (Bank of America/Center on Philanthropy Study) 5. “And”!

Blending Proposals  1.  1. 2.

The “single ask” : Annual Gift The “double ask”: Annual Gift or Multi-Year Pledge Major Gift

Blending Proposals  1. 2. 3.

The “triple ask”: Annual Gift or Multi-Year Pledge Major Gift/Pledge in addition to Annual Planned Gift (Documentation required)

Blending Proposals  1. 2. 3. 4.

The “quadruple ask”: Annual Gift/Pledge Major Gift/Pledge Revocable Planned Gift Irrevocable Planned Gift

Example #1 of Blended Gift Annual gifts to award scholarships, support programs, fulfill pledge, etc.  Major gift (or deferred gift) restricted to create new endowment designated for same purpose.  Endowment reaches goal and spending from endowment replaces annual gifts.  Planned gift will supplement endowment to provide hedge against inflation and market loss. 

Example #2 of Blended Gift Major gift pledge for building, equipment purchase, establish endowment, etc.  Any pledge due and owing at death to be satisfied from testamentary planned gift (e.g., bequest in will or trust).  Assures naming opportunity. 

Example #3 of Blended Gift 

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% of Charitable Lead Trust payments or Donor Advised Fund grants for annual support. % of CLT or DAF payments to grow endowment until minimum is reached. Ultimately endowment supports program Bequest from deferred gift (e.g., will, beneficiary of retirement plan or life insurance) adds to endowment as inflation hedge.

W hen?  

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Timing based on need. Timing based case for support - and effective strategic planning. Timing based on relationship – but don’t wait forever! Timing may not surprise. Avoid multiple single purpose asks.

Where?  

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Allow prospect to choose? Suggestions: charity office, prospect’s home. Restaurants are time limited. Opportunity for conversation.

Why?

The CASE for Support

Connecting the Dots

Case Statements: Connecting the DOTS Documented needs that your charitable mission aims to address.  How your programs and services effectively and efficiently address these needs.  Outright and planned gifts provide essential support to pay for these programs and services now and later.  Serving the interests and philanthropic goals of donors. 

Types of Case Statements General support or campaign.  Capital campaign.  Project campaign.  Endowment campaign.  Unrestricted support.  Planned giving support.  Note: Scope and content of the case statement is unique for each and every charity! 

Donor-Centered Philanthropy 



Are your relationships and asks organization centered , donor centered or balanced? Consider generational differences

Major/Planned Gift Motivations        

Help Now! Strategic Use Serve Community Pay Back/Pay Forward Act of Faith Prestige and Recognition Peer Group Campaign Goal

       

Family Legacy Honor Loved Ones Ability to Give Use of Assets Tax Benefits Pledging Named Endowments Link to Planned Giving

How?

Format for Blended Proposal 1. 2.

3. 4. 5. 6.

Cover Letter from Key Contact Statement of Case (Specific Purpose such as Capital Need, Program Support, Endowment, Unrestricted) Proposed Annual Gift Support Proposed Major Gift Support Proposed Planned Gift Support Proposed Donor Recognition

Planned Gift Proposal Cover letter. Consider options. Summary or matrix of options. Begin with general descriptions: How it Works, Benefits for You, Benefits for Charity.  Follow with specifics: Financial Illustration, Sample Forms, Brochures.  Donor recognition.    

Pledge Format Addressed to CEO or Board Chair.  Identification of purpose and use of gift.  Commitment of outright gift: dollar amount and timeframe.  Commitment of planned gift(s): dollar amount (estimate, if possible) and technique(s).  Statement that planned gift documentation will be shared within reasonable time 

Break a Leg!? A practice golf sw ing is often better than your gam e sw ing. W hy? Because you are relax ed in practice!

Rehearsal Proof and understand the proposal.  Prepare a script.  Role play the “ask”.  Anticipate questions and objections. 

Excellent Elocution 1. 2. 3. 4.

Welcome Introductions Follow up (if needed) Thank you for support and interest . 5. Would like to share an opportunity to support mission. 6. Share and review proposal. 7. Request follow up meeting.

Use Stories Passionate presentations of your mission and case should use one or more illustrative stories.  Stories can reduce the donor’s anxiety as well as build comfort and confidence.  “Let me share some examples of how others have helped us fulfill our (mission/case) ... [share some specific examples excluding confidential information].” 

Prelude to a Close Your stories should try to connect with the prospect’s choices, objectives and dreams.  However, the presentation and stories is not the close. The close starts after your presentation.  Consider transition questions or statements. 

The Transition “Tell me what you think about ___ (story, mission, case) ___?”  “Are you interested in a wonderful way to … multiply your values/leave a legacy/pay back/pay forward/act on your faith/help future generations … with significant gift?”  “How would you rate ___ (name) ___ work on your scale (1 to 10, 10 is best) of philanthropic passions or interests?” 

Transition to Close 

“ How do you usually evaluate and make

your philanthropic decisions?”  “We will need $_____ to fulfill this initiative. Who do you think we should be talking to?”  “Can we meet in a couple of weeks to see how you might be able to play a role in this program…?”  “When would be a good time to talk about a significant gift for _____”?

The Close “I’ve told you about ___ (our case) ___, and how others have planned their gifts; would you consider sharing how you may wish to help if money was no object.” “Would you consider/what would you think of a major/planned gift of $__________ to (explain use in detail) if I could show you how?” “We would like you to consider being lead/named major/planned gift donors for this project in the amount of $____”.

Critical Reviews Maintain the conversation!  Work to a “Yes!”  Inform and involve leadership (board and executive staff).  Answer questions promptly.  Rely on expert assistance to answer questions. 

Responding to Critics Edit the proposal if needed.  Suggest gift from assets – not just income.  Emphasize deferred or planned gifts if outright gift ask is too much.  Be careful with illegal or inappropriate restrictions. 

Responses to Critics “But I don’t think I have enough income to make a major gift…” Response: “If I can show you how to plan gifts involving assets and through your estate plan, would you consider…”?  “But I want to retain assets for my heirs…” Response: “If I can show you how you can conserve more for your heirs, would you consider …?” 

Responses to Critics 

“ But I need income for my retirement…”

Response: “If I can show you how to convert assets for retirement income and still support our organization, would you consider…?”  “But taxes already erode too much of what I have…” Response: “If I can show you how to save taxes and maximize the value of what you have, would you consider…”

Resources The Ask , Laura Fredricks (Jossey Bass)  Born to R aise , Jerold Panas (Pluribus)  Asking , Jerold Panas (Emerson Church)  The Artful Journey , William Sturtevant 

(Bonus Books)

The Art of Planned Giving (Doug White)  The Fundraising School , Courses on 

Planned and Major Gift Fundraising

P lanned Gifts in a Cam paign: To Ask or Not To Ask ?