Tag Archives: Planned Giving Series

The Five Words That Really Excite Donors

Can you form a sentence—better still a question—with the five words that really excite donors?

What are the words?

How about:

  • Increase
  • Improve
  • Reduce
  • Save
  • Gain

Try this the next time you hear a prospective donor say, “I would love to make an increased gift in support of your organization—you know how much the mission means to me—but, I am concerned about the economy and my investments. Will I have enough to sustain my lifestyle and my family for the future?”

Can you respond by asking, “Mr. Prospect, if I can show you how to increase your income and improve your cash flow as you reduce your investment management expense, save taxes and gain control of your philanthropy, would you consider a charitable gift annuity to our organization today?

The prospect’s answer should be a resounding “Yes!”—who could resist?

In this period of a “new normal” more and more of our best supporters are fearful of outliving their resources and not having the current cash to fulfill their philanthropic objectives. A planned gift—a charitable gift annuity or charitable remainder trust, for example—may provide the best of all possible worlds. The organization receives a significant gift and the donor gets to “increase their income, improve their cash flow, reduce their expenses, save taxes and gain control” of their personal and philanthropic investments.

All you have to do is listen for the donor’s cues and be ready to ask a question with the five words that really turn donors on.

Funding Tuition Through Planned Giving

Last month we recommended doing a favor for your donors and members who live on fixed incomes.  Imagine now how you can assist parents and/or grandparents who are concerned about tuition payments for the next generation.  Today you can offer a planned giving vehicle that can provide attractive benefits and tax savings as well as greatly assist in offsetting the expense of tuition.

One of the more attractive ways to provide a stream of income to offset the cost of tuition is through a deferred gift annuity.  A deferred gift annuity is a simple contract between a donor and a nonprofit.  The donor makes a gift to a nonprofit and, in return, receives a fixed income for life beginning at a predetermined age, usually as a child or grandchild approaches the college years.  The income continues throughout the donor’s life.  The payment rate is determined both by the age of the donor at the time the gift is made and the age at which the donor wishes to begin receiving the income. The donor also receives a charitable income tax deduction in the year the gift is made.

    For example, assume Mr. Jones, age 68, has a new grandchild.  In approximately 18 years this grandchild will reach college age.  To help his children with the outrageous costs of college, Mr. Jones makes a gift of $100,000 to fund a deferred gift annuity.

   Through the deferred gift annuity, Mr. Jones will receive an income beginning when his grandchild enters college.  The income yield is 16.9% which provides an income of $16,900 of which $3,768.70 is tax free.  He also receives an immediate charitable income tax deduction of $$75,898.   A $250,000 gift would pay for most colleges (at current costs) for each of the four years. 

By suggesting this type of giving vehicle to one of your donors, you may enable the donor to alleviate some of the anxiety around tuition payments and help plan how to strengthen your organization for the future.  Contact David A. Mersky if you want to explore other ways in which through your planned giving program you can help your donors.

*** Needless to say, all gifts to the nonprofit are irrevocable, and the donor should be advised to consult with his lawyer, accountant, or financial advisor to ensure that the deferred gift annuity is structured to meet his particular tax needs.

Planned Giving in the Small Shop – A Checklist

It is challenging and rewarding to be the sole person responsible for the multi-faceted development program of a small nonprofit that seeks maximum diversity in revenue streams. However, in order for an organization to grow and attract gifts at higher levels, a planned giving program is essential.

Focus by putting the basics in place and build toward creating a larger program as a time and results warrant. Determine how to start a planned giving program employing existing agency staff, e.g., the chief financial officer and or executive director, volunteer leaders, such as board members who are tax and estate attorneys or CPA’s, and outside counsel who can help define policies and best practices from other similarly situated agencies.

Define the scope of the program and determine which gift options to offer. Perhaps, you might initiate the program and limit the options to bequests and charitable gift annuities. Develop gift acceptance policies as well as donor tracking and recognition systems. Explore and obtain planned giving software such as PGCalc or Crescendo.

Work your way through this checklist of initial action items:

___ Take a seminar on planned giving basics
___ Mobilize the organization’s appropriate human resources
___ Secure pro bono legal counsel
___ Retain a planned giving consultant
___ Determine which planned gift options to offer
___ Evaluate and select planned giving software
___ Establish gift acceptance and gift-crediting guidelines
___ Create case for planned giving support differently focused than the agency’s general case
___ Market the options to relevant segments of your donor list

If you want to receive a marketing checklist for planned gifts, send me an email by clicking here with your name and organization’s name and I will send it to you by return email.

Characteristics Of A Successful Planned Giving Program

A decade ago I met a donor who was eager to become a Founder of his synagogue on the occasion of a major campaign. But, there was no way that this devoted member, leader and past president, was going to be able to make the minimum gift of $100,000 in his lifetime. The most he thought he could contribute was $5,000 for each of the next five years.

Instead, by structuring a planned gift he was able to increase his current income, reduce his current taxes, and make a sizable philanthropic investment that assured his own financial well being.

We could only do this because our client, the donor’s congregation, recognized the value of charitable gift planning to the success of their proposed efforts. They prepared themselves to accept and manage planned gifts in advance of their campaign—a process which has survived the successful completion of the campaign five years ago, and has since resulted in millions of dollars of additional planned gifts.

In the past months, I have written in this series about the increasing importance of planned giving in these challenging economic times. If you are serious about instituting a planned giving program—and assuring the long-term stability of your enterprise—then it is time to focus upon what you need to consider in advance of implementing such a program. There are seven the key characteristics of a successful program such as those identified by our friends at PGCalc—the leading provider of charitable gift planning products and services for more than a quarter century.

As they observe, the successful operation of a planned giving program requires that:
• the board understands what planned giving is and what having a planned giving program entails.
• the board has consciously settled upon an appropriate scope for the program.
• the board has adopted suitable program policies and guidelines.
• those responsible for operating the program have developed and implemented sound procedures for seeking, receiving, and administering planned gifts.
• a comprehensive marketing plan is created, followed, and refined.
• the principles of the program are donor-centric and enable donors to meet their objectives.
• all aspects of the program are reviewed and assessed on an ongoing basis, with adjustments made whenever necessary.

These seven characteristics can apply not only to planned giving but to nonprofit operations, in general, and all development programs, in particular.

Next month, we will explore the implications of establishing a planned giving program in the small shop.

Asking for Bequests

Getting Your Piece Of The Planned Giving Pie

To start a planned giving effort, begin with the planned gift that is easiest to ask for and to deal with once made: the charitable bequest. The charitable bequest accounts for 70% of the gifts and dollars attributed to planned giving. In tact, according to the Giving USA Annual Report, charitable bequests accounted for $22.8 billion or $0.08 of every philanthropic dollar in 2010. Bequests increased by 18.8 per cent over the prior year. According to the IRS, 1 in 5 estates claimed a charitable gift deduction.

What is a bequest? A bequest is a provision in a will or living trust which directs the executor of the will or trustee of the trust to distribute part of the assets the document controls to another person or charity.

Are you getting your piece of the planned giving pie?

Because bequests often transfer the largest gifts individual donors ever make to charity, there has been quite a bit of research about the process and who make the best probable donors. In short, affluent, better educated donors who are or have been married and have children are your best prospects. However, affluence is the least predictive attribute. People with modest estates often leave charitable bequests and should certainly be given the opportunity to do so.

Planned giving, even simple bequests, requires important preparation. You want to be ready to accept and process requests for information and notices of gifts expeditiously. Then, once you have donor-centered policies and procedures for accepting planned gifts in place, and a system to respond to inquiries established, it’s time to give people the opportunity to give.

To do this, you need a multi-channel, systematic messaging process. To receive a comprehensive marketing checklist to encourage bequests to your agency, email David Mersky.

A Time for Planned Giving

We now live in the midst of a “new normal.” The current, unprecedented global economic roller-coaster and political uncertainty impact personal philanthropy. An additional component of the new normal—at least in America—is the increasing concentration of wealth being inherited as a result of the transfer by, what Tom Brokaw called, the “greatest generation” to their children and grandchildren.

This new normal has led to many donors’ anxiety about the future.  That anxiety manifests itself in an inability or unwillingness to commit to significant, multi-year charitable investments vital to the ever-changing, growing demands upon the Third Sector.

With this as a backdrop, we see great opportunity in thoughtful planned giving approaches to individual donors especially since only 7% of the wealth of individual Americans is in cash and the balance is in other assets and property..  Planned gift proposals also enable forward-thinking nonprofits to articulate and achieve bold, challenging, game-changing visions.

Once a month for the rest of 2011, Mersky, Jaffe & Associates will offer valuable posts written by David Mersky that will outline recipes for your success in planned giving.  Especially during these challenging economic times, fundraisers need to have a comprehensive donor centered approach to securing major support. If you don’t, the parade will pass you by.

Make sure you check back to understand how planned giving helps donors fulfill their charitable intent consistent with their desires, lifestyle, and financial needs by focusing on assets not income. We will demonstrate how to market planned gifts in a consistent, persistent and, ultimately, effective way. And how your message presented to a loyal donor as he or she weighs personal priorities will potentially yield a stupendous gift that will gratify both the donor and you and your organization..

Stay tuned!