Maintaining Momentum in Challenging Times

1. Maintaining Momentum in Challenging Times Dan C. Peterson, J.D. Assistant Vice President, Gift Planning Oregon State University Foundation Dan.peterson@oregonstate.edu

2. Today’s Presentation Context setting Relationship building strategies Addressing donor concerns/goals with select gift vehicles – Gift Planning 101 With tips for introducing gift vehicles into donor conversations Focus on conversations about ASSETS in order to secure the largest gift commitments Context setting How many with 5 years+ of fund raising experience? 10 years? 20 years? How many work in major gift fund raising? Gift/planned giving? Annual giving?Context setting How many with 5 years+ of fund raising experience? 10 years? 20 years? How many work in major gift fund raising? Gift/planned giving? Annual giving?

3. Setting the Context The End is Near v. A Return to Gift Planning Camelot?

4. An Uncertain Economy Stock market gyrations – pick your symbol! Home values off 30% from peak Rising unemployment – 10% and 17% What’s the true cost of health care “reform”? Consumers staying on the sidelines Billion dollar bailouts – how do we pay for them? PG Today article: Turbulent Times and Critical Donor Messages, Kathryn Miree, Feb 2010. Points to the same set of economic factors.PG Today article: Turbulent Times and Critical Donor Messages, Kathryn Miree, Feb 2010. Points to the same set of economic factors.

5. Uncertain Federal Tax Structure Income Tax changes? Top rates could increase from 36% to 40% or more State rates (Oregon) increasing for top TPs Possible deduction limits on charitable gifts by top-tier TPs Capital Gains Tax rates Possible increase from 15% to 20%, or back to 28% Tip: donors believe this will happen! Estate (Transfer) Tax changes

6. What’s in Store for Charities? Declining endowment values – and smaller payouts for program purposes? Smaller grants from private foundations? Reduced corporate giving? Smaller and fewer major gifts? Shrinking annual fund revenues? UNLESS…

7. We Go Back to Basics Compelling case – now more than ever! Marketing our organizations Stressing the impact of philanthropy & accountability Committed leadership – internal and external Level-setting giving expectations with Board members – Regular, Special and Ultimate gifts! Enough prospective donors – that we’re seeing! Development is a contact sport! Engines – structure, staff, systems, accountabilities MGO/GPO partnerships, with lots of shared credit I want to focus on the 4th predictor of fund raising success. How all of us in the f-r process – mgos, pgos, annual giving officers, research staff, our admins – need to work together to foster strong relationships and listen for clues from our donors.I want to focus on the 4th predictor of fund raising success. How all of us in the f-r process – mgos, pgos, annual giving officers, research staff, our admins – need to work together to foster strong relationships and listen for clues from our donors.

8. Fostering Relationships

9. Good Gifts: Aligning Donor Goals with Our Priorities We all understand need for private support? There is an art to building relationships, assessing where those individuals are in their commitment level with OSU and how the needs of CoF overlap with the donor’s goals financially, for their family, and/or philanthropically.We all understand need for private support? There is an art to building relationships, assessing where those individuals are in their commitment level with OSU and how the needs of CoF overlap with the donor’s goals financially, for their family, and/or philanthropically.

10. Understanding Donor Values Sharpe: Be near, dear and clear with: Board members Top-tier donors Legacy society members Long-haul donors (at lower gift levels) PLUS continue or begin DISCOVERY programs Listen for PAPPA People Assets Passion points Planning priorities Advisors February 9, 2010 Big Gifts Are Harder, but Still Possible, to Find By Kathryn Masterson While donations of $1-million or more are down for colleges and other nonprofit organizations, there are still donors who can and want to make big gifts, a trio of fund-raising experts said Tuesday. Such philanthropists are no longer easy to find, however, and colleges must be creative in how they identify and solicit them. The three experts—Robert F. Hartsook, a fund-raising consultant who works with colleges and other nonprofit organizations; Robert E. Carter, a philanthropy consultant who works with individual and corporate donors; and Lisa Thomson, associate director of gift planning for the Nature Conservancy—shared their tips for seeking big gifts during tough times in an online discussion moderated by The Chronicle of Philanthropy. February 9, 2010 Big Gifts Are Harder, but Still Possible, to Find By Kathryn Masterson While donations of $1-million or more are down for colleges and other nonprofit organizations, there are still donors who can and want to make big gifts, a trio of fund-raising experts said Tuesday. Such philanthropists are no longer easy to find, however, and colleges must be creative in how they identify and solicit them. The three experts—Robert F. Hartsook, a fund-raising consultant who works with colleges and other nonprofit organizations; Robert E. Carter, a philanthropy consultant who works with individual and corporate donors; and Lisa Thomson, associate director of gift planning for the Nature Conservancy—shared their tips for seeking big gifts during tough times in an online discussion moderated by The Chronicle of Philanthropy.

11. Looking for Clues Age & Depression Era Values Marital Status Childless, No Heirs, Distant Heirs, Successful Children Taxable Estate Long-term Appreciated Assets Steady, Faithful Donors & Long-Time Staff The Bereaved – “Tears of Gratitude” A Team of Advisors and Wealthy Friends “Looking for Clues”, Gabrielle Dudley (SPU), PG Today, 12/09 We can ALL be on the lookout for these clues – no matter what role we play in the organization! Jeff Comfort: VP for Principal Gifts and PG at Georgetown says “the biggest gifts come from assets. So, listen for assets!” You can reach Gabrielle at: dudley@spu.edu We can ALL be on the lookout for these clues – no matter what role we play in the organization! Jeff Comfort: VP for Principal Gifts and PG at Georgetown says “the biggest gifts come from assets. So, listen for assets!” You can reach Gabrielle at: dudley@spu.edu

12. Unlocking Donor Passions When did you make your first charitable gift – ever or to our organization? Why? What charities have you supported the longest and why? Are there any that you’ve stopped supporting? Most meaningful gift? Why? How do your prioritize requests for support? What role does your family play in your giving decisions? PG Today, May 2009, p. 2 Good set of questions to use when visiting with your donors for stewardship purposes – especially good idea in these challenging times.PG Today, May 2009, p. 2 Good set of questions to use when visiting with your donors for stewardship purposes – especially good idea in these challenging times.

13. Values-Based Planning For the GPO member, we’re likely LISTENING for answers to these questions.For the GPO member, we’re likely LISTENING for answers to these questions.

14. What has your donor “told” you?

15. Smart Fund Raising Addressing Donor Goals/Concerns with Select Gift Vehicles Moving left to right on the impact/control spectrum…Moving left to right on the impact/control spectrum…

16. 1. “Can I spread payments out over a few years?” “Flex” or “build-up” endowments

17. Don’t dive into details – stay high level! CLTs, while beneficial, are not done often. Most in audience will have GPO team member they can rely on. With a 3% discount rate, to zero out estate tax requires a 20 year CLAT with a 6.75% payout. Or a 25 year term with a 5.75% payout. Ask: Can you think of some families where this plan may address some of their financial, family, and/or philanthropic objectives? Don’t dive into details – stay high level! CLTs, while beneficial, are not done often. Most in audience will have GPO team member they can rely on. With a 3% discount rate, to zero out estate tax requires a 20 year CLAT with a 6.75% payout. Or a 25 year term with a 5.75% payout. Ask: Can you think of some families where this plan may address some of their financial, family, and/or philanthropic objectives?

18. 3. “I would…but I need all of my investments…” Predictors: 70+, steady donors, involved in program Listen: “I want (need) more income…” “We aren’t earning anything off our investments…” “We’re ok now, but Jean loses my pension when I die… Say: Did you know you can make a gift and receive secure, fixed income for life? ASK: what language has worked for you? “We offer charitable gift annuities – can I have one of our gift planning officers contact you…” Or “at our next visit can I walk you through an example…” ASK: what language has worked for you? “We offer charitable gift annuities – can I have one of our gift planning officers contact you…” Or “at our next visit can I walk you through an example…”

19. Make sure your organization is registered in all states (differing rules) where you want to offer CGAs.Make sure your organization is registered in all states (differing rules) where you want to offer CGAs.

20. 4. “I Want to Lock in My Gains. I’m Afraid Capital Gains Rates May Increase.” CRUTs Say: “Did you know you can (1)gift appreciated assets, avoid capital gains tax get an income tax deduction (2)receive a stream of income for your life, and (3) make a wonderful gift to [your org here]

21. Julie: OSUF logo please. Ask: Can you think of some families where this plan may address some of their financial, family, and/or philanthropic objectives? Julie: OSUF logo please. Ask: Can you think of some families where this plan may address some of their financial, family, and/or philanthropic objectives?

22. Creative Uses for CRTs New “normal” market – lock in capital gains Asset/investment diversification Supplemental income for adult children or parents Business planning exit strategy Mobile home parks Seed companies, commercial heating contractor Apartments, duplexes, commercial real estate PT clinic, Veterinary clinic Asset management for special needs trusts Education CRTs for grand-kids

23. 5. “My family is all grown and gone” “Did you know you can give OSUF your personal residence, while retaining the right to live in it for your lifetime and relieving your distant family of the burden of having to come back to town to sell it when you’re gone?”

24. Residence: can include vacation homes. Farm: can include timber acreage. Deduction for 80 year old donor will roughly equal 2/3 of the FMV of the asset Ask: Can you think of some families where this plan may address some of their financial, family, and/or philanthropic objectives? Residence: can include vacation homes. Farm: can include timber acreage. Deduction for 80 year old donor will roughly equal 2/3 of the FMV of the asset Ask: Can you think of some families where this plan may address some of their financial, family, and/or philanthropic objectives?

25. RLE prospective donors Generally age 75 and older Owns home outright, no mortgage Plans to live in home for the rest of life and has sufficient assets, besides home, to do so Or sufficient assets to move to care facility Listen: “they’ll roll me out of here!” Interest in reducing current income taxes Deep philanthropic intent 25

26. 6. Bequest Expectancies Providing for OSU thru an estate plan: Will or Living Trust IRA/401-K/Keogh b/ary designation Transfer/Pay on Death accounts Life Insurance proceeds Say: “have you included [your org] in your estate plan?” Let’s practice saying it! Have you… Planning Tip: tax burdened assets to charity/ tax favored assets to familyLet’s practice saying it! Have you… Planning Tip: tax burdened assets to charity/ tax favored assets to family

27. “I just don’t think I can make a major gift today” “I understand and t/y for sharing that.” Have you included our charity in your estate plan? Would you consider endowing your annual gift through your estate? Bequest trivia PPP: average age for charitable bequest is _______. Stelter: once a charity is included in a Will, it is ______ dropped. Meer study stresses importance of first ____ years as an alum and donor. Implications for bequest gifts. Meer study: using a dataset from one school, Meer and Rosen found that alumni who were steady donors in their first five years following graduation gave 8 times more, over the next 20 years, than alumni who made a single gift in the first 5 years. Econweb.tamu.edu/jmeer Meer study: using a dataset from one school, Meer and Rosen found that alumni who were steady donors in their first five years following graduation gave 8 times more, over the next 20 years, than alumni who made a single gift in the first 5 years. Econweb.tamu.edu/jmeer

28. Good Gifts Across the Spectrum

29. Values-Based Planning

31. Following the 9/11 attacks, the Center for Philanthropy (IU) conducted a study of 13 major events of terrorism, war, political or economic crisis going back to the Fall of France in 1940. While the stock market dropped precipitously right away, in most cases it had recovered or more than recovered a year later – except in 3 cases (the Fall of France, the Arab Oil Embargo and the 1987 financial panic). Total giving increased every year but after the 1987 financial panic. Source: The Napa Group, citing AAFRC Trust for Philanthropy…9/27/2001)Following the 9/11 attacks, the Center for Philanthropy (IU) conducted a study of 13 major events of terrorism, war, political or economic crisis going back to the Fall of France in 1940. While the stock market dropped precipitously right away, in most cases it had recovered or more than recovered a year later – except in 3 cases (the Fall of France, the Arab Oil Embargo and the 1987 financial panic). Total giving increased every year but after the 1987 financial panic. Source: The Napa Group, citing AAFRC Trust for Philanthropy…9/27/2001)

32. Estate (Transfer) Tax Proposals Variety of proposals pending in Congress. Action likely by CYE to avoid elimination of estate tax in 2010. Stay tuned! One “crystal ball” prediction: