The Role of the Board in Building a Successful Endowment and Planned Giving ProgramKathryn W. Miree & Associates, Inc. North Carolina Planned Giving Council Gift Planning in a Fluid Environment
What We’ll Cover • The environment for donors • The opportunity for deferred gifts • What we know about donors • The role of gift planning • The magic of gift planning in campaign • The best prospects • The role of the Board
An Overview • The board of directors/trustees is not simply a group of random volunteers • They are charged by law with responsibility for running the nonprofit • For that reason, they are essential to the success of building endowment, building a strong planned giving program, and charting the future of the organization
The Board’s Fiduciary Role • Determine the organization’s mission and purpose • Select the chief executive • Support the chief executive and assess his or her performance • Ensure effective organizational planning • Ensure adequate resources
The Board’s Fiduciary Role • Manage resources effectively • Determine, monitor, and strengthen the organization’s programs and services • Enhance and ensure the organization’s public image • Recruit and orient new board members • Assess its own performance
Seven Things Every Board Member Should Know About Endowment and Planned Giving
Gift Planning is Important in the Current Environment • What is gift planning? The process of planning each gift effectively. • Clearly articulating the goals (purpose, outcomes) • Identifying the donor’s personal goals • Selecting the best gift form • Selecting the best timing • Selecting the best asset
The Investment Markets • In this environment, “safe” assets performed poorly • Financial services firms faltered or failed • Real estate investments - residential and commercial - decreased dramatically in many markets
The Madoff Chill • In addition to the usual peril in the investment markets, there’s a human element • Madoff hit a high bar with a fraud valued at $50 billion • There were other investment managers involved in fraud across the country
Other Factors Impacting a Donor’s Ability to Give • The uncertainty of the federal tax rates • Retirement needs • The need to take care of parents • Children in preparatory school, college, graduate school • Loss of a job • Active involvement with another charity • Financial crisis • Medical crisis
Charitable Giving Potential:Giving USA 2011 Corporations $15.29 Foundations $41 Individuals $227.41 Bequests $22.83 Total: $280.89 Billion
Boston College Social Welfare Institute - Transfer of Wealth • Estimate of the transfer of wealth from 1998 - 2052 • Transfer of assets from one generation to the next: $41 trillion to $136 trillion • Transfer of assets to charity: $6 trillion to $25 trillion 20
The Opportunity Gap • Independent Sector estimates 89% of all families give to charity each year • Yet the national estimate on the number of donors who have included charity in their wills is 8% - 10% • The gap is the opportunity. 21
Bank of America High Net Worth Study • 2006 study focusing on high net worth donors • Incomes more than $200,000, assets exceeding $1 million • Group represents 3.1% of all U. S. households, 2/3’s of U.S. philanthropy • 98% of all high net worth households give to charity
The 2008 High Net Worth Update • The top three reasons donors stopped giving: • “no longer feel connected” • decided to support another charity • solicited too often • The desire to “give back to the community” was the primary motivation for giving (public recognition of less interest)
The 2008 High Net Worth Update • The gifts they make have a great impact on them personally • Setting an example for children is an important motivation • Donors expect transparency, accountability, and protection of privacy
Conversations About Long-term Gifts and Endowment Build Stronger Donors
The Fundraising Pyramid Donor Commitment Nonprofit Contact PLANNED GIVING Transformational MAJOR GIVING Transactional/Transformational ANNUAL GIVING (includes membership) Transactional
Moving Donors Up the Pyramid • Donor commitment and donor engagement move the donor up the pyramid • They are engaged by a staff member, board member, or volunteer • They get excited about a charitable goal • They have a great experience at Gonzaga 34
Building Long-Term Commitment • Public television station received $30/year for more than 20 years - and received an estate gift of $250,000. • A donor to the Arthritis Foundation made gifts of between $25 and $75/year - and received an estate gift of $150,000. • A direct mail charity that received average gifts of $80 had an estate gift average of $32,000 • There are many reasons donors don’t give more during life. They often make the largest gift of their life at death.
Building Long-Term Commitment • There are many reasons donors don’t give more during life. They often make the largest gift of their life at death.
The Range of Gift Options Allows Donors to Create a Gift that Fits Their Circumstances
Current Gifts of Non-Cash Assets • Publicly traded securities • Privately held securities • Real estate • Life insurance • Oil and gas interests • Intellectual property • Tangible personal property
Gifts that Pay Income • Charitable gift annuities • Charitable remainder trusts
Gifts Deferred Until Death • Bequests • Bequest substitutes • Beneficiary designation of IRA or qualified retirement plan • Beneficiary designation of insurance policy • Pay on death accounts
Gift Planning’s Greatest Strengths • Gift planning expands donor options • Gift assets • Gift structures • Gift timing • Ability to accommodate personal goals
How it Works: Idea #1 • In a no-estate tax or small-estate tax environment, accelerate charitable gifts • Accelerate a bequest to make a current gift • Accelerate a bequest to create a charitable gift annuity • Give Gonzaga an insurance policy • Turn a gift of real estate at death to a retained life interest gift
How it Works: Idea #3Use a Charitable Gift to Fund Retirement (Couple Ages 70,71)
How to Capture the Magic • Build big visions that have big outcomes. • Engage donors in the vision. • Create a way for every donor - at every level - to have a significant role. • Design a comprehensive campaign with current and deferred funding goals. • Ask for blended gifts - part current gift and part deferred gift - in campaign.
The Campaign Options • An outright gift funded with cash or other assets • A multi-year pledge with cash or other assets • An irrevocable gift that pays income to the donor (or others) and terminates to Gonzaga • An irrevocable gift that pays income to Gonzaga and terminates to heirs • A deferred gift at the donor’s death
Counting and Measuring Results • Outright gifts, irrevocable gifts that pay income, and revocable deferred gifts have different values and should be tracked separately. • Donor worry that by expanding choices donors will move to revocable deferred gifts. • Always start with the gift goals and the vision.