Leadership
Conference
September 26, 2012
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Intergenerational Wealth Transfer
$44 trillion to $135 trillion dollars in the next 50 years
$6 trillion to $25 trillion dollars in charitable bequests alone
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Intergenerational Wealth Transfer
In Minnesota more than $47.9 billion will transfer from one generation to the next over the 20 years, 2011-2030
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Charitable Giving Marketplace:
Who Makes Charitable Gifts?
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Where the money is
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Charitable Giving Marketplace:
Who Receives Charitable Gifts?
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Everyone Can Make An Estate Gift
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Fundraising Strategies
Annual Giving Special or Major Gifts Planned Giving
Donor’s Source of
Funds for
Contribution
Charity’s Use of
Contribution
Primarily income or cash on hand
On-going operations
Target Audience
Target Audience
Any and all active constituents
Annual solicitation
Contribute (or sell) assets or make multiyear pledges
Special projects or unique needs
Prospects with linkages, interest and liability
Opportunistic strategy seeks
Estate Wealth
Unrestricted,
Capital and
Endowment
Anyone who might be interested in the cause
Continuous education, long term cultivation
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A Generation-Based Approach to Giving
All donors find themselves at some stage of life…
A B C
Under Age 50 Aged 50 – 70 Over Age 70
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…all donors have certain assets and income…
1
Highest Wealth & Income Range
2
Average Wealth & Income Range
3
Below Average Means
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…all donors find a “home”
Wealthy
Moderate
Means
Limited
Means
Younger Middle-Aged Older
A1 B1 C1
A2 B2 C2
A3 B3 C3
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Common Donor Concerns
•
•
•
•
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Gift Planning Solutions
C. Full Benefit to
Charity
D. Split Benefit to
Charity
A. Benefits to
Charity in Near Term
Outright Gifts of
Cash and
Appreciated Assets
B. Benefits to
Charity Deferred
Bequests via Wills,
Trusts, Life Insurance
& Retirement Plans
Charitable Lead Trusts
Term of years, CRT
Assignment of Income
Charitable Remainder
Trusts, Charitable Gift
Annuities, & Pooled
Income Funds
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Charitable Gift Planning Vehicles
-50 YOUNGER 50-70 MIDDLE-AGED 70+ OLDER
WEALTHY
A1
Outright gifts
B1
Charitable
Remainder Trust for Term of Years
C1
Bequests, Charitable
Trusts for Life,
Charitable Lead Trusts
MODERATE
MEANS
LIMITED
MEANS
A2
Outright gifts
A3
Outright gifts
B2
Charitable Trusts for Life, Pooled
Income Funds
B3
Outright gifts,
Bequests
C2
Bequests, Charitable
Trusts for Life,
Charitable Gift
Annuities,
Retirement Plans
C3
Bequests, Charitable
Gift Annuities,
Retirement Plans, Life
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Insurance

When Assets are Often Gifted
During Lifetime:
• Cash
• Stock – publicly traded or closely held
• Mutual Funds
• Real Estate
• Life Insurance
• Crops
At Death:
• Retirement Plan Assets
• Bonds
• Life Insurance
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Types of Planned Gifts
• Bequests
• Beneficiary Designations
• Life Income Gifts
• Gift Annuities and Trusts
• Gifts of Life Insurance
• Retained Life Estates
• Real Estate
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Life Income Gifts
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Life Income Gifts
Gift Amount Fixed Payment Variable Payment
(Inflation)
$10,000 to
$100,000
Charitable Gift
Annuity
$100,000 and up Charitable
Remainder
Annuity Trust
Charitable
Remainder
Unitrust
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Charitable Gift Annuity
• Contractual promise to pay
• Payments are fixed at the time of the gift
• Usually provides tax-free income
• Two types, payments can start now or later
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Charitable Remainder Trusts
Basic Concept:
“The right to hold an asset can be separated from the right to receive income from the asset.”
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Charitable Remainder Trusts
• Common Elements
• Irrevocable gift
• Established either inter vivos or testamentary
• Income payments are made at least annually
• The remainder beneficiary must be a charity
• Income for lifetime or term of years
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Charitable Remainder Unitrusts
• Variable income stream
• Additional contributions can be made
• Minimum payout of 5%
• 10% Rule
• 4 types of unitrusts
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Charitable Remainder Annuity Trusts
• Fixed income stream
• Cannot make additional contributions
• 10% Rule
• Charitable remainder
• The 5% Probability Test
• Corpus exhaustion
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Retained Life Estate
• Donate home to charity, but retain the right to live in it
• Charitable deduction in the year the gift is made
• Donor is responsible for maintenance, taxes and insurance
• Property maintains homestead status
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Case Studies

Donor Profile #1
“I want to make a gift, but I can’t afford to do so now.”
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Solution: Estate Gift
• Charitable bequest or
• Beneficiary designation of
• A will or trust
• life insurance or
• retirement plan assets
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Donor Profile #2
“I have enough assets and I want to see my gift at work.”
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Solution: Outright Gift
Cash vs. Stock Gift
Cash Gift of:
Contribution deduction
Income taxes saved
(28%)
Capital gain taxes saved (15%)
$10,000
$ 2,800
$ 0
Stock
After tax cost of gift $ 7,200
$10,000
$ 2,800
$ 1,200
$ 6,000
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Donor Profile #3
“I want to make a gift, but I really could use the income.”
• Donor Age 80
• $10,000 cash
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Solution: Charitable Gift Annuity
$
10,000 Cash
Donor
Income tax deduction
$4,607
Annual Income
$680
6.8%
Charitable
Gift
Annuity Remainder to charity
$8,200
Charity
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Donor Profile #4
• Husband & wife, ages 70, 70
• $100,000 in appreciated stock
• $10,000 cost basis
• Currently receives 2% dividend
• Would like more income
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Solution: Charitable Remainder Unitrust
$100,000 Property
$ 10,000 Basis
Donor
Income tax deduction
$40,825
Gains not taxed
$90,000
First Year Income
$5,000
5%
Unitrust
Remainder to charity
$149,729
Charity
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Solution: Charitable Remainder Unitrust
5% Charitable Unitrust
Gross Principal
Net Principal
Charitable Deduction
Total Before-Tax Benefit to Income Recipients
Donor Principal
Benefit to Charity
Total Benefit
$100,000
$100,000
$40,825
$133,053
$0
$149,729
$323,607
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Most Important Factor
• When making a charitable gift, donors rank the following factors in order of importance:
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Thank You!
Your thoughts?