Trends in Planned Giving and Five
Easy Ways to Get Started
Presented by
Christy Eckoff, JD, LL.M.
Director of Gift Planning
The Community Foundation for Greater Atlanta
•• Bullet
Mission
information here
To be the most trusted resource for growing
philanthropy to improve communities throughout
the Atlanta region.
• Goals
• Engage our Community
• Strengthen the Region’s Nonprofits
• Advance Public Will
• Practice Organizational Excellence
The Community Foundation for Greater Atlanta
•• Bullet
History/background
information here
• Founded in 1951
• Among top 12 community foundations in
country - Assets $755 million
• Raised $104 million in 2012; $95 million in
grants
• Over 900 funds, 700 of which are donor advised
Charitable transfers of assets– cash, real estate, stock
Complex gifts
• Serve metro Atlanta region and 23 counties
surrounding city.
2010 Tax Act and 2013 Fiscal Cliff
Agreement
Income
Tax information here
• Bullet
2010 -12 –Temporary 2 year extension of 2010 ordinary income tax rates –
maximum tax rate of 35%
2013 –
Maximum tax rate of 39.6% for individuals making $400k or more or
households making $450k or more
Payroll Tax
2010-12 - Temporary 2% reduction in withholding
2013 Gone
IRA Charitable Rollover
Extended to cover 2010 and 2011
2012 – in effect
2013 – in effect
4
• Bullet
information
here
Capital
Gains
Tax
2010-12 - Temporary 2 year extension of 15% maximum long-term capital
gains tax rate
2013 –
23.8% maximum long-tern capital gains tax rate (includes 3.8%
Healthcare Act surtax)
Dividends
2010-12 - Temporary 2 year extension of 15% maximum long-term capital
gains tax rate
2013 –
23.8% maximum long-tern capital gains tax rate (includes 3.8%
Healthcare Act surtax)
Transfer Tax Law
Bullet information
here
• •Applicable
Exclusion
Amount: $5 million
• Gift Tax Exemption: $5 million
• Generation Skipping Tax Exemption: $5
million
• Estate, GST & Gift Tax Rates:
– 2012 - 35% maximum rate
– 2013 – 40% maximum rate
• Basis Step-Up OR Step-down
• Deduction for state death taxes
• Annual Exclusion: $13,000
6
Summary of Impact
• Bullet information here
• Most married couples need to review estate plan
• Any person with an estate over $5 million should be
actively updating their estate plans and taking action
to leverage these changes in by the end of 2013
• Certainty???
• NOW IS THE TIME to talk to high net worth
prospects about including your charity in their plans
7
Charitable Deduction for Current Gifts
• Bullet by
Limited
information
Adjusted gross
here Income and type of asset
Deduction by artist may be very limited
Deductions may be carried over for 5 years
What is Gift Planning?
• Bullet information here
Helping donors make substantial gifts
through an examination of their assets,
obligations, and charitable intent
It’s an opportunity for charitable giving in
circumstances that may not otherwise
allow a donor to make a large gift
9
Why is gift planning important?
• Bullet information here
Average major gift is 20 times an annual
fund contribution
Average planned gift is 200-400 times an
annual fund contribution
10
Top Donors 2008
Top Donors in the U.S., 2008
• Bullet information here
1
Leona M. Helmsley
Family wealth, Hotels
Years on List: 1
Total Amount Committed: $5.2 billion
2
James LeVoy
Sorenson Invention, Investments
Years on List: 1
Total Amount Committed: $4.5-billion
3
Peter G. Peterson and Joan Ganz
Cooney Finance
Years on List: 1
Total Amount Committed: $1 billion
4
Harold Alfond
Manufacturing, Retail
Years on List: 1
Total Amount Committed: $360 million
5
Donald B. and Dorothy L. Stabler
Construction, Real Estate
Years on List: 1
Total Amount Committed: $334.2 million
6
David G. and Suzanne D. Booth
Finance
Years on List: 1
Total Amount Committed: $300 million
7
Frank C. Doble
Energy
Years on List: 1
Total Amount Committed: $272 million
8
Robert L. and Catherine H. McDevitt
Investments
Years on List: 1
Total Amount Committed: $250 million
9
Michael R. Bloomberg
Media and Entertainment
Years on List: 6
Total Amount Committed: $235 million
10
Dorothy Clarke Patterson
Family Wealth
Years on List: 1
Total Amount Committed: $225 million
11
Richard W. Weiland
Technology
Years on List: 1
Total Amount Committed: $174.3 million
11
Top Donors 2008
• Bullet information here
1
Leona M. Helmsley
Family wealth, Hotels
Years on List: 1
Total Amount Committed: $5.2 billion
2
James LeVoy
Sorenson Invention, Investments
Years on List: 1
Total Amount Committed: $4.5-billion
3
Peter G. Peterson and Joan Ganz
Cooney Finance
Years on List: 1
Total Amount Committed: $1 billion
4
Harold Alfond
Manufacturing, Retail
Years on List: 1
Total Amount Committed: $360 million
5
Donald B. and Dorothy L. Stabler
Construction, Real Estate
Years on List: 1
Total Amount Committed: $334.2 million
6
David G. and Suzanne D. Booth
Finance
Years on List: 1
Total Amount Committed: $300 million
7
Frank C. Doble
Energy
Years on List: 1
Total Amount Committed: $272 million
8
Robert L. and Catherine H. McDevitt
Investments
Years on List: 1
Total Amount Committed: $250 million
9
Michael R. Bloomberg
Media and Entertainment
Years on List: 6
Total Amount Committed: $235 million
10
Dorothy Clarke Patterson
Family Wealth
Years on List: 1
Total Amount Committed: $225 million
11
Richard W. Weiland
Technology
Years on List: 1
Total Amount Committed: $174.3 million
12
• Bullet information here
• Bullet information here
Medical College of Georgia Foundation (Augusta) has received a bequest of
$66-million from J. Harold Harrison to establish a fellows fund named after him
to endow faculty chairs and student scholarships. Dr. Harrison was a
cardiovascular surgeon who retired as chief of surgery at St. Joseph's Hospital
of Atlanta. He was also a cattle farmer. Dr. Harrison graduated from the college
in 1948 and was a former chairman of the foundation's board. He died in June
2012.
$66-million Bequest
•Medical
Bullet information
College of Georgia
here Foundation (Augusta) has
received a bequest of $66-million from J. Harold
Harrison to establish a fellows fund named after
him to endow faculty chairs and student
scholarships. Dr. Harrison was a cardiovascular
surgeon who retired as chief of surgery at St.
Joseph's Hospital of Atlanta. He was also a cattle
farmer. Dr. Harrison graduated from the college in
1948 and was a former chairman of the
foundation's board. He died in June 2012.
Share of Donors Who Made Bequests –
2011 – Top 50 donors
• Bullet information here
Total Value of Bequests
Total Value of Gifts from
Living Donors
16
2011
• Bullet information
here
Margaret
A. Cargill Family wealth
1
$6-billion
(bequest)
Beneficiaries: Margaret A. Cargill Foundation (Eden
Prairie, Minn.); Anne Ray Charitable Trust (Eden
Prairie, Minn.)
2
William S. Dietrich IIManufacturing
$500-million
(bequest)
Beneficiary: Dietrich Foundation (Pittsburgh)
3
Paul G. Allen Technology
$372.6-million
Beneficiaries: Paul G. Allen Family Foundation (Seattle);
Allen Institute for Brain Science (Seattle) and other
groups
17
When to think “planned gift”
• Bullet information here
Between ages of 40-59
Within 10 years of retirement
Life altering event
•
•
•
•
Divorce or remarriage
Death of spouse or child
Inheritance from parents
Need for parents or special needs children for
specialized, on-going care
18
When to think “planned gift”
• Bullet information here
 Cash poor
 Wants to leverage gift
 Assets have depreciated greatly
 Want to do something, but are afraid to give up
cash
19
Yes, but…..
• Bullet information here
When to think about a planned gift?
– I wish I could give, but …….
•
•
•
•
•
•
•
I have young kids or grandkids to think of
I have kids in college
I take care of my parents
I don’t have the liquidity
I can make more than your endowment makes
I need money for retirement
Other reasons
20
How do you find Planned Givers?
Prospect
Research
• Bullet information
hereand Cultivation
• Board members
• Large donors
• Consecutive year givers (10+) – even at small
amounts
• Never married
• DINKs
21
How do you find Planned Givers?
•Self-Identification
Bullet information here
– Check the box on pledge cards
– Marketing
• Newsletters
• Postcards
• Emails
22
Cheapest and Simplest Way to Get Started
• Bullet information here
“Remember The Community Foundation in
your estate plans.”
Place on every piece of donor interaction
•
•
•
•
•
Email signature lines
Letterhead
Solicitation letters
Stewardship reports
Donor newsletters
23
How to be a success
• Bullet information here
• Have a way to say NO!
• Create and update your gift
acceptance policy!
24
How to be a success
• Bullet information here
• Concentrate on bequests
and beneficiary
designations!
• Have a designation mechanism.
25
Most have not been approached to
• Bullet information
make here
a planned gift
Ever been approached about making a
planned gift to charity
12
Just general
suggestions
without method
mentioned
Bequest through
will
9
No, have not
been
approached
78%
Yes, have
been
approached
22%
3
2
Ways suggested*
Name as
beneficiary of
life insurance
policy
Name as
beneficiary of
retirement
account
*Based on all. Multiple responses accepted, so total will exceed the 22%
represented in pie chart.
How to be a success
• Bullet information here
• OUTSOURCE Marketing!
• Have a website and do monthly emails!
• Put your bequest language online
27
How to be a success
• Bullet information here
• Don’t forget younger donors!!!
• 43% of bequests and 35% of charitable
remainder trusts are created by individuals
age 55 and younger
28
Percentage of Planned Givers
• Bullet information here
Age
31%
Percentage of Planned Givers
18-24
6%
25-29
3%
30-39
8%
40-49
20%
50-64
32%
65+
31%
Study by Donorpulse between 8/5/08 and 8/14/08
29
Bequest donors are not Elderly!
• Bullet information
here
* Bequest
pledge makers
are generally between 45 and 54
years of age. …. Most first set up gifts to a charity in their
wills at age 49
*The 45- to 54-year-old group accounted for 26 percent of
total charitable bequest pledgers in the survey, followed by
the 55- to 64-year-old group (22 percent) and the 65- to 74year-old group (20 percent)
*Individuals aged 45 to 54 years were more likely to have
made provisions for a charity in their will than those aged
65 or older
30
How to be a success
• Bullet information here
• Leverage what you have!
• Drip, drip, drip…..
31
Concentrate on
• Bullet information here
• Major gift donors and prospects – triple
asks, blended gifts
• Consistent donors
• Members of Alumni Association or
volunteer arm
• Board Members
• Faculty and staff
32
Current Gifts
•Bullet
Stock –information
appreciatedhere
and depreciated
 1035 Insurance Exchange
 Virtual Endowments
 Real Estate
 IRA Charitable Rollover –
 Up to $100,000
• Way to get those funds out of the estate (subject
to double taxation)
 Other assets and privately-held assets
33
Estate Giving Basics
• Bullet information here
 Donor enjoys benefit of asset during lifetime
 Donor retains control of asset till death
 Donor receives estate tax deduction but no
income tax relief
 Removes asset from taxable estate and may avoid
probate
 Donor’s good works often go unnoticed during
lifetime.
34
Estate Gifts
• Bullet information here
Bequests from a Will
Life Estates
IRA/Retirement Plan Gifts
Pay (transfer) on Death Accounts – beware
of Mauer case in GA
35
Basic types of planned gifts
• Bullet information here
Bequests
36
Who makes charitable bequests?
• Bullet information here
People Younger Than You May Think
•
•
•
•
Average age: 58
Younger ages: 43% < 55
Age of first will/living trust: 44
Age of first charitable bequest: 49
37
Younger Donors
Bullet information
here
• •Younger
donors are the
least resistant to the idea of
bequest gifts; older donors are the most resistant.
• Older Americans (aged 70 and over) with wills in
place are the least likely of any age group to say
they will consider adding a nonprofit at some point
in the future.
• 64% have wills before reaching age 50. That is even
truer of the most affluent, with 84% having wills
before they are 50.
38
Who makes charitable bequests?
People
of all wealth/income
strata
• Bullet information
here
• Average Income: $75K/year
• Lower Income Level: 36% < $50K/year
• High Net Worth Persons (Estates of $10
million+) give 3X more at death than last 10
years living
• Individuals with wealth concentrated in
closely held businesses
• Religious persons (all forms of giving)
39
Bequests
• Bullet information here
68% of bequest donors do not notify the
Charity of their charitable bequest
At The Community Foundation, bequest
donors are eligible to join the Legacy
Society and are assigned a Philanthropic
Advisor – over $1 million – Center for
Family Philanthropy
40
Life Estates
• Bullet information here
Charity receives the property and donor gets
the use of that property for their life.
41
Retirement Plans
• Bullet information here
42
IRA/Retirement Plan Gifts
• Bullet information here
 Charity is the beneficiary of the
IRA/Retirement Plan
 IRA/Retirement Plan passes directly to the
charity free of federal income tax and/or
federal estate tax.
 Estate receives a charitable deduction
43
Split Interest Gifts
• Bullet information here
Give the asset now – but keep the benefits!
44
Charitable Gift Annuity
• Bullet information here
A contract between the donor and charity
where the donor transfers property (or
cash) in exchange for a fixed dollar payment
for life.
45
Why attractive?
• Bullet information here
Interest Rates are extremely low – 1-2% on
a CD
Interest Rate on a charitable gift annuity
can go as high as 8.5%
Simple 2 page contract
Current tax deduction based on age and
amount of annuity
46
How can I …
• Bullet information here
Support my elderly parents and charity at the
same time?
47
Illustration
• Bullet information here
48
Who gives Charitable Gift Annuities?
• Bullet information here
 Typical Annuitant/Donor: 77 year old female
(60/40 split)
 92% are “plain vanilla” CGA’s (immediate
payment)
 62% of CGA donors first heard about it through
non-profit’s materials
 Average contribution: $30,000
 TCF minimum: $25,000 and at least 60 years of
age and half to unrestricted fund
49
Charitable Trusts
• Bullet information here
Charitable Remainder Trusts
• Irrevocable transfer of property by the donor
• Donor (and/or other beneficiary) retains a right to
receive income from the trust
• Donor received income tax deduction in year of trust
creation
• No immediate capital gain tax on transfer to trust and
any subsequent sale of the assets by the trust
• At the of trust term, trust principal distributes to
charity
50
Who creates CRTs?
• Bullet information here
CRT donors are:
• Profile: Married, avg. age 62, mean income
$86K/year
• More likely to be male
• Similar to high income/net worth bequest
donors
• More concerned about taxes and planning
• 68% first heard about CRT’s from legal and
financial advisors.
51
How Can I …
• Bullet information here
Provide a college education or income to my
children and still support charity?
52
Illustration
• Bullet information here
53
Charitable Lead Trust
• Bullet information here
Charitable Lead Trust
Basically opposite of a charitable remainder
trust
• Income from trust goes directly to charity
• Remainder goes to the donor or to their
beneficiaries
54
Lead Trust
• Bullet information here
How can I put $1,000,000 in trust, give
$1,000,000 to charity, and get back
$1,000,000 (or more) ten years later?
55
Illustration
• Bullet information here
56
Life Insurance
• Bullet information here
If a cash value policy, can be an outright
gift.
• Donor receives immediate charitable tax
deduction
• Charity can either:
• Cash it in
• Keep policy in force until death of insured
57
Life Insurance
• Bullet information here
Can also be used as wealth replacement
• Fund a life insurance policy with a gift annuity
or charitable lead trust
58
References
• Bullet information here
Christy Eckoff –
ceckoff@cfgreateratlanta.org
(404)588-3183
Marketing firms
•
•
•
•
Stelter
Crescendo
Virtual Giving
RR Newkirk
59
References
• Bullet information here
 The Complete Guide to Planned Giving, Deborah
Ashton
American Council on Gift Annuities
Georgia Planned Giving Council
Planned Giving Design Center
Planned Giving Today
Partnership for Philanthropic Planning
60