Blended Gift Strategies - 2018 AFP DFW Philanthropy in ... · Blended Gift Strategies: Accomplishing Philanthropic Goals Today, Tomorow and in the Future! DFW Philanthropy in Action

Blended Gift Strategies: Accomplishing Philanthropic Goals Today, Tomorow and in the Future!

DFW Philanthropy in Action Conference

Cathy R. Sheffield, MBA, CAP®, CFRE, CSPG


Today we will…

• Define the “Blended Gift”

• Discuss why we should use a Blended

Gift Strategy?

• Review a few Case Studies

• Highlight some Gift Talking Points

• Q & A


Defining the “Blended Gift”

Something Now

Something In Between

Something Later


Blended Gift Combinations

Something Later

• Will/Trust

• IRA/Retirement Plan

• Life Insurance

• Other Beneficiary

Designations

Something Now

• Cash

• Securities

• Real Estate

• Art & Collectibles

• Personal Property

Something In Between

• Gift Annuities

• CRUTs

• CRATs

• Bargain Sale

• Retained Life


Why Donors Like Blended Gifts

• Only some can make the entire gift outright with no strings attached (Capacity Donors)

• Some want lifetime access to principal & income (Bequests)

• Some will donate principal if they receive the income (CGAs & CRTS)

• Some will donate the income or principal if their heirs ultimately benefit (CLT, Asset Replacement Life Ins. )

Source: Robert Sharpe & Co.


Donor’s point of viewSomething Later

Retain Control andIncome

Will/Trust

IRA/Retirement Plan

Life Insurance

Other Beneficiary

Designations

Something Now

Max current impact/tax benefit

(Current Gift)

Cash

Securities

Real Estate

Art & Collectibles

Personal Property

Something inBetween

Lend Income to Charity

Require Return of Income

Cash

Securities

Real Estate

Business Interest


Elements of the Blended Gift

Real Estate

Retirement

Personal Property

Stock Portfolio Cash

2. Blend assets available to gift

3. Blend areas of support in which the donor wants to make an impact

1. Gift types most attractive to the donor


Sample Blended Gift

Before the Blended Gift$1,000 annual unrestricted gifts

After the Blended Ask

$1,000 Cash

$50,000 CGA

with stock

$250,000 Estate Pledge

(Bequest)

Current DeferredLife Income


Donor Concern for the Economy



The New Normal?But I prefer REVOCABLE GIFTS……


Impact of Donor Concerns

• In hard times, donors trend toward a greater proportion of deferred gifts (20% or more of a mature program/campaign)

• Perennially, the bulk of deferred gifts are revocable gifts (80% nationally)


Real Estate 44%

Stocks & Bonds 31%

Personal Property 12%

Retirement Accts. 10%

Cash 2%

Donor Wealth Profile

“Why focus on smallest slice?”Source: US Census per Craig C. Wruck , PPP Conf.


Case Studies


Mark and Ann

Case One – Mark & Ann


Blended Gift Proposal for Campaign

$25,000 Cash

Current

$50,000Estate pledge

Deferred

$75,000 Life Income

Life Income


Case Two - Alice


Completed Blended Gift

$22,000 IRA

Distribution

Current

$100,000Estate pledge

Deferred$50,000

CGACD

Life Income


Case Three - Peter


Cash$25,000

Corporate gift

$10,000

Art Work

$50,000

Land$500,000Into CLT


Break Down the Major & Planned Gift Silos


BIGGEST Challenge: Blend Cultures

Outright giftsCapacity donors

Longevity not critical Age not critical

Avoid technicalities

Focus of Major Giving Program

Focus of Planned Giving Program

Deferred gifts Loyalty donors

Longevity is keySenior donors

OK with technicalities


Blended Gifts: What are the obstacles?

1. Leadership support for Blended Gifts

2. Counting Bequests and the corresponding guidelines?

3. Cooperation from the Major Gifts professionals


Gift Talking Points

Goal Transform your

donors’ obstacles into a gift

opportunity


What Donors Think About…When making Strategic Gifts


Rising Healthcare Expenses“Would you consider a pledge commitment that isn’t paid until you pass or when you no longer need it?”


Most Popular Deferred GiftsBequest “Just takes a simple

designation in your will or trust.”

Living Trust “Avoids probate. Just name the charity as a beneficiary.”

Why? It’s easy and revocable if situation changes.


Outliving Retirement Funds

“If we could show you a way to maintain or increase your income while also supporting your favorite charity, would that be of interest?”


EASY TO UP YOUR CASH FLOW “A simple agreement that can increase your cash flow from a gift that provides guaranteed fixed payments for life.”

Why? Lifetime annuity payments, based on age, are often two or three times higher than donor’s cash return on low-earning securities or CDs.

Charitable Gift Annuity


We Want to Support Our Kids• “Did you know that some of your

assets are expensive to transfer to your children?”

• “Retirement funds paid to your kids at your passing can get hit with income and estate taxes, but are tax-free to charity.”


Charitable Lead TrustGREATLY REDUCE ESTATE TAX

“Lets you greatly reduce or possibly avoid some estate tax on trust assets passing to family if you’re willing to donate some of the trust income to charity for a few years.”

Why? Estate and gift tax deductions for wealth transferred to family if some trust income goes to charity for several years


Virtual Endowment

“Would you be interested to learn how you could see the impact of your estate gift during your lifetime, with minimal financial contributions now?”

32


Virtual Endowment


Real Estate Concerns


Real EstateGreat for making a gift and also transferring the burden of managing the property.

Bargain Sale: You can sell your property at a discount, deduct the difference, and receive a lump sum or installment payments.

Life Estate Deed: You can deed your home or farm property to charity, save taxes with a current deduction, and still use the property for the rest of your life.”


Tools for Your Journey Your Checklist to Promote Blended Gifts

1. Count Revocable Bequests2. Document Estate Gifts with a Simple Bequest

Intention Form3. Identify top blended gift prospects4. Listen for donor’s interest to give but obstacles for

their support5. Have More Prospect Strategy Sessions 6. Track Blended Gifts & Promote Success Stories


SUMMARY1. Donors want options2. Donors are utilizing structured gifting

vehicles3. If a donor does not feel comfortable, or does

not feel they will achieve their objectives, they will seek alternatives


ACTION STEPS1. Utilize the “Team” Approach2. Determine the Point Person3. Determine if ALL the goals have been disclosed &

understood4. Review documents5. Remind the Donor(s) to ENJOY their philanthropy


Buderus, Ashley & Smith, Gordon; Blended Gift, Eh? Making the Most of This Emerging Workhorse for Major and Planned Gift Officers. National Conference on Philanthropic Planning, October 2013.

Giving USA; 2016 Edition. This is the annual report on philanthropy, covering 2014. Download the Giving USA 2015 free report Highlights and purchase other Giving USA products at www.givingUSAreports.org.

The 2014 U.S. Trust Study of High Net Worth Philanthropy. This research is based on respondents throughout the U.S. with net worth of $1 million or more (excluding value of residence).

The 2013 U.S. Trust/The Philanthropic Initiative Study of Disconnects in Philanthropic Conversations between HNW Individuals and Professional Advisors.

The Chronicle of Philanthropy; monthly professional magazine, https://philanthropy.com

Planned Giving Today; a quarterly professional periodical on strategy and charitable motivation, https://givingtoday.com

Charity Navigator, 2016 Giving Statistics, https://www.charitynavigator .orgwww.pppnet.org/pdf/PPPcountingguidelinesppnet.org/Executive Summary.pdfwww.ceplan.com/giftcounting

References & Resources


Counting Revocable Bequests

www.pppnet.org/pdf/PPPcountingguidelines

pppnet.org/Executive Summary.pdf

www.ceplan.com/giftcounting



Cathy R. Sheffield, MBA, CAP®, CFRE, CSPGFoundation Director

All Saints Health Foundation Baylor Scott & White Medical Center – Fort Worth

[email protected]

Documents

Blended Gift Strategies - 2018 AFP DFW Philanthropy in ... · Blended Gift Strategies: Accomplishing Philanthropic Goals Today, Tomorow and in the Future! DFW Philanthropy in Action