Starting Your Planned Giving Program The A, B, C s

Transcription

1 Starting Your Planned Giving Program The A, B, C s Tim Logan, FAHP, ACFRE RuffaloCODY Jeff Mielke, CFRE, CSPG United States Olympic Committee 2 With You Today Tim Logan, FAHP, ACFRE Sr. Vice President, Sr. Consultant Planned Giving Services RuffaloCODY Jeffrey Mielke, CFRE, CSPG Associate Director Estate and Organizational Gifts United States Olympic Committee 1

2 Session Objectives Setting Up a Planned Giving Program 1. Learn a method for mining donor database bequest prospects 2. Be Introduced to relevant tax codes that affect charitable giving 3. Develop a strategy for promoting planned gifts 4. Gain the knowledge to accept a gift successfully Prospect Research Tim Logan, FAHP, ACFRE 5 Goal of Prospect Research Identify prospects who are ready for Moves Management (Face to Face) Find prospects who are ready now 2

3 Types of Prospect Research Self-selective Proactive Data Analysis Segmentation Planned Giving Scoring Individual The Planned Giving Funnel Every donor has capacity to make a bequest Many donors have capacity to fund a charitable gift annuity (CGA) Some donors can also fund other gift instruments (charitable lead trust, charitable remainder trust, etc.) Self Selective or Proactive Proactive Marketing produces results and identifies more Planned Gifts. 3

4 The Biggest Predictor Major Gifts Annual gift size is the single largest predictor of future large gifts Planned Giving Frequency of AF Giving is the single largest predictor of Planned Gifts Find Your Frequent Donors 78% of planned giving donors gave 15 or more gifts to the nonprofits named in their will during their lifetimes Source: Survey by Lawyers.com and the CAE VSE survey DonorSearch blog Age Based Gifts Well..Age (55 to 80) Other analyses based on direct mail RFM analysis Recency of giving (24 months) Frequency of giving Over a specified period (70%) Sagrestano Length of time on the file (LOTOF) Average gift is NOT important Title/Gender (dearth of results data) 4

5 Gifts of Wealth Length of time on the file (LOTOF) Largest one-time gift (LOTG) Total cumulative giving Wealth rating indicator Prospect research Planned Giving Prospect Matrix Wealth High Low Affinity Low High 2005 Timothy D. Logan, ACFRE Analyzing Giving Behavior Measures of Affinity Loyalty, Passion, If it s about building a relationship, how do we measure the strength of that relationship? Measures of Ability Wealth, Assets Need to look at total donor relationship 5

6 Types of Analysis Giving Patterns Number of Gifts--Over a specified period Length of time on the file (LOTOF) Age Gender --more important for messaging than for selection RFM Recency/Frequency/Monetary Amount High Affinity non-donors Enhanced data selects External Data Factors Age Wealth rating/planned Giving indicators Recent death in household Donors to other charities is it a Planned Gift Lack of presence of living children (**) James, 2008 Birth of first grandchild James, 2008 Church Attendance Rooney 2008 Planned Giving Scores Develop a Scoring System Point System Pyramid Passion Index 6

7 Individual Research Structure How outright, multi-year, asset with income back Assets What cash, securities, real estate, retirement, intellectual property, business interest Timing When all now, some later, scheduled, deferred, at death Motivation Why charitable intent, taxes, legacy, project, position The Key Questions It is only through talking with a donor that you can ultimately determine if the donor is qualified and motivated to consider a planned gift. Do they have a will? Do they have a Planned Gift with other charities? Do they have children? Do they have passion for making a gift to you? Are they ready now? Questions on Prospect Research? 7

8 Taxes The Basics Jeff Mielke, CFRE, CSPG 22 Taxes The Basics The BASICS we will talk about: Impact of Taxes Estate Tax (Federal) Gift Tax (Federal) Capital Gain Tax (Federal) Income Tax (Federal) Generation-Skipping Transfer Tax (Federal) 23 Taxes The Basics Impact of Taxes Oversimplified Family Now Family Later Charity Now Charity Later Cash Good Good Good Good Real Estate Maybe Best Best Best Stocks/Bonds Maybe Best Better than cash Good to Best Retirement Plans Personal Property Not realistic A Poor Idea Maybe Best OK Best Rarely a Good Idea Savings Bonds OK Maybe Never Best Life Insurance OK Best Good Best Best 24 8

9 Taxes The Basics: Estate Tax (Fed) You don t need to know all of this material. You need to know where the RED FLAGS are and you need to know who you might call for help. How many of your donors have a net worth of $5,340,000 or more? Those who do represent a potential RED FLAG! Their situation requires special handling. Call someone for help. Who, in your network, might help? What is Basis? It is the amount paid for something like a home, stock, a vintage car, etc. 25 Taxes The Basics: Estate Tax (Fed) Takeaways: Less than 1% of all Americans have a Net Worth of $5,340,000. Step-up in Basis: EXAMPLE: If parents give their children their home in their estate plan, the kids get a step-up in basis to the fair market value (FMV) of the home on the date of death of the parents. Carryover Basis: If parents give their children their home during their lifetime, the kids assume the basis the parents have in their home. IRD Income in Respect of Decedent is a concept of tax law that comes into play at death. Common examples of IRD: IRAs and other tax-deferred retirement plans; Undistributed commissions (real estate, insurance, brokerage) Unpaid fees for services rendered (doctors, attorneys, etc.) Charitable Opportunity with IRD Designate your charity as a beneficiary of the IRA or other tax-sheltered retirement plan. 26 Taxes The Basics: Gift Tax The Gift Tax is in play if the donor is living; but not if the donor is deceased. The Annual Gift Exclusion - $14,000/$28,000 The Marital Deduction Any gift to a spouse is not subject to Gift Tax. The Charitable Deduction Any charitable gift that qualifies for an income tax deduction is excluded from any gift tax. As of 2014, any estate gift up to a cumulative total $5,340,000 is not subject to any gift tax. What if the spouse is not a US citizen? This could be a RED FLAG. 27 9

10 Taxes The Basics: Capital Gains (Fed) Capital Gain Tax is levied on assets (stocks, homes, businesses, land, collectibles, etc.). EXAMPLE: Your donor s stocks increase in value. They sell the stocks or asset (Check with Experts). Holding Period Top Capital Gains Rates < = 12 Months 39.6%* 39.6%* > 12 Months 20%* 20%* Depreciation recapture on real estate Collectables and certain small business stock *Capital gain rates may be subject to an additional 3.8% Medicare tax. 25% 25% 28% 28% 28 Taxes The Basics: Capital Gains (Fed) Takeaways Many of your donors pay Capital Gains taxes. Charitable Opportunity with Stocks It is best for donors who own stock to give you publicly-traded stock as their annual gift. They can avoid the Capital Gain Taxes. RED FLAG Do not accept long term stock that is valued at less than what your donor paid for it. It is best for your donor to sell the stock at a loss, claim the loss deduction (up to $3,000 per year) and then gift you the proceeds. 29 Taxes The Basics: Income Tax (Fed) The only donors who can claim a charitable deduction are those who itemize their deductions. Only about 28% of Americans itemize. Think about how this might affect your Planned Giving program. Why are your donors putting your organization in their estate plan? Some Helpful Concepts: Adjusted Gross Income (AGI) The amount of income at the bottom of the front page of the 1040 form - Line 37. Or on the 1040 EZ line 4. Marginal Tax Rate - is the highest rate of income tax a donor pays

11 Taxes The Basics: Income Tax (Fed) Some Helpful Concepts (Cont.): Fair Market Value (FMV) - is the price paid between a willing seller and a willing buyer Ordinary Income Property - is property that if sold would produce ordinary income instead of capital gain income. Charitable Contribution Ceilings Donors can only contribute so much each year or they could lose part of their charitable deduction. For cash they can contribute up to 50% of their AGI. For appreciated property they can contribute up to 30% of their AGI. (NOTE: 5 YEAR CARRYOVER.) Tangible Personal Property - is property that can be held physically like musty old books, appliances, cases of wine, stamp collections, vintage Shaker chairs, cars, etc. 31 Taxes The Basics: Income Tax (Fed) Some Helpful Concepts (Cont.): Related Use RED FLAG. When your donor contributes tangible personal property to your organization.» Donor gives you their 1776 portrait of General Washington for your museum.» The donor can deduct the FMV of their charitable contribution of the portrait.» If, however, they donate the same portrait to the local food bank, the donor would only be able to deduct what they paid for the portrait. This is how related use can be an advantage or disadvantage to your donor. 32 Taxes The Basics: GST (Fed) Generation-Skipping Transfer Tax (GST) Take-away: Annual Gift Exclusion: Each person can give $14,000 per year to anyone without any Gift Tax or any GST tax. Married couples can gift $28,000 per year. If your donor wants to give a gift greater than $14,000/$28,000 to grandchildren this is could be a RED FLAG. However, since the cumulative Gift and Estate Tax Exclusion in 2014 is $5,340,000 there most likely will not be a problem. Check with your experts

12 Taxes The Basics What we talked about: Impact of Taxes Estate Tax (Federal) Gift Tax (Federal) Capital Gain Tax (Federal) Income Tax (Federal) Generation-Skipping Transfer Tax (Federal) Questions? 34 Marketing Planned Gifts Tim Logan, FAHP, ACFRE 35 Self Selective or Proactive Proactive Marketing produces results and identifies more Planned Gifts. 12

13 Segmentation 1. Multi-year/multi-givers cut by age 2. Internal affinity scores Including Affinity Touch Points 3. PG scores 4. Use wealth rating if appropriate for gift Planned Giving Marketing Matrix What Type of Planned Gift Age based gifts Bequest, CGA, Retirement assets Wealth based gifts Trust, DAF Other/Combination Life Estate, Insurance, Deferred CGA, PIF 13

14 Purpose of the Marketing Message Education Top of Mind Stewardship Call to Action/Ask Purpose of the Medium Marketing Method Purpose Direct Mail piece, postcard Newsletter Website Magazine Telephone Visits Seminars, Events Professional Networks Identify Educate Educate, Top of Mind Identify Top of Mind Qualify, Call to Action Qualify, Call to Action Educate, Qualify Educate, Identify, Top of Mind The One Hard and Fast Rule Do not combine asks in one message OKAY to gather data One or two quick screening questions 14

15 Continuum of Direct Response INTERACTIVE NON-INTERACTIVE Face to Face Telephone Call Social Media Direct Mail Mass Ads TARGETING PERSONALIZATION Donor Centered Messaging Crafting your legacy Unlock the value of your assets Using your real estate creatively Increase your retirement income Providing income to your elderly parents Paying for college for your children or grandchildren Sagrestano, 2008 Multichannel Strategies Free Rider Opportunities Your Annual Fund/ Direct Mail message Using the Phone Your Major Gift Officers Check your website 15

16 Free Rider Opportunities Annual fund mailings Annual fund telephone program Articles in Newsletters Ads in Alumni Magazine Web site Acknowledgements Travel Program Develop a Plan 1. Develop a shell a. Media down the left b. Calendar across the top 2. Plot your messaging for the year a. Include all channels 3. Re-plot based on Age Planned Giving Marketing Plan Shell 16

17 Seven Step PG Marketing Plan Step 1: Identify/Segment Step 2: What type of Planned Gift? Step 3: Purpose of Message Step 4: Choose Medium Step 5: Develop a Donor Centered Message Step 6: Use a Multichannel Strategy Step 7: Develop a Plan Questions on Marketing Planned Gifts? Gift Acceptance Policy Basics Jeff Mielke, CFRE, CSPG 51 17

18 Gift Acceptance Policy Basics What basics are we talking about: Purpose Board of Directors Types of Gifts for your policy Types of Gifts Cash Securities Life Insurance Bequests Retirement Plans Life Income Gifts 52 Gift Acceptance Policy PG Basics Purpose of a GAP When working with donors, the GAP assists development professionals coordinate and accept the proper gift. Guides staff and volunteers when cultivating and accepting gifts. Helps to Under Promise and Over Perform with your donors! 53 Gift Acceptance Policy PG Basics Include your organization s responsibility to donors. Outline what your donors can expect from you. AFP provides suggested Donor Bill of Rights at GAP Template. Provided by AFP at tacceptancepolicy.pdf 54 18

19 Gift Acceptance Policy PG Basics Board of Directors Acceptance Authority Usually grants authority to gift team to solicit gifts. Is usually the technical legal entity to which gifts are made. Is responsible to ensure gifts are properly accepted OR refused. Authority for this is usually referred to the gift team. Usually have a subcommittee of the board acting as a Gift Acceptance Committee (GAC). GAC reviews and considers gifts as necessary. 55 Gift Acceptance Policy PG Basics Types of Gifts Accepted & Criteria. Cash: Usually acceptable in any form. Securities: Publicly traded stocks & securities. Consider making it policy to liquidate shares upon receipt. Closely held securities & restricted stock. Usually prudent to review these securities with the GAC. Redeem these securities at the earliest possible moment. 56 Gift Acceptance Policy PG Basics Life Insurance Revocable naming the charity as the/a beneficiary. Irrevocable charity is named beneficiary of the policy and ownership is transferred to the charity. Consider the following: Type of policy offered Is it term or whole life. In general do not consider accepting term policies. Policy status If premiums are due, it is the responsibility of the donor to make the premium payments.» Payment should be made through the charity and treated as an unrestricted gift in the year payment is made

20 Gift Acceptance Policy PG Basics Life Insurance (Cont.)» Reserved charity rights consider reserving the rights to continue premium payments or convert to a paid up policy should the donor stop payments. Bequests (revocable) Do not act as Trustee, Executor, Personal Representative, Conservator or Guardian. Document through a Letter of Intent or a deferred gift agreement. 58 Gift Acceptance Policy PG Basics Retirement plans (Revocable) Acceptable as a gift. Be aware of spousal rights under federal law. If the spouse is still alive a signed waiver is required. Charitable Gift Annuities (CGAs) (Irrevocable) Consider these guidelines: Minimum Initial Amount: $25,000 (check with your Board). Minimum Additional CGAs (after the 1 st ): $10,000. Minimum Age of Annuitant: 65 Funded with cash or readily marketable securities. 59 Gift Acceptance Policy PG Basics Charitable Trusts. Acceptable if the charity is named as the trustee, beneficiary, remainderman or a combination. Consider these guidelines: (Check with your Board) Charitable Remainder Annuity Trust (CRAT) Minimum trust amount: $100,000 Minimum age of life income recipient: 65 Maximum number of lives: Two (2) Maximum number of income recipients: Five (5) Maximum payout rate (IAW Treasury) 7.5% 60 20

21 Gift Acceptance Policy PG Basics Consider These Guidelines (Cont). Charitable Remainder Unitrust (CRUT) Minimum trust amount: $100,000 Minimum age of life income recipient: 65 Maximum number of lives: Two (2) Maximum number of income recipients: Five (5) Maximum payout rate (IAW Treasury) 7% Charitable Lead Annuity Trust (CLAT) Minimum trust amount: $1,000,000 Minimum annual annuity to charity 51% Maximum term of trust 20 years 61 Gift Acceptance Policy PG Basics Consider these guidelines (Cont.): Charitable Lead Unitrust (CLUT) Minimum trust amount: $100,000,000 Minimum annual annuity to charity 51% Maximum term of trust 20 years 62 Gift Acceptance Policy PG Basics What we talked about: Purpose Board of Directors Types of Gifts Questions? Types of Gifts Cash Securities Life Insurance Bequests Retirement Plans Life Income Gifts 63 21

22 QUESTIONS? Tim Logan, FAHP, ACFRE Jeffrey Mielke, CFRE, CSPG