Southern Institute Conference

Transcription

1 Southern Institute Conference Securing Transformational Gifts and Developing Sustainable Funding Streams: How Planned Giving Plays a Key Role Greenville, SC May 27, 2015

2 Speakers Today Roxanne Cromartie, United Way of Greenville County Evelyn Morgner, United Way Worldwide s Endowment and Gift Planning Service Center 2

3 Giving Assets Planned or Legacy Giving and New Insights into United Way Endowments Window into Transformational Gifts

4 Planned giving defined A significant gift of assets given during one s lifetime or at death as part of a donor s financial and/or estate planning Provides an opportunity for a highly engaged conversation with the donor about the donor s philanthropic vision United Way Worldwide can actively support you Planned Gifts are usually housed in an endowment 4

5 Endowments generate sustained income, and create a more stable financial base Endowment Sustainable Income to Support Collective Impact United Way 5

6 6 Transformational Gifts

7 Just as payroll deduction is a technique of giving income PLANNED GIVING is a technique of giving assets.

8 Cash represents a small portion of a donor s potential source of gifts Bonds 18% Real Estate 22% Life Insurance 3% Other 14% Cash 12% Stocks 31% 8 *Source: IRS

9 A donor s potential source of gifts expands dramatically if assets are included Income 12% Assets 88% 9

10 The current and imminent wealth transfers from baby boomers create a substantial opportunity for United Way $58.7 trillion* United Way s $10 billion in network community resources should be achievable by 2024 $6.3 trillion $6.5 trillion $324 billion Total Expected Wealth Transfer from Baby Boomers Expected Charitable Bequests IRA Assets in 2013 IRA Rollovers in 2013 *Chart not to scale Source: Chronicle of Philanthropy and Evolution of the Retirement Investor 2014 from Cerulli Associates 10

11 Percentage of US Population Baby boomers are retiring in substantial numbers with the median boomer due to turn 65 in Boomer Generation Approximate Retirement Age Source: US Census Data,

12 United Way needs to adjust its strategies to keep Baby Boomers actively engaged in our work as they retire 17 percent of baby boomers have already retired For the next 18 years, 8,000 Americans will turn 65 every day About a quarter million every month Source: AARP 12

13 Bold plays Bold Plays Maximize Impact Bold Play 1: Commit to and Implement a Single Business Model that Drives Impact AND Increases Revenue Bold Play 2: Create a World-Class Individual Experience with Mobile Capability Donor-Centered Bold Play 3: Formalize Community-Partner-Of-Choice Agreements with Top 100 Corporate Partners Bold Play 4: Develop New $10M Leadership Giving Society Network Performance Bold Play 5: Create New Partnership Group of United Ways to Execute Our Enterprise-Wide Strategy 13

14 Discussion and Questions on Retiring Baby Boomers and the Bold Plays Do you have any questions or comments on the retiring Baby Boomers or the Bold Plays? 14

15 Differing planned giving vehicles appeal at different times in a donor s life cycle Age Group Millenials 20s and 30s Mid Career 40s Planning for Retirement 50s Retirees 60s + PG Vehicles Life Insurance- Cost Effective Solutions Estate Planning- Bequests and Retirement Plans Cash and Property Gifts to Endowment Revocable Gifts including Retirement Plans Charitable Gift Annuities Donor Focus Developing Philanthropic Vision & Mindset Planning for Future Income Needs for Some Donors Executing Philanthropic Vision for Others 15

16 Donors decide the timing of their planned gifts... gifts may be contributed during lifetime or at death.

17 Donors select the type of vehicle that fulfills their objectives and UWW works actively to support you Three types of planned gifts Help United Way later Bequests Life Insurance Retirement Plans Real Estate Interest Pay donor income Gift Annuities Pooled Income Funds Charitable Remainder Trusts Help United Way now Outright Gifts Endowments Lead Trusts 17

18 Donors decide the type of their planned gift... Gifts that help now Gifts that pay income Gifts that help later

19 Donors decide the type of their planned gift... Gifts that help now Gifts that pay income Gifts that help later

20 What are the 2 most common planned gifts that help now? $$ Cash $$ Gifts of Stock

21 Donors decide the type of their planned gift... Gifts that help now Gifts that pay income Gifts that help later

22 Charitable Gift Annuity a new benefit for you and your donors, and UWW can implement for you New policy full reinsurance so you get your $ back within the first month Irrevocable gift of assets made to United Way United Way guarantees payments back to donor for life Upon placement of reinsurance, United Way receives the residuum, within a month Double benefits your United Way receives the immediate benefit, and your donor sees the impact of their gift during their lifetime United Way Worldwide administers the National Gift Annuity Program and your annuities on your behalf 22

23 Donors decide the type of their planned gift... Gifts that help now Gifts that pay income Gifts that help later

24 Will and Estate Gift A gift to United Way at death through will or estate plans UWW provides estate planning materials to you

25 Charities added as a beneficiary to an existing policy A simple Change of Beneficiary form signals the donor s intent Retirement Plan or Insurance Policy

26 United Way Life A new policy on a donor s life benefiting United Way

27 United Way Life Your United Way owns and benefits from policy Donor increases annual support Proven charitable gift of insurance Convenient Open Architecture

28 United Way Life Gift outside of donor s estate Use current assets/payments 5-years or 1-year payments

29 United Way Life -- an Irrevocable gift to your United Way Insert Process chart from Key Documents manual 29

30 What could signal a donor s potential interest in a United Way Life gift? Younger donor says I d love to do more, but I am still building assets. How can I best leverage my gifts to United Way? I am in my 30s/40s; how could I make the biggest impact in our community. I ve just made my estate plans, and don t want to disrupt anything that I have already put in place. My income is growing, but I d like to have more of an impact than just being a Tocqueville donor. How can I become a member of the Tocqueville Legacy Circle? 30

31 Questions on United Way Life Any questions on United Way Life? Table talk -- role play asking a donor to consider a United Way Life gift. 31

32 Greenville County s Success with United Way Life 32

33 United Way of Greenville County $16 million annual campaign 138 Tocqueville members 4,533 Leadership Donors ($1,000+) $7.9 million $ s from Leadership Donors 33

34 United Way Life Started in 2012 Current Stats 18 Policies in force $7,125,000 total value $250, policies $375,000 1 policy $500,000 1 policy $1,000,000 3 policies 34

35 UWL Donor Profile Current/Former Volunteer Leadership 5 are Tocqueville/13 are not Age range at the time policy written All but one have longtime ties to the community 35

36 UWL Prospect Profile Current/Former Volunteer Leadership Current Tocqueville OR donor with long term giving history of $2,500 or more Under the age of 50 Leadership in Young Philanthropists Have a strong family history with United Way Will have their legacy experience in Greenville 36

37 United Way Life Match $100,000 each year for 3 years (just approved $100,000 for 2015) Match is from Board Designated Funds $278,416 of match used for the current 18 policies for $7,125,000 long term investment 37

38 United Way Life Match Match only available for policies of $250,000 or more Match 50% of the premium $250,000-$499,000 policy 50% premium up to $2,500 $500,000-$999,999 policy 50% premium up to $5,000 $1million % premium up to $10,000 38

39 Endowment Fund Today As of May 2015 Gifts/Cash Received $3.1 million Expectancies $17.7 million TOTAL $20.8 million 119 Legacy donors (47 TLC) ***40% of Expectancies are from UWL 39

40 Keys to Success We started asking and have continued to ask Celebrate & Recognize UWL donors creates a buzz UWL donors are TLC members Strong Young Philanthropists Affinity Group Organizational Priority Culture not a Campaign 40

41 What is a Charitable Gift Annuity (CGA)? A charitable gift annuity is an annuity whose ultimate beneficiary is a non-profit organization. For an upfront payment by a donor, a guaranteed income stream is paid back to the donor during the donor s lifetime, and the charitable residuum is paid to the non-profit. The donor receives tax benefits for placing the annuity. Key Attributes of a CGA Fixed payments to donor Charitable deduction for donor Partially tax free income Partial bypass of capital gains tax Rates are adjusted every month Charitable residuum returned to the designated non-profit Can have one or two annuitants 41

42 What would signal a donor s potential interest in a CGA? Donor would like an improved income stream over short term money market type investments Donor would like a guaranteed income stream in retirement Donor is either age 60 or above, and wants an immediate income Donor is in their 50s, would like a tax deduction now and income later in retirement Most CGA donors are in their 70s and 80s 42

43 What are the primary benefits of a CGA? Benefits to the Donor Benefits to your United Way Guaranteed income stream for life Charitable tax deduction See impact of their gift during their lifetime Irrevocable gift to your United Way Immediate return of the charitable portion of the gift to your United Way 43

44 Attributes of CGAs that are attractive to your donors You receive a guaranteed income stream for life You receive multiple tax benefits upfront charitable deduction, partial tax free income, and reduced capital gains tax, if you are funding the annuity with appreciated property You make a charitable gift to United Way You are recognized as a donor Some donors place multiple CGAs, placing a new one every year You can see the benefit and impact of your gift during your lifetime Simpler process and administration, and more cost effective than establishing a charitable trust 44

45 National Charitable Gift Annuity Program Program Characteristics Metrics for our Program Program at UWW since 2001 Number of CGAs* 181 All CGAs reinsured as of 2014 Top tier industry leaders provide actuarial, banking, reinsurance and other support State regulatory compliance and monitoring performed by UWW Minimum CGA $25,000 CGAs range from $10,000** to $536,000 Average CGA value since inception through the beginning of 2015 is $24,000 Average CGA value in (through January) is $132, * As of January 2015 ** Minimum prior to 2014 was $10,000

46 Charitable Gift Annuities Any questions on gift annuities? Table talk -- role play talking to a donor about a potential gift annuity. 46

47 Worldwide Property Program Program Attributes Property Types Covered Capability to support you and your donor in successfully completing a property gift Full feasibility study, assessment, negotiation of sale, completion of gift United Way experience property consultant has worked with United Ways and UWW, and works closely with you and your donor Property consultant has over 30 years experience in commercial and investment real estate Real estate Mineral rights Royalty interests Water rights Air rights Timber Conservation easements 47

48 What would signal a donor s potential interest in a property gift? We have a second home by the lake that we use infrequently now that the children are grown. We re thinking about selling the lake house. I have a piece of real estate that has appreciated hugely, and I really don t want to pay capital gains tax on that property. We are moving into an apartment in the city, and selling our house in the suburbs. We have surplus real estate on our books, and are trying to determine how to clean up our balance sheets. With this shale oil boom, we are getting monthly checks we never expected from our property on the Antrim/Marcellus/Bakken shale. 48

49 IRA Charitable rollovers IRA Rollover requirements* Donors age 70 ½ and older Rollover upto and including $100,000 per year Rollover directly to United Way Donor does not recognize transferred assets as taxable income Satisfied required minimum distribution rules Planning your annual campaign Identify older donors in your database Annual contact with older donors including mention of IRA rollovers Publicize IRA rollover provisions during the year with periodic mailings, potentially using the UWW designed IRA rollover brochure Concerted ask of eligible donors at one point during the year 49 *Not yet approved by Congress for 2015

50 Bequests Donor Messaging You may wish to consider leaving a legacy gift, and we would like you to consider naming United Way as one of the 3-4 charities you may wish to support through a legacy gift. Resources available to you from UWW Sample letter of intent Sample bequest language United Way Will Planning Guide Leaving a legacy gift allows you to continue to have a positive impact on your community into the future. 50

51 Questions Any questions on bequests? Table talk -- role play talking to a donor about leaving a bequest to your United Way. 51

52 Endowments time permitting 52

53 Recent Growth in Endowment Assets in the United Way Network (In Billions $) 3 End of Year Market Value of Endowment Portfolios 2 1 $1.16 $1.32 $0.98 $1.11 $1.25 $1.23 $1.34 $ Sources: data from United Way Research, Database ll.

54 Top 15 endowments in the U.S. network by market value Endowment Market Value (Million $) $180M $160M $140M $120M $100M $80M $60M $40M $20M Average $52MM $0M Source : UWW Research DB2 Data as of end 2013

55 Endowments can play a key role in developing a more stable financial base to support long term mission Role of Endowments Provide sustainable income for United Way Provide more stable funding and revenue base Support long term community impact work Attract and engage high net worth donors to serve on Investment Committees Universe Metrics at end 2013 Nearly 46% of United Ways in the U.S. had endowments Approximately 170 United Ways had endowments over $ 1 million Approximately 324 United Ways had endowments under $ 1 million Average endowment portfolio across the network was just over $ 3 million 55

56 Endowments of scale that generate sustainable funding for their United Ways Number of United Way Endowments Average of Top 10 $67MM Endowment Market Value (Million $) $75MM 20 $50MM Average of Top 25 $38MM 10 $25MM 5 4* 2** 0 Endowments above $10MM Endowments above $25MM Endowments above $50MM Endowments above $100MM $0MM 56 Source : UWW Research DB2 Data as of end 2013 * Seattle, Rochester, Providence, Indianapolis ** Seattle and Rochester

57 Endowments across the U.S. network Percent of United Ways with Endowments by Metro size (in %) (in $) Median Endowment in U.S. $ by Metro size ,000 5,000 4,000 3,000 5, ,000 1,000 1, ~11 Metro % of UW with an endowment ~11 Metro Median Endowment in thousands of dollars 57

58 Target Endowment Capital to be Raised (in $ Millions) Endowment & initiative campaigns currently in progress in the United Way network $ $ $ $ $ Total Estim. Endowment Assets to be Raised: $874 M $ $ $ $50.00 $ $65.00 $62.50 $55.00 Mean: $51.4 M $25.00 $20.00 $20.00 $15.00 $13.40 $10.00 $10.00 $10.00 Median: $20.0 M $5.00 $2.00 $1.00 $- Mean Median - Data reported as of June Targets as reported by each UW. Campaigns in public phase, quiet phase, or planning stage Target data represents either confirmed target or mean of high and low potential dollars to be raised.

59 Eight of the 10 largest single gifts received from private donors by United Way have been endowment gifts LARGEST SINGLE GIFTS TO UNITED WAY FROM PRIVATE DONORS* 1. $30 million Seattle-based couple ENDOWMENT 2. $17.2 million Philadelphia-based couple - ENDOWMENT 3. $14.5 million Savannah-based individual donor bequest - ENDOWMENT 4. $12.5 million Erie, PA-based 'anonymous friend' bequest -- ENDOWMENT 5. $10.0 million Twin Cities-based individual donor - ENDOWMENT 6. $7.0 million Seattle-based donor gift ENDOWMENT 7. $6.1 million Columbus, OH-based private donor Initiative focused on family stability 8. $5.0 million Phoenix-based individual donor ENDOWMENT 9. $5.0 million Toronto-based donor's bequest - ENDOWMENT 10. $5.0 million Twin Cities-based individual donor - Jobs & education special initiative funding in honor of the UW Centennial *Through mid-november 2014 based on information currently available.

60 New Endowment Resources to support you, your CFO and your Board and Investment Committee Endowment Report Endowment Investment Toolkit Endowment and Spending Calculator 60

61 61

62 62

63 For further information, contact Evelyn Morgner Manager, Endowment and Planned Giving Services, Investor Relations United Way Worldwide 701 N. Fairfax St. Alexandria, VA 22314, USA telephone ext 341

64 Glossary of Key Planned Giving Terms Bequest A gift received after death generally received through a donor s will or other estateplanning document (such as a living trust). Charitable Gift Annuity A contract between a donor and a charity where a donor receives a lifetime income from the charity in exchange for a donation of cash or property. The donor receives a partial tax deduction and the charity keeps the gift upon their death. Endowment A gift that is intended to be kept permanently and invested to generate income for charitable purposes. Houses planned gifts received by the organization. Life insurance Name a charity as beneficiary on a life insurance policy The simplest way to use life insurance to give to charity is to name a charity as beneficiary on a life insurance policy. Designating the charity as beneficiary allows donor to make a larger gift than they could otherwise afford. No immediate tax benefit Life insurance Donate an existing life insurance policy to charity Donor assigns all rights in the policy to charity. Donor delivers the policy itself to charity and gives up control of the life insurance policy forever. Because transfer of ownership is irrevocable, this provides some tax advantages. 64

65 Glossary of Key Planned Giving Terms (continued) Life insurance Donate a new life insurance policy to charity Donor applies for a new policy and immediately assigns all rights in the policy to charity. Donor pays all the premiums to the charity. A charitable deduction for premiums may be taken. The IRS treats this transfer as if the charity itself has purchased the policy on donor s life. Donor is entitled to full tax advantages of the annual gift for the premiums. Living trust A written agreement to govern the distribution of assets at death. Trust is established by donor for their lifetime and is usually revocable. Outright gift A contribution of cash or property in which donor retains no interest and can be used right away by charity. Planned Giving/Gift Planning The planned transfer of an individual s or a couple s assets to a charity during their lifetime or upon their death. May provide immediate or deferred tax benefits. Professional advisors Are estate-planning attorneys, financial planners, trust officers, certified public accountants, stockbrokers and insurance agents who can be invaluable guides in helping donors include charitable giving in their plans. 65

66 Glossary of Key Planned Giving Terms (continued) Property Gifts Donors can gift and get a charitable tax deduction for property gifts, and can structure the gift so that they also get an income stream from the asset after the gift is completed. Property can include real estate held by individuals, surplus corporate real estate, mineral rights, water rights, air rights, timber, and conservation easements. Retirement assets Are assets such as a retirement plan, 401(k), 403(b), IRA, Keogh, or other qualified pension plans. Designating the charity as beneficiary allows the donor to make a gift to a charity of their choice upon death that may carry additional tax benefits. Will The most basic instrument used to distribute an asset, also called Last Will and Testament. A will is a legal document that spells out the disposition of a person s assets after death. It is governed by state law and is the most basic element of an estate plan. 66