Creating Sustaining Revenue for Your Organization

Transcription

1 Creating Sustaining Revenue for Your Organization

2 Planning, Goal Setting and Gift Acceptance Sandra Henningsen, CGPA Assistant Vice President

3 What is Planned Giving? Planned or Deferred Gifts: Life Income Gifts vs. Outright Current Gifts

4 Planned Giving Process Marketing Education Closing

5 Identify Your Best Prospects Segment Your Donor List Target Age: 65+? 45? Categories: - Greatest Generation - Baby Boomers - Repeat Givers - Surviving Spouses - Young Donors

6 Analyze Costs & Benefits Recognition of Lag Time Relationship Building Marketing Educating Motivating Potential Benefits are Huge Planned Gifts Far Exceed Current Gifts

7 Anyone Can Raise Planned Gifts

8 What Gifts Will You Accept? Bequests Easiest and most popular gift Largest volume/amount to charity Made in wills or trusts Bequest Types: - dollar amount - specific gift - percentage of an estate

9 What Gifts Will You Accept? Beneficiary Designation Gifts Easy to make even online! No attorney visit required Donor can change mind PODs, TODs Asset Types: - retirement plan assets - life insurance - financial accounts

10 What Gifts Will You Accept? Charitable Gift Annuities Simple contract Fixed income for life Rates based on age (1-2 Lives) Possible tax-free income Current or deferred State regulation Taxes

11 What Gifts Will You Accept? Charitable Trust Options Charitable Remainder Trust - Income to family - Remainder to charity Charitable Lead Trust - Income to charity - Remainder to family

12 Visits and Gift Closing Listen for goals Match gift options Focus on the benefits Use illustrations for donors Provide backup for advisors

13 Managing Your Program Donor Stewardship - Gift Receipts, Donor Events, - Giving Societies, Visits Charitable Trust Management Bank/Trust Co., charity, donor + help Gift Annuity Administration - In-House vs. Outsource

14 Creating a Legacy Society Creat e a Legacy Define membership criteria Choose a name and logo Market and Publicize Recordkeeping Recognition

15 Networking with Advisors How to find them? Can they help? What they will offer? How can you help them?

16 Bequests Sandra Henningsen, CGPA Assistant Vice President

17 You Should Like Bequests! #1 planned gift vehicle Bequests by will or trust Beneficiary designation gifts Contingent beneficiary gifts

18 Bequest Types Specific Asset Bequest- my car Specific Amount- $100 Undivided Percent of Assets Bequest- 10% of my property Bequest of Residue- all the rest

19 Did you know?... 80% of planned gifts are Will Bequests 70% of adults have NO WILL Will Bequest results from good planning

20 Bequest Opportunity Average age of first Will is 44 Average age of first Bequest is 49 Average age of bequest donors is 58 79% of Bequest Donors have relationship

21 Bequest Donor Demographics No Children 50% With Children 17.1% With Grandchildren 9.8% Russell James III

22 Bequest Life-Points Illness Death of Spouse Birth of Child/Grandchild Death of Relative Increase in Assets Sargeant Study, Indiana U

23 Bequests By Age % % % % Russell James III, U. GA %

24 Bequests By Donor Income 36% 35% 17% 12% $0 $50,000 $50,000 - $100,000 $100,000- $150,000 $150,000+ Russell James III

25 Loyal Donor Demographic Look for Demonstrated Loyalty! Gifts for 10, 15, 20 years or more Modest gifts, but consistent No credit card debt Homeowners Only 2% of charitable bequests revoked! Kathryn Swank, Target Analytics

26 Increased Charitable Planning Adults age 55+ who have completed a will or trust increasingly include charity. Charitable Planning Drivers: 1. Growing levels of education 2. Increased childlessness Russell James III, American Charitable Bequest Demographics

27 The Young and Married Youngest Demographic - age is driving the trend for 55+ group. Married Couples - 28% increase in charitable plans ( ) Russell James III, American Charitable Bequest Demographics

28 Singles and Survivors Single Females Households twice as many as male households over age 55 Unmarried make more charitable bequests than any other group! Russell James III, American Charitable Bequest Demographics

29 Highly Educated Givers Education consistently predicts a greater propensity to engage in charitable planning College Grads with Charitable Plans % % Russell James III, American Charitable Bequest Demographics

30 Planning Later in Life Substantial numbers add a charitable component in years leading up to death Late-change gifts are smaller in size than long-term planned gifts. Russell James III, American Charitable Bequest Demographics

31 Charitable Gift Annuities Sandra Henningsen, CGPA Assistant Vice President

32 Gift Annuity Benefits Fixed Payments for Life Rates by Age to 9.0% Income Tax Deduction Partly Tax-Free Payments

33 Gift Annuity Martha Washington - Age 75 George Washington - Age 80 Property $20, % Annuity Principal $20,000 Two Lives Charity $20,000 Gift of Annuity. Deduct $7,827 Payout $1, Tax-free $ After two lives, property to charity.

34 Gift Annuity Martha Washington - Age 75 George Washington - Age 80 Property $100, % Annuity Principal $100,000 Two Lives Charity $50,000 Partial bypass of gain. Deduct $39,137. Payout $5,300. Taxfree $ Effective rate 7.2%. After two lives, gift to charity.

35 Gift Annuity Taxation How Will Payouts Be Taxed? Ordinary Income Capital Gain Over Donor s Life* Return of Principal Over Donor s Life* Tax-Free Unrecovered Basis

36 Deferred Gift Annuity Property $500,000 Deferred Payment Gift Annuity Martha Washington - Age 58 George Washington - Age 58 First Payment on September 30, 2022 Annuity Amount of $30,500 Two Lives Charity $500,000 Deduct $115,740. Annuity payout of $30,500 for two lives. Tax-free payout $17,324. After two lives, value to charity.

37 Flexible Deferred Gift Annuity Martha Washington - Age 58 George Washington - Age 58 First Payment on September 30, 2022 Property $500,000 Deferred Payment Gift Annuity Flexible Annuity Options Payout Ages 63/63 $21, Payout Ages 73/73 $37,000 Annuity Amount of $30,500 Two Lives Charity $500,000 Deduct $115,740. Annuity payout of $30,500 for two lives. Tax-free payout $17,324. After two lives, value to charity.

38 Testamentary Gift Annuity Prepared for Martha Washington Estate Value $8,000,000 Tax deduction of $2,595,224. May save $1,038,090. Family $2,840,000 Charity $1,000,000 Gift Annuity $4,000,000 Two Lives Estimated total income $3,177,200. Estate taxes are $0. Annuitants Funding Frank Jones $2,000,000 Betsy Jones $2,000,000 Charity $4,000,000 (Approximate Value) After each life, gift to charity.

39 Charitable Remainder Trusts

40 Charitable Reminder Trust Types Income to Family 1. Unitrusts (CRUTS) Four Types 2. Annuity Trusts (CRATS)

41 CRUT Benefits Bypass Gain Increased Income Charitable Deduction

42 Charitable Reminder Unitrust Martha Washington - Age 70 George Washington - Age 75 Property $300,000 Bypass of gain. Save $45,120. Deduct $133, % Unitrust Principal $300,000 Two Lives UT annual income $15,000. Effective pretax rate 5.86%. Charity $357, % growth for two lives. Trust to charity.

43 Unitrust Options Income to Family Term of 1 20 Years One Life Two Lives Two Lives Plus Term

44 Unitrust Payouts Type 1: Standard Pays from income and principal. Type 2: Net Plus Make Up Pays the lesser of UT% or income; if extra income later, pays make up. Type 3: Net Income Only Same as Type 2 with no make up. Type 4: FLIP Type 2 converts to Type 1

45 4- Tier Taxation Ordinary Capital Gain Other Tax Free Principal

46 Unitrust Income Growth Payment Years to Martha and George Washington

47 Unitrust Principal Growth Principal Years of Principal Growth for Martha and George Washington

48 Sale and Unitrust Martha Washington - Age 70 George Washington - Age 75 Property $300,000 Bypass of gain may save up to $36,096. Tax Deduct. $107,033. Cash Received $60,000 5% Unitrust $240,000 Two Lives Unitrust income of $12,000. Effective return rate 5.86% Charity $286, % growth for two lives. Trust to charity.

49 Retirement Unitrust Martha Washington - Age 50 George Washington - Age 55 5% Unitrust Initial Amount $500,000 Principal $808,843 Accumulation Model Retirement on July 1, 2024 Two Lives Charity $898,793 Transfer and sell tax-free. Tax Deduct of $97,265 may save $32,097. Annual income at retirement $40, After two lives, trust principal paid to charity.

50 Education Unitrust Prepared for Mary Jones Property $200,000 5% Unitrust Trust Principal $200,000 Term of 20 Years Charity $238,659 Bypass of gain saves $30,080. Deduct $72,637. Saves $23,970. Unitrust income to students. Income after tax $161,386. After 20 years, trust to charity.

51 Testamentary Unitrust Prepared for Martha Washington Family $3,840,000 Estate Value $8,000,000 Charity $1,000,000 5% Unitrust $3,000,000 Charity $3,335,566 Term of 12 Years Tax deduction of $2,633,716. May save $1,053,486. Estimated total income $1,890,514. Estate taxes are $0. Trust grows 0.89%. After 12 years, unitrust to charity.

52 Annuity Trust Martha Washington - Age 80 George Washington - Age 85 Property $300, % Annuity Trust Two Principal $300,000 Lives Charity $278,987 Deduct $131,150 may save $43,280. UT annual income $18,780. Effective pretax rate 7.32%. Trust increases. After two lives, trust to charity.

53 Charitable Lead Trusts

54 Lead Trusts Types 1. Non-Grantor or Family Lead Trust 2. Grantor Lead Trust

55 Family Lead Trust: Donor Profile Own Growth and Income Asset Desire to Pass It On to Children Want to Avoid Gift/Estate Tax Willing to Give Up Income for Several Years How to Move the Asset to Children with No Tax?

56 Family Lead Trust Property Value $1,000,000 Cost $200,000 Gain $800,000 Prepared for John Smith 6.00% Lead Trust Trust Principal $1,000,000 Term of 12 Years Trust to Family $1,346,181 Deduction $519,996. Reduces Taxable Gift to $480,004. $60,000 to Charity for 12 Years. Total in 12 Years $720,000. Growth to Family Saves $155,781 Gift Tax.

57 Testamentary Lead Trust Prepared for Martha Washington Estate Value $8,000,000 Family $2,840,000 5% Lead Trust $5,000,000 Family $5,843,497 Income for 12 Years Test. Lead Trust: Deduct $2,643,825. Saves $1,000,000. Income to charity during trust term is $3,000,000. After term of years, remainder to family.

58 Donor Profile: Grantor Lead Trust High income donor Needs income tax deduction Wants to make gifts for a limited time Needs asset back Note: Payments taxed to grantor

59 Grantor Lead Trust Case Study Problem Barbara Johnson 45 $1M Stock to Give $60,000/Year 5 Year Term

60 Grantor Lead Trust Property Value $1,000,000 Cost $500,000 Gain $500,000 Prepared for Barbara Johnson 6.00% Lead Trust Trust Principal $1,000,000 Term of 5 Years Trust to Donor $1,117,332 Gift Asset. Charitable Income Tax Deduction of $256,920. $60,000 to Charity for 5 Years. Total Payments $300,000. After 5 Years, Trust to Donor.

61 Integrating Major & Planned Gift Asks in a Campaign

62 Why Blended Gifts? Large Campaign Goals Desire to build endowment Donors may give more Ensure gift continues into future

63 Appealing to Donors Loyal couple - saving for retirement Senior - worried about outliving money Life expectancies up 5 years for decade Cost of long-term care Young entrepreneur wants to preserve cash for family and education Investor assets are burdensome

64 Focus on Loyal Donors Top major gift donors Donors for 10 years+ Donors w/ 25+ gifts Donors who have made gifts of securities or real estate Legacy society members Board, volunteers & staff

65 Blended Gift Donor Profiles Large Texas University s Profiles Major gift donor with reservations Matching gift donor Naming donor Generous planned giving donor

66 Accepting Revocable Gifts University of Hawaii Accepting Revocable Bequests for Campaign Counting at Face Value Documentation Required: Signed gift acknowledgement (Form) Letter or other written acknowledgement Will

67 Not Asking for Wills? Denver University Counting Revocable Bequests Valuing at Current Face Value Documentation Required: Not comfortable asking for a will or trust Bequest Intention Form Far more donors willing to reveal estimated value of bequest when they saw form as way to instruct DU how to use the gift.

68 Board Member Gifts UC Santa Cruz Trustee 1 $2.5M Bequest + scholarship current gifts + CRT Trustee 2 - $5 million bequest + $25,000 campaign pledge Trustee 3 IRA Bequest + annual pledge of securities

69 Staff Member Gifts UC Santa Cruz Retired faculty - $100K CGAs + annual gifts + endowments Retired staff CRUT, CGA, bequest, $5K annual pledge Pioneer alum CRT, IRA bequest, POD, endowment gifts

70 Blended Gifts in a Campaign Ball State University Blended matching gifts program targeted for specific endowments Planned giving donors current gifts Annual gift donors gift scholarship opportunity

71 Making the Double Ask University of Minnesota Marketing to Double Donors Annual and Planned Giving Donors Example: Endowment + Bequest Donor Excited donors tell their friends!

72 Planned Giving Donor Gifts Baylor University Encouraging Gifts of Income Changing Beneficiary Designations Blended Gifts Asks for Naming Rights Understanding Current Giving Benefits Marketing Planned Gifts to Major Donors

73 Match Goals with Gifts Donor Goals Avoid capital gains tax Increase income Reduce income tax Reduce estate tax Lower gift/transfer tax Asset diversification Make gifts to charity

74 1. Gift and Bequest George Washington - Age 75 Estate $30M+ Cash Gift $1,000,000 Bequest $29,000,000 Total Gift $30M Very large Estate. Two children. Desire to leave inheritance. Open to charitable plan. Medical center for care of children. Naming opportunity. Blended gift. Major gift plus bequest.

75 2. Gift and Gift Annuity Martha Washington - Age 80 George Washington - Age 85 Property $1,000,000 Part Gift and part gift annuity. Tax Deduction $646,072. Gift $200,000 5% Gift Annuity $800,000 Two Lives Annuity $40,000 for two lives. Est. total payout $492,000. Total Gift $1,000,000 Property to charity fulfills gift goal.

76 3. Gift and Unitrust Martha Washington - Age 70 George Washington - Age 75 Property $1,000,000 Bypass of gain may save up to $171,360. Tax Deduct. $502,138. Gift $100,000 5% Unitrust $900,000 Two Lives Unitrust income of $45,000. Est. total payouts $996,434. Total $1M+ Growth for two lives. Trust to charity.

77 Target Marketing

78 Target Markets All Persons Estate Income Gift Plan Remarks ALL ALL Will/Bequest Estate Tax Ded. ALL ALL Gift of Apprec. Income Tax Ded. Property (land, stock, insurance)

79 Target Markets Business Persons Estate Income Gift Plan Remarks Moderate Moderate+ Deferred Gift Large Annuity income tax deduction Large High Retirement UT Better retirement income

80 Target Markets Business Persons Estate Income Gift Plan Remarks Large High UT / Insurance Large gift / Replacement low cost 500K+ High Grantor Lead Income tax Trust deduction

81 Target Markets Retired Persons Estate Income Gift Plan Remarks Below 400K Low+ Revocable Trust Good Liquidity Low+ Pooled Income Income tax Fund deduction 400K-2M Moderate 1L/2L + Term Benefit family of Years UT & charity

82 Target Markets Retired Persons Estate Income Gift Plan Remarks 800K-3M+ Moderate+ 1L/2L UT Income tax ded. 5M+ Moderate QTIP/Bequest Benefit spouse & charity

83 Target Markets Retired Persons Estate Income Gift Plan Remarks 2M/4M+ High UT/Insurance Large gift with Repl. Trust little or no cost 4M+ Moderate QTIP/Bequest Benefit spouse and charity 6M/12M+ High Lead Trust Minimize transfer tax

84 Target Markets Senior Friends 75+ Estate Income Gift Plan Remarks Below 450K Low+ Revocable Trust Good Liquidity Low+ Gift Annuity Income tax ded. + income Home +250K Low+ Gift Annuity Live in home for Home + income Moderate Life Estate Reserved Live in home

85 Target Markets Senior Friends 75+ Estate Income Gift Plan Remarks 400K-800K Moderate 1L/2L+ Term Benefits of Years UT family & Charity 500K+ Moderate Education UT Benefit grandchildren

86 Target Markets Senior Friends 75+ Estate Income Gift Plan Remarks 800K-1M+ Moderate 1L/2L Annuity Possible Trust Municipal Bonds Moderate Term of Balance of Years UT/AT years to children

87 Target Markets Senior Friends 75+ Estate Income Gift Plan Remarks 4M+ Moderate QTIP/Bequests Benefit spouse charity 6M/12M+ High Lead Trusts Minimize transfer tax

88 Sandra Henningsen, CGPA Assistant Vice President