Building a Legacy Giving Program
for Your Nonprofit Organization
Bob Congdon
Director of Development
University of New Hav...
The Giving Pyramid
Legacy Gifts
Major Gifts
Annual Gifts
What Are Legacy Gifts?
• Commonly, they are transfers of assets that
occur at death or when a trust terminates
• Often ari...
Types of Legacy Gifts
• Bequests
• Beneficiary designations for Individual
Retirement Accounts and life insurance policies...
Types of Legacy Gifts
• Charitable Lead Trusts (Income to a charity for a
term of years, remainder to heirs on a tax-
adva...
Focus on Bequests and
Beneficiary Designations!!
Giving USA
2012 Total Giving
$316.23 Billion
Individuals 72%
Bequests 7% = $23.4 B
Foundations 15%
Corporations 6%
Giving USA
Bequests 1993-2012
$’s in Billions (adjusted for inflation)
0
5
10
15
20
25
30
35
1993
1998
2003
2008
2012
Bequ...
Yale Tomorrow Campaign
$707 M in Planned Gifts- 20% of $3.886 B
Bequest Intentions
Realized Bequests
Life Income Gifts
Don...
Legacy Gifts in Relation to Annual/Capital
Gifts at United Methodist Homes
$0
$100,000
$200,000
$300,000
$400,000
$500,000...
Why Does an Organization Need
Legacy Giving?
• Potential for substantial long-term results
• Discussion about legacy gifts...
University of New Haven
Maxcy Legacy Society Members
45 Known Legacy Gifts
Bequests- 30
Trusts- 9
Life Insurance- 4
IRA de...
Why Build an Endowment?
• Permanence
• Financial stability during economic cycles
• Orientation to the future
• Offsets in...
Are You Ready for a
Legacy Giving Program?
Critical criteria-
A mature development program including:
• An active database...
Gift Acceptance Policy Guidelines
Who can negotiate and accept gifts?
What approvals are needed?
What assets are acceptabl...
Identifying Bequest Prospects
What demographic characteristics would you
look for?
Identifying Bequest Prospects
• Long-term, consistent donor
• Age 65+
• Children well-established financially, or no child...
What Motivates a Donor?
• Gratitude for economic success
• Interest in facilitating positive change
• Personal contact
• R...
Focus on Bequests
• Write instructions with specific wording to
name your organization in a will;
Restricted Purpose Beque...
Focus on Bequests
• Recommend specifying a percentage of the estate
as a bequest rather than a specific amount “so
that th...
Focus on Bequests
• Send periodic mailings and/or email blasts
with a reply mechanism; What happens when
a donor responds?...
Focus on Bequests
• Ask each bequest donor to give a testimonial;
use testimonials in
mailings, newsletters, website
• Tra...
Website Tips
• Make it simple, clear and easy for older
individuals to use
• Use simple font styles and basic colors
• Avo...
Health and Retirement Study Data
• Federally-funded longitudinal study of 26,000
diverse Americans over the age of 50
• In...
30%
35%
40%
45%
50%
55%
60%
65%
1995/6 1998 2000 2002 2004 2006 2008 2010 2012 (p)
55-64
65-74
Age 75+
US Population Age 5...
Increasing use of living trusts funded during
lifetime, despite:
• Increasing estate tax exemptions and
• Increasing avail...
Distributed Estates Where Decedent
Reported Having a Written and
Witnessed Will (n= 6,063)
16%
38%
10%
19%
11%
6% No will ...
Talk with donors about non-probate
transfers, such as:
• Beneficiary designations on retirement
accounts and other assets
...
Gift of an IRA as Part of an Estate Plan
Securities
to UNH
IRA and other assets
to children
$100,000 $1.9 million (Consist...
National Committee on Planned
Giving Survey
• 89% of all Americans give to charity annually
• Only 8% of Americans include...
A person age 65 today has a one in four chance
of living until age 90
Take the Long View
• A 65-year-old who creates a will in 2013 will
revise it at least once; precipitating factors could
be...
Steward Your Legacy Donors
• Invest time comparable to time spent on top
outright donors
• Personal visit or phone call at...
Legacy Gift Donors Want…
• To be appropriately thanked
• To be kept informed
• To have personal information kept confident...
The Role of the Board
Approve the gift acceptance policies
Allocate resources for legacy giving program
Promote the effort...
The larger the gift commitment, the
more likely that it includes a
bequest, a charitable trust, or other
legacy gift
Advanced Planned Giving
Charitable Gift Annuities
• Evaluate your organization’s readiness to
accept, manage and market gi...
Advanced Planned Giving
Charitable Remainder Trusts:
• Your organization can receive your remainder
interest in a trust wi...
Advanced Planned Giving
Provide training so development officers have a
working knowledge of gift planning strategies,
and...
Set Expectations and Measure Success
Track the number of revocable gifts (bequests,
IRA and insurance beneficiary designat...
Focus on Bequests and
Beneficiary Designations!!
Building a Legacy Giving Program
for Your Nonprofit Organization
Bob Congdon
Director of Development
University of New Hav...
First County Bank on Building A Legacy Giving Program for Your Nonprofit
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First County Bank on Building A Legacy Giving Program for Your Nonprofit

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First County Bank on Building A Legacy Giving Program for Your Nonprofit

  1. 1. Building a Legacy Giving Program for Your Nonprofit Organization Bob Congdon Director of Development University of New Haven
  2. 2. The Giving Pyramid Legacy Gifts Major Gifts Annual Gifts
  3. 3. What Are Legacy Gifts? • Commonly, they are transfers of assets that occur at death or when a trust terminates • Often arise as very pleasant surprises- only 20% of bequests are known in advance • Gifts with the largest dollar values • Ultimate expressions of donor support Legacy Gifts vs Planned Gifts?
  4. 4. Types of Legacy Gifts • Bequests • Beneficiary designations for Individual Retirement Accounts and life insurance policies • Charitable Remainder Trusts (income to donor, remainder to charity) • Charitable Gift Annuities (contract to make fixed payments for lifetime to one or two annuitants in exchange for a gift, remainder to charity)
  5. 5. Types of Legacy Gifts • Charitable Lead Trusts (Income to a charity for a term of years, remainder to heirs on a tax- advantaged basis) • Retained Life Estate Agreements (Donor gives residence while retaining lifetime use; donor responsible for upkeep and property taxes) • Pooled Income Funds- (Charity offers one or more funds similar to mutual funds; donors can make gifts and receive lifetime income based on the value of their shares in the fund)
  6. 6. Focus on Bequests and Beneficiary Designations!!
  7. 7. Giving USA 2012 Total Giving $316.23 Billion Individuals 72% Bequests 7% = $23.4 B Foundations 15% Corporations 6%
  8. 8. Giving USA Bequests 1993-2012 $’s in Billions (adjusted for inflation) 0 5 10 15 20 25 30 35 1993 1998 2003 2008 2012 Bequests
  9. 9. Yale Tomorrow Campaign $707 M in Planned Gifts- 20% of $3.886 B Bequest Intentions Realized Bequests Life Income Gifts Donor Advised Funds Charitable IRA Rollovers Other Planned Gifts
  10. 10. Legacy Gifts in Relation to Annual/Capital Gifts at United Methodist Homes $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Year 1 Year 2 Year 3 Year 4 Gift Annuities Bequests Current Gifts
  11. 11. Why Does an Organization Need Legacy Giving? • Potential for substantial long-term results • Discussion about legacy gifts may identify assets available for current gifts • Opportunity for discussion with donors focused on their goals, needs, and values
  12. 12. University of New Haven Maxcy Legacy Society Members 45 Known Legacy Gifts Bequests- 30 Trusts- 9 Life Insurance- 4 IRA designations- 2 Known Amounts = $8.7 M Estimated amounts = $1.0 M Total expectancies = $9.7 M
  13. 13. Why Build an Endowment? • Permanence • Financial stability during economic cycles • Orientation to the future • Offsets inevitable loss of steady donors as they die • Perpetuates donors’ charitable priorities- as in • “Leaving a Legacy” • An appealing option for many donors
  14. 14. Are You Ready for a Legacy Giving Program? Critical criteria- A mature development program including: • An active database of individual donors • Staff and Board support (a Board Champion) • Time commitment from staff • Marketing plan and budget
  15. 15. Gift Acceptance Policy Guidelines Who can negotiate and accept gifts? What approvals are needed? What assets are acceptable- Securities? Real estate? Personal property? What gift purposes are acceptable- e.g. Permanently-restricted gifts for endowment?
  16. 16. Identifying Bequest Prospects What demographic characteristics would you look for?
  17. 17. Identifying Bequest Prospects • Long-term, consistent donor • Age 65+ • Children well-established financially, or no children • Frequently a widow or widower • Strong association with your organization • They think of your organization as part of their extended family • Often not a wealthy individual Also market to key volunteers, current and former trustees, long-term staff
  18. 18. What Motivates a Donor? • Gratitude for economic success • Interest in facilitating positive change • Personal contact • Recognition and appreciation • Influence or control • Commitment to your organization
  19. 19. Focus on Bequests • Write instructions with specific wording to name your organization in a will; Restricted Purpose Bequest: I hereby bequeath to the University of New Haven, a tax-exempt organization, located at 300 Boston Post Road, West Haven, Connecticut 06516, the sum of ________ dollars (or, alternatively, ____% of residual estate, or include a description of property, assets, etc. that you wish to bequeath). It is my wish that this gift be specifically used to support [describe specific intent here – scholarships, athletics, student services, etc.]. If it becomes inappropriate or impossible to accomplish the purpose of the gift as described herein, then the Board of Governors may designate this bequest to be used for the benefit of a substantially similar purpose. If you are considering a Restricted Purpose Bequest, we encourage you or your attorney to contact the University of New Haven’s Office of Advancement so that we can work with you on language that will insure we can meet your intent.
  20. 20. Focus on Bequests • Recommend specifying a percentage of the estate as a bequest rather than a specific amount “so that the beneficiaries of your estate, including charities, will receive the proportion you intend, even though your estate may increase or decrease in value.” • Put bequest wording on your website, and make it available to staff and volunteers who have contact with donors • On annual fund reply cards, include options to inform you of a bequest intention and to request more information
  21. 21. Focus on Bequests • Send periodic mailings and/or email blasts with a reply mechanism; What happens when a donor responds? • Establish a method of tracking prospective legacy donors and potential bequests • Create recognition society; publicize it in your annual report • Consider an annual event for members, and include them in other donor events
  22. 22. Focus on Bequests • Ask each bequest donor to give a testimonial; use testimonials in mailings, newsletters, website • Train fundraising staff (paid and volunteer) to ask loyal donors: “Have you provided for any charities in your estate plans? Would you consider including a bequest for our organization in your estate?”
  23. 23. Website Tips • Make it simple, clear and easy for older individuals to use • Use simple font styles and basic colors • Avoid bright backgrounds with reversed text • Use a minimum font size of 12 point, but know that showed studies show that 14 point is ideal • Avoid multilevel menus and complicated navigation
  24. 24. Health and Retirement Study Data • Federally-funded longitudinal study of 26,000 diverse Americans over the age of 50 • In-depth interviews every two years about income, work, assets, pension plans • Links lifetime responses to distributions after death (10,000 survey participants who have died) Analysis of charitable giving data by Russell James, professor, Texas Tech University, and Jackie Franey, Sales Director, BNY Mellon Wealth Management
  25. 25. 30% 35% 40% 45% 50% 55% 60% 65% 1995/6 1998 2000 2002 2004 2006 2008 2010 2012 (p) 55-64 65-74 Age 75+ US Population Age 55+ Use of Will Alone, By Age Segment Analysis by Russell James and Jackie Franey
  26. 26. Increasing use of living trusts funded during lifetime, despite: • Increasing estate tax exemptions and • Increasing availability of non-probate transfers, such as pay-on-death options
  27. 27. Distributed Estates Where Decedent Reported Having a Written and Witnessed Will (n= 6,063) 16% 38% 10% 19% 11% 6% No will found Will probated Unprobated will; nothing much of value Unprobated will; estate otherwise distributed Unprobated will; trust distributed Unprobated will- other Analysis by Russell James and Jackie Franey
  28. 28. Talk with donors about non-probate transfers, such as: • Beneficiary designations on retirement accounts and other assets • Remainder interests in living trusts
  29. 29. Gift of an IRA as Part of an Estate Plan Securities to UNH IRA and other assets to children $100,000 $1.9 million (Consisting of the $100,000 IRA, plus the home, cash and stock totaling $1.8 million) Income tax $0 $25,000 (Assumed tax bracket of children = 25% x $100,000 equals $25,000) Net $100,000 $1,875,000 Option 1: Give the IRA and other assets to the children and $100,000 in securities to UNH IRA to UNH Real estate, cash and stock to children $100,000 $1.9 million (Consisting of the home, cash and stock) Income tax $0 $0 Net $100,000 $1,900,000 Option 2: Give the IRA to UNH and the cash and stock to the children John, a widower, has a $2 million estate, including a home, securities and cash totaling $1.9 million, and an Individual Retirement Account of $100,000. John wants to leave $1.9 million to his children, and $100,000 to the University of New Haven. John’s estate is exempt from the Federal estate tax, which in 2013 applies to estates larger than $5.25 million. Depending on where John resides, there may be State estate tax considerations.
  30. 30. National Committee on Planned Giving Survey • 89% of all Americans give to charity annually • Only 8% of Americans include a bequest to charity in their will • When polled on the reasons have not planned to leave a gift to charity, they responded: – All assets left to family – Not enough assets – Not familiar with bequests – No one asked them to make a bequest
  31. 31. A person age 65 today has a one in four chance of living until age 90
  32. 32. Take the Long View • A 65-year-old who creates a will in 2013 will revise it at least once; precipitating factors could be the death of a spouse, the birth of grandchildren, tax reforms and health issues • Even if charitable interests are included in the will of a 65-year-old, those charitable interests do not change, and the anticipated amount for charitable bequests remains available, the bequest may not be received for 25 years or more
  33. 33. Steward Your Legacy Donors • Invest time comparable to time spent on top outright donors • Personal visit or phone call at least once/year • Send birthday cards and holiday cards • Include in other donor events • Continue to contact even if they stop annual giving
  34. 34. Legacy Gift Donors Want… • To be appropriately thanked • To be kept informed • To have personal information kept confidential • To be listened to • To be remembered
  35. 35. The Role of the Board Approve the gift acceptance policies Allocate resources for legacy giving program Promote the effort Lead by example
  36. 36. The larger the gift commitment, the more likely that it includes a bequest, a charitable trust, or other legacy gift
  37. 37. Advanced Planned Giving Charitable Gift Annuities • Evaluate your organization’s readiness to accept, manage and market gift annuities • ACGA suggests annuity rates • How will your annuities be invested during the donor’s lifetime? • Who will explain gift annuities to prospective donors, write gift annuity contracts, and communicate with donors and annuitants?
  38. 38. Advanced Planned Giving Charitable Remainder Trusts: • Your organization can receive your remainder interest in a trust without having to be involved in creating or managing the trust • Evaluate whether you want to offer information about planning charitable trusts, either by hiring knowledgeable staff or using a consultant • Evaluate whether your organization has the size and financial sophistication to offer trust management
  39. 39. Advanced Planned Giving Provide training so development officers have a working knowledge of gift planning strategies, and can recognize opportunities when a planned gift will complement a major capital gift
  40. 40. Set Expectations and Measure Success Track the number of revocable gifts (bequests, IRA and insurance beneficiary designations, trust distributions) Set goals related to: • Number of members of your legacy society • Number of prospects who are asked to consider a bequest
  41. 41. Focus on Bequests and Beneficiary Designations!!
  42. 42. Building a Legacy Giving Program for Your Nonprofit Organization Bob Congdon Director of Development University of New Haven 300 Boston Post Road West Haven, CT 06516 203-479-4295 rcongdon@newhaven.edu
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