Friday, February 14, 2014

At the keyboard, or at the table?

Demographics, the economy and public policy may change, and all will impact philanthropy, but there will always be a job for gift planners who can use the tools found in planned gift software. Many nonprofits need a person who can model charitable options for any donor, however small, who wants such information. For-profits, like the larger banks, and some community foundations and large single issue charities, are hiring such technicians. I hope the trend continues. But the emerging job, and highest paid job, is for the gift planner who can also convene a team to place the tools within an overall legacy plan, with the help of the client/donor’s other advisors.

As I see it, the features you find in the popular software systems are tactics, or tools, or strategies—not plans. They are constituents of a larger estate plan, retirement plan, business exit plan, financial plan or legacy plan. The planning process per se (as taught in the financial services field) elicits donor/client goals, gathers appropriate facts (balance sheet, income statement, existing legal arrangements) and seeks to achieve optimal outcomes for self, family, and community. To achieve that involves many tools—some charitable, some not charitable—coordinated together, as part of an overall plan. Here is a daunting example from Dave Holaday.

Advisors struggle to elicit high and noble client motivation, and to connect the dollars from charitable tools, like DAF, Foundation, CLT, CRT, to specific outcomes via specific gift agreements and specific programs at specific nonprofits. You will note how non-specific the massive Holaday plan is about charitable outcomes. What is planned in his example is tax; the tool used is charitable in the end, but there is no specific charitable purpose and no connections as far as I can see to a specific program at any specific charity. This is planning for “the charity of your choice,” as opposed to specific impact. To factor such impact into the plan, the estate planner needs gift planner involvement.

Who will convene the team? Could be the estate planner, could be the gift planner, but the net result is what Holaday has done here, as daunting as that is, plus more. The more part, in this case, is planning how the big money in the foundation will go to work for the community.

The vision of planning accomplished by a team is essentially the vision outlined in the 2008 PPP white paper on The Future of Gift Planning. I believe it is the future of planning for the highest capacity donors. Gift planners working for charities need technical expertise and an appetite for negotiation and collaboration to sit at that table. 

About Phil Cubeta

As the Sallie B. and William B. Wallace Chair in Philanthropy at The American College, Phil Cubeta, CLU®, ChFC®, MSFS, CAP® is responsible for the Chartered Advisor in Philanthropy® (CAP®) curriculum.

Prior to joining The American College, Phil worked for New York Life Insurance Company in a variety of roles in training, instructional design, financial planning, and advanced underwriting. From 1991 to 1993, he headed up New York Life's Charitable Giving Network of Agents. From 1995 to 2008, he served as Chief of Staff for The Nautilus Group, a service of New York Life Insurance Company providing estate, business, and philanthropic strategies to affluent clients through 200 of the company's top agents.

Phil's original training was in English Literature, Williams College, BA; Philosophy and Psychology, Oxford University, MA; and English Language and Literature, Yale, MA, M.Phil.

Phil served for 10 years on the Education Committee of the Dallas Social Venture Partners and is a Past-President of the Dallas Council of Partnership for Philanthropic Planning (formerly NCPG). He is on the Board of Interfaith Worker Justice and on the Professional Advisory Committee for Inspired Legacies. Phil also serves on the board of Advisors in Philanthropy. Essays by Phil on philanthropy have appeared in Tracy Gary's Inspired Legacies, Your Step by Step Guide to Creating a Giving Plan and Leaving a Legacy (Wiley and Sons: 2008); H. Peter Karoff, The World We Want: New Dimensions in Philanthropy and Social Change (Altimira Press: 2007); and Amy Kass, Doing Well Doing Good: Readings for Thoughtful Philanthropists (Indiana University Press: 2008). Phil has been quoted, or been the subject of articles, in The New York Times, The Journal of Gift Planning, Lifestyles Magazine, Financial Planning, and the Financial Times.

Thursday, January 30, 2014

So What Does the Future Hold?

As the new year began, a question was posed on the PPP Leadership Institute listserv:  How do we see the future for gift planning? A lively discussion ensued, as will happen when a question like that is posed to a bunch of professionals who are passionate about philanthropy and, admittedly, perhaps a bit proprietary about this field we call charitable gift planning. There was mention of blended gifts (a combination of outright and deferred), being good stewards of our organizations’ long-term interests, and the pendulum-swing from separate planned giving departments in charities, to combined major and planned gift departments, back to gift planning specialists. And that was before we even got into the issues of the economy and financial markets. On that one, the Magic Eight Ball says, “The answer is unclear.” Indeed.

To me, the question is more about the future of philanthropy and the role of what we have been calling “planned gifts” in that future. My mantra has always been that a planned gift is simply a specially structured major gift that helps a donor fulfill both charitable and personal financial goals. If that’s the case, then major and planned gifts are inherently integrated. It is also a bit of the philosophy behind the PPP mission: Charitable giving made most meaningful.

In the early days of gift planning, those special techniques we called planned gifts – gift annuities, pooled income funds (remember those?), charitable remainder trusts in their many variations, and charitable lead trusts – were almost exclusively the purview of specialists on staff at charitable organizations, especially universities and colleges, major health care institutions, and large national organizations. Charitable bequests were more widely understood and often discussed in the offices of estate planning attorneys, but not too many of those practitioners were suggesting these other tools for fulfilling clients’ goals.

A lot has changed in the past 20 years. Many more estate, tax, and financial advisors are very familiar with, in some cases expert in, various charitable techniques.  There are a number of planned gifts being crafted without the involvement or even the awareness of the charities they will benefit. And more and more development professionals know at least something about planned gifts, and many small organizations effectively incorporate them into their fundraising efforts. Even if they’re not quite sure what it is, just about every person of significant wealth who is middle-aged or older has at least heard of a charitable remainder trust.  Perhaps they don’t all need one, but their eyes may be open to the possibilities of long-term charitable planning.

I still think there is a place for the gift planning specialist at the not-for-profit organization, someone who knows more than the average bear about these special techniques and about the tax and financial planning structures that underpin their potential. But if those people are simply advisors, sitting in an office cranking out gift annuity illustrations, reading IRS bulletins, and waiting for their colleagues to call, that organization is going to miss out on a lot of great revenue – and their donors are not going to fulfill their greatest philanthropic potential.

Fortunately, that isn’t happening much anymore, at least as far as I can see. Development professionals, whether generalists or major gift officers, are eager to know more about different giving techniques. Universities and other institutions are including planned gifts in their multi-year fundraising campaigns and developing gift counting policies that appropriately include and recognize all gifts. And once a major gift professional is part of a team helping a donor make a gift that includes both an outright contribution and one that is part of her long-term plan, that gift officer is a planned giving advocate for life – as is the gift planning specialist who just helped bring in current revenue for a cause he is passionate about.

If all development professionals, non-profit CEOs, and donor advisors think of planned gifts as specially structured major gifts that help donors fulfill both charitable and personal financial goals, the future is bright. So bright, in fact, we might have to wear shades.

About Shari Fox

In her role as Assistant Vice President for Development at the University of Michigan, Shari Fox has senior responsibility for the Office of Gift Planning, Stewardship and Donor Relations, the faculty and staff campaign, and several constituent fundraising programs.  Before joining the University of Michigan in 2006, Shari was Director of Gift Planning with The University of Cincinnati Foundation for almost four years.  Prior to joining UC, Shari led all development and community relations efforts for Beech Acres, a 160-year old child-focused family service agency in Cincinnati, served as Endowment Director for Jewish Federation of Cincinnati, and worked in endowment and planned gift administration at Fifth Third Bank.

Shari is a past chair and former board member of the Partnership for Philanthropic Planning and a past president of the Greater Cincinnati Planned Giving Council. She is currently on the faculty of the Planned Giving Institute at University of Richmond and has served on the Editorial Advisory Board for the monthly newsletter Planned Giving Today.  Shari is currently an active member of the Planned Giving Roundtable of Southeast Michigan.  

Shari received her Bachelor of Science in Business Administration with a major in Finance from Miami University and her M.B.A. with a concentration in Management from Xavier University.

Shari enjoys travel and reading and is a closet writer, penning personal essays, memoir, and opinion editorials, perhaps for publication in the future.

Thursday, January 9, 2014

The Perpetual Campaign

We’ve been talking to PPP members around the country about how their organizations treat planned gifts during capital campaigns. One gift planner working for a university in the final year of a five-year, $1 billion campaign said he expects to transition immediately into the silent phase of the next campaign. It’s a high energy, high stress, production-oriented atmosphere for everyone in the development operation, and especially for gift planners, whose “production” doesn’t easily fit in a time-limited box. Is the perpetual campaign good or bad for planned giving?

The Pros
  • There’s a difference between Sunday dinner and a Thanksgiving feast, even if the menu is essentially the same. It’s just easier to get the “family” together and excited in the atmosphere of the campaign.
  • It’s a reason to revisit current donors and share information about new goals and initiatives. Plain vanilla stewardship calls are boring by comparison.
  • It’s an opportunity to “harvest” planned gifts that have been in process. Donors have a reason to finalize arrangements they’ve been considering. They might also document the value of previously undocumented gifts, if that allows them to be counted in the campaign.
  • Metrics! Planned gifts often contribute 20% or more of the campaign total. They finally hit the radar of the high level people responsible for the campaign. Perhaps the endowment focus will increase in the next campaign.

The Cons
  • Metrics! Gift planners have no control over how planned gifts will be counted, and most organizations still publicize a single-number goal. Why bother to pursue gifts that won’t be counted toward the goal? In the perpetual campaign, uncounted gifts go un-pursued for many years.
  • Planned gift donors don’t care that much about campaigns—they certainly don’t intend to die during the campaign period. The perpetual campaign imposes short-term focus on donors who are thinking about long-term legacy.
  • Peer pressure—if Next Door University’s campaign raised $7 million, why can’t we? (…even though we just completed a $6 million campaign last year.)
  • Media scrutiny—inquiring reporters want to know how much of that money you really have in hand at the end of the campaign. If they don’t understand the real value of planned gifts to the long-term stability of the organization, they may accuse you of overstating the success of the campaign.

Are you in perpetual campaign mode? 

What are the pros and cons for gift planning at your organization? 

Share your own experience and opinions by responding to our survey. Your input is completely anonymous, and questions should take no more than 10 minutes to answer. Click here to access the survey.

About Barbara Yeager

Barbara Yeager is the director of operations for PPP. She has worked for the organization since 1991. Her responsibilities include managing research projects for the national organization and for councils, managing education and networking programs for the National Conference on Philanthropic Planning, the Council Conversations series, and the Leadership Institute. She moderates groups in the PPP e-community and works with writers to develop original content for publication by PPP. Barbara has a master’s degree in library and information science and worked as a public librarian and as a technical writer and systems analyst before joining the PPP staff. In her community, she is a Girl Scout leader, a community gardener and volunteers as a costumer for community theater groups.