A Planned Giving Program Primer · A Planned Giving Program Primer April 2, 2019. What is Planned...
Transcript of A Planned Giving Program Primer · A Planned Giving Program Primer April 2, 2019. What is Planned...
A Planned Giving Program Primer
April 2, 2019
What is Planned Giving?
• Part of your overall development plan but expands
your focus to include deferred or future gifts
• Planned gifts have some complexities and unique
considerations • More planning required
• Involvement of advisors and other professionals
• Part of strategic philanthropy – seeing the whole
donor, their full philanthropic plan
Common Planned Giving Vehicles
• Bequests – gifts in wills
• Gifts of publicly-traded securities
• Life Insurance
• Retirement Assets (RRSPs/RRIFs)
• Charitable Remainder Trusts
• Gifts of Residual Interests
• Charitable Gift Annuities
Why Create a Planned Giving Program?• Bequests are a great way for average people to leave
above average gifts!
• Plus, bequests are one of the least expensive gift vehicles
for organizations and make up the majority of planned
gifts
• Committed current donors may already have included
your organization in their estate plans
• Help build the long-term sustainability of your
organization
• Gain a fuller understanding of your donors’ philanthropic
interests and plans while increasing their giving options
Are You Ready for Planned Giving?
• Assess your organization’s readiness
• e.g. maturity level
• e.g. reputation
• Review your base of support
• Is your leadership willing to invest in Planned
Giving?
• Does your organization have the capacity to
administer a Planned Giving program?
• Obtain board approval
• Appoint a planned giving committee
• Develop policies and guidelines
• Identify types of gifts to accept
• Develop a marketing plan
• Know your audience
• Importance of Stewardship
Steps to create a Planned Giving Program
Making the Case to your Board
• Planned Giving programs allow for long term
planning and to build sustainability
• Donors often have a greater capacity to give at
death than during their lifetimes
• Opportunity for donors to self identify
• Once identified, you can thank donors while
they are still living, which can encourage more
current giving
• Start with a modest planned giving program
Structures, Policies and Supports
• Ultimately, your board is responsible for
planned giving, gift acceptance and conditions
• Decide types of gifts that will be accepted
• Identify who can approve planned gifts
• Build internal expertise
• Identify external supports e.g. financial advisors
• Consider committee structure
• Budget for professional guidance
Committee Considerations:
Committee roles• Oversees the planned giving program and the work
of staff on behalf of the board,
• Provides advice and guidance to staff,
• Advocates for the program
Staff roles• Hire additional or responsibility of an existing staff
person to devote a portion of their time to program
• Limited scope for the program is recommended at
least initially, focus on outright gifts and bequests.
Gift Acceptance Policy:• Important tool to anticipate and avoid legal and ethical issues
• What conditions or restrictions are acceptable to your
organization?
• Almost all charities accept unrestricted bequests and
unrestricted marketable securities
• Some charities do not accept more complicated planned
gifts (e.g. annuities)
• Consider your capacity (internal and external)
• Reviewed by an expert and adopted by your board of
directors
Additional policies and guidelines
to consider
• Code of Ethics
o CAGP resource
• Bill of rights
o AFP resource
• Working with people who may be in a vulnerable
circumstance
• Best practice to meet in pairs if possible (protects the
donor and your organization)
Types of Planned Gifts
Bequests - Some considerations
• Gift is deferred – commitment might be made
but you will not receive the gift for many years
• Need file protocols
• Manage leadership expectations
• donor doesn’t see impact of their gift
• Cannot thank donor if wait until gift is received
Bequests - Some considerations
• Bequests are largely unknown
• Gift is revocable – donor can change their mind
• No current tax benefit to donor
→ Create opportunity for donors to tell you
→ Create opportunity to engage them now
Types of Bequests
Specific: A distribution of a specific dollar amount to a
specific charity
Conditional: A distribution made after other conditions or
directions are met
Residual: A distribution made after other payments, debts
and gifts are fulfilled
Designated: A gift directed to a specific area or program
Undesignated: A gift that is not directed to a specific area or
program
Sample Will Wording
Undesignated/unrestricted – either specific or
residual
I give The Winnipeg Foundation the sum of $ ____ [specific] or ____%
or the residue of my estate [residual] to establish the _____ Fund. It is
my wish that this gift be held in perpetuity and that the annual
grantmaking therefrom as determined by the Spending Policy of The
Winnipeg Foundation shall be used for general purposes at the
discretion of The Foundation’s Directors.
Estate Administration
• Learn the administration process
• Even once realized an estate gift can take more
than a year to be fully finalized
• keep good files and records
• Review mail or other communication
immediately -> time sensitive deadlines
• Invest in legal counsel for your first bequest and
any complicated gifts
Estate Administration
• Know information you are entitled to as beneficiary– Specific gifts: request copy of Will or at least provision
– Residual: request copy of the Will, Inventory of Assets, full and
final accounting
• Releases – release of rights, not just payment– Know who can sign for your organization
– Interim vs. final
– Review carefully and seek legal advice if you do not understand
• Signing off on fees (lawyer and executor)– As beneficiary your consent to fees charged is required
– Review rules for what lawyers and executors are allowed to charge
Did you know?
• A bequest can be made to The Winnipeg Foundation and
directed to your Agency Fund in the Will
• If bequest is being directed to an Agency Fund here we
can record the commitment and include your donor in
our stewardship efforts
• If bequest is coming directly here in the Will we also take
care of all estate administration
• Questions about responding to inquiries from donors?
Contact our team and we can help you respond!
Gifts of Securities
• Publicly-traded securities
• NB: shares in private companies are treated differently under the
Income Tax Act and by CRA
• Donor may transfer the shares themselves (in kind)
to your charity and receive a tax receipt for the
fully appreciated value of their gift without paying
capital gains tax
• Receipt value is based on the closing share price
on date of transfer
Benefits to the DonorSell Shares &
Donate Cash
Donate Shares
Directly
Fair Market Value $10,000 $10,000
Cost Basis $2,000 $2,000
Capital Gain $8,000 $8,000
Taxable Gain $4,000 (50%) $0 (0 %)
Tax credit (assuming
25%)
$2,500 $2,500
Tax on gain (at 50%) $2,000 $0
Tax Savings $500 $2,500
Attractive option for:
• Investors of any age who have appreciated stocks or
securities and wish to donate them
• Donors who wish to simplify their affairs by divesting
themselves of some of their holdings
• Estates - transfer securities instead of liquidating
investments and making a cash gift*
• Donors who intend to leave a bequest may consider
advancing their gift through a gift of securities
*This option may depend on how the Will is worded. Good to raise with
a donor before they see their lawyer to draft their Will.
Gifts of Securities – considerations
• Requires a brokerage account
• Work with broker to develop transfer process,
including transfer forms
• Have a staff point person
• Provide information on your website.
• Be aware of timelines
• NB: Donors can transfer publicly-traded securities
electronically to your Agency Fund at The Winnipeg
Foundation via our broker at no extra cost
Life Insurance:
• Understand the 3 Ps – proceeds, policy and
premiums
• Gifting the Proceeds vs. the Policy
• Gift of Proceeds – charity is named to receive
the proceeds paid out on death• Revocable designation
• Donor retains control and ownership
• Receipt for the proceeds once received
Life Insurance• Gift of Policy – charity becomes the owner of the
policy and the beneficiary of the proceeds
• New policy – typically receipt future premium payments
annually
• Existing Policy – typically receipt for cash surrender value
of policy at time of ownership transfer plus any future
annual premiums paid
• Always review the policy prior to acceptance
• Premiums - obtain confirmation from issuer (e.g. copy of
statement or receipt) of amount and who paid
Life Insurance
As a general rule:
• If charity named as beneficiary only -> proceeds
are a gift. Tax receipt issued to owner of policy (i.e.
the estate)
• If charity owns the policy -> proceeds are not a
gift. No tax receipt
(Receipt was issued when the policy was donated and/or for
annual premiums)
Retirement Assets
• Retirement plans (RRSPs/RRIFs) may be
donated
• By beneficiary designation
– Revocable during lifetime
– Receipt proceeds when received
• By bequest
– If there is no beneficiary designated, retirement plan
assets becomes part of estate assets and should be
dealt with in Will
Marketing your program:
• Create a fact sheet that explains planned giving
• Provide information on the vehicles that your
organization accepts
• Provide testimonials, contact information and
sample bequest wording
• Ensure your correct legal name and charitable
registration number is clearly listed on your
website
Marketing your program:
• Use existing publications
• Reminders at events
• Add a check box on pledge cards
• Signatures on email messages “Would you like
more information on how to include a gift in your
will?”
Your Audience:
• Current and former employees
• Board members
• Longtime donors
• Donors, friends, retirees, volunteers or past
volunteers of your organization
o Particularly in the age 45 – 55
o Donors thinking of retirement as estate plans
are often revisited
Stewardship:Ongoing in Planned Giving cycle:
• Thank and appropriately acknowledge donorso Personal notes
o Cards
o Phone calls
o Visits
• Ensure gifts are used as intended
• Maintain confidentiality
• Demonstrate impact
o Build awareness of organizational needs
o Share stories based on donor interest
Resources• Community Foundations of Canada – 6 Gift Options for Canadian
Donors (https://www.communityfoundations.ca/guide/professional-
advisors-eresource/six-gift-options-for-canadian-donors/)
• CAGP Code of Ethics (https://www.cagp-acpdp.org/en/code-of-ethics)
• AFP Bill of Rights (https://www.spelman.edu/docs/giving-docs/donor-
bill-of-rights.pdf)
• Community Legal and Education (CLEA)- Wills and Estates
(https://www.communitylegal.mb.ca/unrepresented-litigants/wills-and-estates/)
• Public Guardian and Trustee of Manitoba - “Deceased Estate
Handbook”(https://www.gov.mb.ca/publictrustee/pdf/deceased_estate_handbook.en.pdf)
FindyourBecause.org
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