Never Let Donors Drown in Planned Giving

Wednesday, August 5th, 2009

The American Council Gift Annuities (ACGA) recommends that people invest on a portfolio with 5% cash, 40% equities, and 55% bonds.  Individuals who are looking for security are more open to CGA (charitable gift annuities) because there’s stock market volatility.  In the meantime, this market may be wreaking havoc on charity’s annuity reserves, where a portion is usually invested in equities.

The senior vice president of The Sharpe Group located in Memphis. Tennessee, John Jensen, is expecting more nonprofit boards to look at annuity reinsurance.  He said “A charity locks whatever losses it had.  But is it smarter to do this?  You wouldn’t reinsure if you’re thinking that the market would come back, but from a standpoint of risk management, you wouldn’t want that exposure, or you don’t think the market is coming back, then you reinsure.”  

“What we’re hearing is that charities are so nervous and now they’re doing risk assessments and looking at gift annuity programs,” said Tanya Howe Johnson who’s the CEO and president of PPP (Partnership for Philanthropic Planning) in Indianapolis.  She further added, “It might become popular to reinsure a gift annuity which is something that nonprofits would do occasionally.”

A large pool consisting of gift annuities minimizes the charity risk.  Therefore, if one gift annuity would go under water, the more charity risk would be spread out if the annuity pool is larger.   

Tags: ACGA, annuity, CEO, CGA, charity, equities, John Jensen, Memphis, Planned Giving, PPP, risk, Tanya Howe Johnson, Tennessee, The Sharpe Group
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Planned Giving: A Noble Goal

Monday, July 13th, 2009

Jim Taylor gave away his house to charity.  He’s not rich, but he did not become homeless too.  This 83-year-old man continues to live in their rambler (4-bedroom), that he bought in 1977 when he and his late wife moved to Onalaska.  He retired in 1990 as Dairyland Power’s head, and said that he has built a nest egg big enough to be comfortable (although not rich).  Although they own their home in Onalaska, their children were already grown and with their own homes as well.

Since Taylor and his wife received good care from Gundersen Lutheran, they now wanted to contribute something to the hospital.  So what they did was call up the Medical Foundation and asked them if they need a house.

The executive director of the foundation, Phil Schumacher, explained that the Taylors can live in the house as long as they want.  Then, after their death, the foundation will own the house and can sell it as their property.  This planned giving will not affect the estate taxes of Taylor or be tied in probate, so their kids don’t need to worry about anything.

Meanwhile, Taylor enjoys a good tax deduction and the fulfillment that he has helped out an organization that he loves.  As for his heirs, he said, “They will inherit the rest of my life savings, or what’s left of it.”    

Tags: charity, Dairyland Power, estate taxes, Gundersen Lutheran, hospital, Jim Taylor, Medical Foundation, Onalaska, Phil Schumacher, Planned Giving, probate
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Both Donor and Nonprofit Benefits from Planned Giving

Saturday, July 11th, 2009

Since charitable giving is down, more nonprofits are using and further reducing their endowments, which makes a bad situation worse.  But there’s one type of giving that has not reached its full potential - it’s planned giving, which is another way that nonprofits raise money aside from grants and donations.  However, fundraising staff and board members usually shy away from programs pertaining to planned giving because it looks more complicated compared to other programs.

According to Lorri Greif, an instructor for webinars on planned giving, “These programs are win-win both for the donor and the nonprofit.  Donors can make larger gifts to the charity they care about and sometimes increase their tax advantages and income, which will enhance their financial situation.  Then charities, on the same token, would receive more assets than before.”  She added, “Often, this would create greater loyalty and stronger relationships between the benefiting nonprofit organizations and contributors.  Furthermore, it could lead to more volunteerism and bigger gifts to the fundraising campaigns of the charity.”

So how will you know if a planned giving program is the right one for your nonprofit?  Your organization executives and board members should be looking for an answer to this question. They have to weigh the pros and cons of creating this program as well as seeking advice from qualified professionals.

Tags: charitable giving, charity, donations, donor, grants, Lorri Greif, nonprofit, Planned Giving
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Crackdown on Fraudulent Charities

Thursday, June 25th, 2009

Federal Trade Commission (FTC) recently announced their campaign on “Operation False Charity.”  This effort will crack down fraudulent charities, which actually lies in the hands of FTC’s partners in this effort - 61 law enforcers, Secretaries of State, and Attorney Generals in 49 states and Columbia district.

“The problem of having fraudulent charities is very real,” said Tony Martignetti, managing director of a New York-based consultancy group called Martignetti Planned Giving Advisors, LLC.  “However, it’s harder to spot these fraudulent charities when 90% of them fund-raising in Florida, New York, California, or other major states are not even registered there,” he added.

Non-profits are controlling about $1.5 trillion (or 10%) of the U.S. economy.  “It will only be a matter of time before state and federal agencies catch up to non-profit sector and combat fraud.  Charity licensing and registration throughout 50 states has been a regulatory morass most non-profits have avoided.  Enforcement by states is nearly non-existent.  In fact, many states don’t even have penalties for noncompliance.” Martignetti noted.

The new IRS Form 990, which is signed by the non-profit’s officer under a penalty of perjury, makes it illegal for nonprofits to avoid state registrations since it calls for a record of states where it’s required to file a copy of Form 990.

Tags: attorney generals, charities, charity, FTC, non-profits, Planned Giving, Tony Martignetti
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