Planned Giving Marketing Impacts Legal Ruling

Wednesday, August 5th, 2009

There was an opinion issued by U.S. Court of Appeals involving Robert Dillie in a case that charged him with operating a fraudulent foundation from 1996 to 2001.  The foundation was actually in a ponzi scheme issuing $55 million gift annuities to more than 400 donors - these were sold through investment advisers receiving commissions on each sale.  The opinion was issued this past June and M. Dillie is now serving a prison sentence of 121 months.  However, the legal fallout from the operation lives on.

Due to return of commissions ruled by the lower court, investment advisors sued the receiver who’s assigned to recover the remaining funds and repay defrauded donors.  However, Federal Court of Appeals concurred with the rulings of the lower court and rejected the arguments of the investment advisers’ lawyer.

Truly, the underlying facts of this case were unique.  And the ruling’s significance is how the gift annuities were viewed by the Court in light of marketing techniques used.  When the court looked at various promotional advertisements used, it was clear that the gift annuities were actually investment contracts.  Therefore, charities should be careful in marketing their gift annuities or other life income vehicles.  Make sure to emphasize that these are gifts first and foremost.

Tags: commissions, court, donors, foundation, gift annuities, lawyer, Planned Giving, Robert Dillie, U.S. Court of Appeals
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Options in Planned Giving

Sunday, June 21st, 2009

The most common vehicles or types of planned giving are gift annuities, charitable bequests, charitable lead trusts, charitable remainder trusts, and beneficiary designations.

• 1. Gift Annuities - to establish this, you need to contribute assets or funds to a nonprofit organization. In turn, that organization will give you fixed annuity payments from its general assets. Therefore, a charitable gift annuity can provide you with lifetime income.
• 2. Charitable Bequests - used to describe anything that you leave or give to charity. These may come from a living trust or a will. Anybody (even those with small estate) can arrange a charitable bequest.
• 3. Charitable Lead Trusts - you can designate a charity that will receive regular, fixed amount for a specified time period coming from a trust. Then, at the end of that period, the remainder of the trust can pass either to your designated heirs or other beneficiaries.
• 4. Charitable Remainder Trusts - this allows you or your beneficiaries to receive income coming from trust during your lifetime or a period not exceeding 20 years. The balance of this trust can be transferred to any charity you select at the end of that period.
• 5. Beneficiary Designations - when you designate a charity as beneficiary of your retirement assets or life insurance, you could enjoy certain tax advantages and flexibility in your planned giving.

Tags: beneficiary designations, charitable bequests, charitable lead trusts, charitable remainder trusts, gift annuities, Planned Giving
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