Benevon Weblog

Planned Giving Tools

Flipping through this month's issue of AARP The Magazine --(what can I say?)--I stumbled across an ad near the back of the magazine with a catchy caption that read "It's Still Philanthropy Even If You Benefit." The article went on to describe the benefits of a Charitable Remainder Trust. In small print at the bottom of the half-page ad it said, "For more information on how to multiply the impact of your assets, visit our web site at www.aarpgift.org." So I did, and I was very impressed by what I found there.

Estate planning is obviously not an easy subject for most people to confront. Most feel that they cannot wade through the alphabet-soup morass of CGA (Charitable Gift Annuity), CRT (Charitable Remainder Trust), CLT (Charitable Lead Trust), PIF (Pooled Income Fund), Bargain Sale, and Bequests without professional help. And yet these vehicles really can be beneficial to both donors and charities alike. Making these tools accessible and understandable to the general public is really the first hurdle.

Planned giving is the integration of personal, financial, and estate planning goals with a person's goals for lifetime or testamentary charitable giving. This Web site leads to a great primer on how these various vehicles work. Click on "What is Estate Planning?" to find a seven-page .pdf file which is a great no-cost first step to getting educated about what is available.

The site doesn't stop there. By next clicking on "Create Your Plan," you will find tools the AARP Foundation has provided to calculate the income and tax benefits for your individual circumstances. The site even has a color slide show to demonstrate what the vehicle may mean to you. You can self-prepare and view a unitrust, annuity trust, gift annuity, or gift and sale.

These are great free tools for getting people educated and focused on how to begin the process of thinking about planned giving. It is a methodology of "something for everyone," from simple to complex, providing for either current or deferred benefits, with lots of flexibility and options.

Ten ways to leave a legacy

We've been looking at financial literacy and planned giving lately, so LEAVE A LEGACY caught our attention with a recent article published by their Western Washington program entitled "Top 10 Things You Can Do to Leave a Legacy." LEAVE A LEGACY is a broad-based community campaign to inspire people to make charitable bequests.

Here are a few of their ideas for ways you can leave a legacy:

• Prepare a will. Only 40% of those who pass away have one. Without a will, you may lose control over your belongings.
• Leave a gift in your will for the non-profit organizations that make a difference in your life. Americans are generous-70% of us give to charity each year. Surprisingly, less than 6% of persons in American households have included non-profits in an estate plan. Imagine the positive impact on our community if everyone made a donation to their favorite nonprofits!
• Leave a specific dollar amount or a percentage of the assets in your will to the non-profits of your choice.

To read the rest of the article, click here.

Teach the children well

Experts agree that early education is the key to instilling philanthropic values. Sarah Wirz, the Seattle Foundation's director of donor services and head of the youth and philanthropy program, says that one need not be retired or wealthy to teach such values to children.

In an "Estate Planning and Charitable Bequests" supplement to the Puget Sound Business Journal, Wirz offers suggestions that are applicable to all parents in an article entitled "Teach the children well":

• Begin a tradition of giving early
• Find a way to make giving a family affair
• Point out ways that philanthropy has helped in day-to-day lives
• Don't be afraid to answer a child's tough questions about things like homelessness or sickness
• Point out the ways the community is acting to help people
• Provide a good role model with your own philanthropy
• Incorporate giving into the holidays
• Let the kids help choose the charities the family donates to

The article concludes by saying, "It is due diligence child style. It's also an advanced tutorial in the simple childhood lesson of sharing." We agree. If we begin a tradition of giving early in our children's lives, that awareness will inspire them to involve themselves in charitable endeavors.

The perils of podcasting

We try to disseminate our ideas in as many different medias as possible - blog, electronic newsletter,  Web site, books and DVDs, conference calls, PowerPoint presentations, streaming video (upcoming), and podcasts (click here for our latest). So it was interesting for us to read about the fundraising dilemma faced by National Public Radio around podcasting in the Wired article "Podcasting Roils NPR Fund Raising"

According to Steve Freiss, the article's author, by loading up an MP3 player with various National Public Radio programs available in whole or in part for free as podcasts, a listener can now completely avoid NPR's membership drive, which some consider a semi-annual annoyance.

"That kind of thinking reflects both the blessing and curse presented by podcasting," writes Freiss. "On the upside, the medium is expanding NPR's overall audience and boosting some shows previously unavailable in many markets…Yet, at the same time, it can turn ears away from local stations-possibly for good-which could be a problem for affiliates that rely heavily upon member donations to pay the dues to air some of the same programming listeners can now get free as MP3s."

This "threat of bypass" is a real concern, and the need for a new business model is an interesting challenge for NPR. Many ideas have been proposed, such as selling sponsorships to podcasts either en masse on a revenue-sharing basis or based on the development of good new content; having agreements that radio shows won't be available until they've aired on local stations first; or charging a small fee for podcasts to create a revenue stream.

Ruth Seymour, general manager of KCRW in Santa Monica, California, sees podcasting as an opportunity rather than a problem. With podcasting, she says, a station's good programming can take that station out into the world in a way that was never before possible, and this can increase underwriters for that station. Stations like KCRW seem to understand and relate to these new market dynamics.

We agree with this view of podcasting as an opportunity. Podcasts are a great way to cultivate people to NPR and grow their business; we believe loyal listeners/donors will want to help. It will be interesting to see the wide range of new business models that come into existence to deal with podcasting and other "bypass issues" as our technology changes the way we receive and relate to the brave new world of "infoedutainment."

Podcast on Major Gifts

In a new podcast recently included in the Raising More Money E-New$, Terry Axelrod, Raising More Money founder and CEO, talks about how the Raising More Money Model facilitates asking for major gifts. Listen to her major gifts podcast to learn how this mission-based approach uses a process of personalized cultivation to make asking for major gifts an easy and natural process.

Questioning conventional wisdom about boards

Nearly 2,000 nonprofit executive directors in eight cities completed the survey for Daring to Lead 2006, a joint project of CompassPoint Nonprofit Services, a consulting, research, and training organization based in the San Francisco Bay area, and the Meyer Foundation, one of Washington D.C.'s oldest private grantmaking foundations. 

The survey looked at how nonprofit executive leadership has changed over the past five years, whether executive turnover was escalating, and what factors contributed to executive director success, failure, and burnout.

Among the findings:

• Three quarters of those executives polled don't plan on being in their current jobs five years from now, and 9% are currently in the process of leaving.
• Frustrations with boards of directors and institutional funders, lack of management and administrative support, and below-market compensation contribute to executive burnout;
• Executives believe they make significant financial sacrifices to lead nonprofit organizations;
• Bench strength, diversity, and competition are critical factors in finding future leaders; and
• Executives are concerned with their organizations' sustainability and seek new skills and strategies especially in the areas of fundraising and finance.

The study's conclusion and recommendation to capacity builders includes this refreshing bit of new thinking:

"Question conventional wisdom about boards. Individuals and organizations that provide training and consulting for nonprofits may be setting up executives for ongoing frustration by promoting unrealistic and even misguided expectations for boards. For example, is it reasonable and appropriate to expect "good" boards to be fundraising boards? In real life, boards may do a lot of fundraising, a little, or none.  Executives need help in figuring out what revenue generation role their boards are capable of and planning accordingly."

At Raising More Money, we train and coach groups on how to break the conventional approach to fundraising by boards, and we believe other training and consulting firms should do likewise. We hope this report will get more nonprofit executives and capacity builders to shift their thinking as well.

Financial literacy part 2

As if we need more proof of the need for financial literacy, Worth magazine  reports in its April issue that in a survey conducted by the Consumer Federation of America and the Financial Planning Association, 21% of Americans said that winning the lottery would be the most PRACTICAL strategy for accumulating wealth. This, despite the fact that the odds of winning the Washington State Lottery, (www.webmath.com) for example, are 1 in 13,000,000!! Now, we know that there are 300 million people in the US, which means according to the survey there are 60,000,000 of these financial mavens among us who believe in this PRACTICAL approach to wealth building.

Here are some other odds for the sake of comparison:

• You have about a 1 in 2,000,000 chance of being struck by lightning.
• A pregnant woman has a 1 in 705,000 chance of giving birth to quadruplets.
• Someone eating an oyster has a 1 in 12,000 chance of finding a pearl inside of it.

Even Leonardo da Vinci noted the pitfalls of this approach to accumulating wealth when he said, "He who wishes to be rich in a day will be hanged in a year."

Or for that matter, Fran Lebowitz, who quipped, "I've done the calculation and your chances of winning the lottery are identical whether you play or not."

(To read our first article on financial literacy, please click here.)

The Joy of Giving Back

We often tell our alumni groups that you never know who's going to be generous. And we are constantly impressed by tales of generosity, but the story of Sue Cobley , a mother of five in Boise, Idaho, truly amazed us. Her story first appeared in Ladies' Home Journal in October 2005 and then was picked up by MSN.

Cobley had been living a comfortable life, but after a divorce from an abusive husband who was using illegal drugs, she found herself homeless in a matter of weeks. Her husband refused to pay alimony or child support, so she and her kids spent the next eighteen months living in motels, her car, and shelters.

One night in 1996, Cobley was in a supermarket and saw the deli clerk throw ten leftover roasted chickens in the trash, and she asked if she could donate them to the homeless. She then asked other Boise restaurants to let her donate their leftovers, too. Even though she was the one in crisis, she thought if her family could help others it would take their mind off their situation, so they got into a routine. She cleaned homes during the day, and then she and her children would deliver food in the evenings. Eventually, an Idaho food bank took over her program, called it "Chefs to the Rescue," and hired her to run it.

Last March, Harlequin, the romance-book publisher, named Cobley a winner in a contest celebrating ordinary women who have made extraordinary contributions.

Documentary on Hand in Hand Ministries

Barry Bernson, Emmy award-winning journalist and co-anchor of Fox in the Morning in Louisville, narrates a documentary on Hand in Hand Ministries, one of the groups in our Five-Year Sustainable Funding Program. Hand in Hand Ministries, based in Louisville, works in some of the neediest corners of the world providing life's essentials for the poorest of the poor. The documentary "Heaven and Hell" focuses on their project in a 38-acre garbage dump in Nicaragua. The documentary aired March 30 and 31 on WDRB Fox 41 in Louisville.

Legacy Planning vs. Estate Planning

We subscribe to a free electronic newsletter called the "Wealth Management Letter" published for financial advisors through Registered Rep Magazine. A recent story caught our attention regarding a new educational trend for advisors who are trying to help older investors with their financial affairs. The opportunity that lies in the vast wealth transfer underway makes this ever more important for the profession of financial advising as a source of new potential business.

The subjects covered in this new educational area include financial topics such as long-term care and estate planning as well as courses on the psychology of aging. Organizations such as the American Institute of Financial Gerontology and The American College offer certification and designation for this type of study. There is also The Society of Certified Senior Advisors and the Society of Certified Retirement Financial Advisors which both offer designations.

Unfortunately, we don't see any mention of legacy planning--that process by which people can determine what Paul Schervish of Boston College refers to as their "moral biography"--the way individuals conscientiously combine two elements in daily life: personal capacity and moral compass. As Schervish says, "A moral biography is the confluence of capacity and character. It is the spiritual process of self-examination that goes well beyond portfolio analysis or financial tools."

There is no doubt that a marketing opportunity exists in the aging demographic. It is the fastest-growing segment of our population. We understand that these advisor education programs are about having professional financial advisors better able to serve and market to this age demographic. To an estate planner, a charitable trust is only as good as the tax advantage it provides. Estate planners currently see no money to be made in taking the time to counsel clients on the legacies they want to leave.

Perhaps when people begin to value the satisfaction of discerning the difference they want to make in their lives and are willing to pay for that counsel, the trend to provide advice to this aging group will ultimately be used to better counsel them in the full range of philanthropic possibilities and allow them the satisfaction of determining their moral biographies.