Blended Gift Strategies: Accomplishing Philanthropic Goals Today, Tomorow and in the Future!
DFW Philanthropy in Action Conference
Cathy R. Sheffield, MBA, CAP®, CFRE, CSPG
DFW Philanthropy in Action Conference
Today we will…
• Define the “Blended Gift”
• Discuss why we should use a Blended
Gift Strategy?
• Review a few Case Studies
• Highlight some Gift Talking Points
• Q & A
DFW Philanthropy in Action Conference
Defining the “Blended Gift”
Something Now
Something In Between
Something Later
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Blended Gift Combinations
Something Later
• Will/Trust
• IRA/Retirement Plan
• Life Insurance
• Other Beneficiary
Designations
Something Now
• Cash
• Securities
• Real Estate
• Art & Collectibles
• Personal Property
Something In Between
• Gift Annuities
• CRUTs
• CRATs
• Bargain Sale
• Retained Life
DFW Philanthropy in Action Conference
Why Donors Like Blended Gifts
• Only some can make the entire gift outright with no strings attached (Capacity Donors)
• Some want lifetime access to principal & income (Bequests)
• Some will donate principal if they receive the income (CGAs & CRTS)
• Some will donate the income or principal if their heirs ultimately benefit (CLT, Asset Replacement Life Ins. )
Source: Robert Sharpe & Co.
DFW Philanthropy in Action Conference
Donor’s point of viewSomething Later
Retain Control andIncome
Will/Trust
IRA/Retirement Plan
Life Insurance
Other Beneficiary
Designations
Something Now
Max current impact/tax benefit
(Current Gift)
Cash
Securities
Real Estate
Art & Collectibles
Personal Property
Something inBetween
Lend Income to Charity
Require Return of Income
Cash
Securities
Real Estate
Business Interest
DFW Philanthropy in Action Conference
Elements of the Blended Gift
Real Estate
Retirement
Personal Property
Stock Portfolio Cash
2. Blend assets available to gift
3. Blend areas of support in which the donor wants to make an impact
1. Gift types most attractive to the donor
DFW Philanthropy in Action Conference
Sample Blended Gift
Before the Blended Gift$1,000 annual unrestricted gifts
After the Blended Ask
$1,000 Cash
$50,000 CGA
with stock
$250,000 Estate Pledge
(Bequest)
Current DeferredLife Income
DFW Philanthropy in Action Conference
Impact of Donor Concerns
• In hard times, donors trend toward a greater proportion of deferred gifts (20% or more of a mature program/campaign)
• Perennially, the bulk of deferred gifts are revocable gifts (80% nationally)
DFW Philanthropy in Action Conference
Real Estate 44%
Stocks & Bonds 31%
Personal Property 12%
Retirement Accts. 10%
Cash 2%
Donor Wealth Profile
“Why focus on smallest slice?”Source: US Census per Craig C. Wruck , PPP Conf.
DFW Philanthropy in Action Conference
Blended Gift Proposal for Campaign
$25,000 Cash
Current
$50,000Estate pledge
Deferred
$75,000 Life Income
Life Income
DFW Philanthropy in Action Conference
Completed Blended Gift
$22,000 IRA
Distribution
Current
$100,000Estate pledge
Deferred$50,000
CGACD
Life Income
DFW Philanthropy in Action Conference
Cash$25,000
Corporate gift
$10,000
Art Work
$50,000
Land$500,000Into CLT
DFW Philanthropy in Action Conference
BIGGEST Challenge: Blend Cultures
Outright giftsCapacity donors
Longevity not critical Age not critical
Avoid technicalities
Focus of Major Giving Program
Focus of Planned Giving Program
Deferred gifts Loyalty donors
Longevity is keySenior donors
OK with technicalities
DFW Philanthropy in Action Conference
Blended Gifts: What are the obstacles?
1. Leadership support for Blended Gifts
2. Counting Bequests and the corresponding guidelines?
3. Cooperation from the Major Gifts professionals
DFW Philanthropy in Action Conference
Gift Talking Points
Goal Transform your
donors’ obstacles into a gift
opportunity
DFW Philanthropy in Action Conference
Rising Healthcare Expenses“Would you consider a pledge commitment that isn’t paid until you pass or when you no longer need it?”
DFW Philanthropy in Action Conference
Most Popular Deferred GiftsBequest “Just takes a simple
designation in your will or trust.”
Living Trust “Avoids probate. Just name the charity as a beneficiary.”
Why? It’s easy and revocable if situation changes.
DFW Philanthropy in Action Conference
Outliving Retirement Funds
“If we could show you a way to maintain or increase your income while also supporting your favorite charity, would that be of interest?”
DFW Philanthropy in Action Conference
EASY TO UP YOUR CASH FLOW “A simple agreement that can increase your cash flow from a gift that provides guaranteed fixed payments for life.”
Why? Lifetime annuity payments, based on age, are often two or three times higher than donor’s cash return on low-earning securities or CDs.
Charitable Gift Annuity
DFW Philanthropy in Action Conference
We Want to Support Our Kids• “Did you know that some of your
assets are expensive to transfer to your children?”
• “Retirement funds paid to your kids at your passing can get hit with income and estate taxes, but are tax-free to charity.”
DFW Philanthropy in Action Conference
Charitable Lead TrustGREATLY REDUCE ESTATE TAX
“Lets you greatly reduce or possibly avoid some estate tax on trust assets passing to family if you’re willing to donate some of the trust income to charity for a few years.”
Why? Estate and gift tax deductions for wealth transferred to family if some trust income goes to charity for several years
DFW Philanthropy in Action Conference
Virtual Endowment
“Would you be interested to learn how you could see the impact of your estate gift during your lifetime, with minimal financial contributions now?”
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DFW Philanthropy in Action Conference
Real EstateGreat for making a gift and also transferring the burden of managing the property.
Bargain Sale: You can sell your property at a discount, deduct the difference, and receive a lump sum or installment payments.
Life Estate Deed: You can deed your home or farm property to charity, save taxes with a current deduction, and still use the property for the rest of your life.”
DFW Philanthropy in Action Conference
Tools for Your Journey Your Checklist to Promote Blended Gifts
1. Count Revocable Bequests2. Document Estate Gifts with a Simple Bequest
Intention Form3. Identify top blended gift prospects4. Listen for donor’s interest to give but obstacles for
their support5. Have More Prospect Strategy Sessions 6. Track Blended Gifts & Promote Success Stories
DFW Philanthropy in Action Conference
SUMMARY1. Donors want options2. Donors are utilizing structured gifting
vehicles3. If a donor does not feel comfortable, or does
not feel they will achieve their objectives, they will seek alternatives
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ACTION STEPS1. Utilize the “Team” Approach2. Determine the Point Person3. Determine if ALL the goals have been disclosed &
understood4. Review documents5. Remind the Donor(s) to ENJOY their philanthropy
DFW Philanthropy in Action Conference
Buderus, Ashley & Smith, Gordon; Blended Gift, Eh? Making the Most of This Emerging Workhorse for Major and Planned Gift Officers. National Conference on Philanthropic Planning, October 2013.
Giving USA; 2016 Edition. This is the annual report on philanthropy, covering 2014. Download the Giving USA 2015 free report Highlights and purchase other Giving USA products at www.givingUSAreports.org.
The 2014 U.S. Trust Study of High Net Worth Philanthropy. This research is based on respondents throughout the U.S. with net worth of $1 million or more (excluding value of residence).
The 2013 U.S. Trust/The Philanthropic Initiative Study of Disconnects in Philanthropic Conversations between HNW Individuals and Professional Advisors.
The Chronicle of Philanthropy; monthly professional magazine, https://philanthropy.com
Planned Giving Today; a quarterly professional periodical on strategy and charitable motivation, https://givingtoday.com
Charity Navigator, 2016 Giving Statistics, https://www.charitynavigator .orgwww.pppnet.org/pdf/PPPcountingguidelinesppnet.org/Executive Summary.pdfwww.ceplan.com/giftcounting
References & Resources
DFW Philanthropy in Action Conference
Counting Revocable Bequests
www.pppnet.org/pdf/PPPcountingguidelines
pppnet.org/Executive Summary.pdf
www.ceplan.com/giftcounting
DFW Philanthropy in Action Conference
Cathy R. Sheffield, MBA, CAP®, CFRE, CSPGFoundation Director
All Saints Health Foundation Baylor Scott & White Medical Center – Fort Worth