Posts tagged ‘beneficiary designation’

December 8, 2017

5 Mistakes that Could Cost You Year-End Donations

As year-end approaches, you are probably working feverishly to raise as much money as possible for your nonprofit organization. Unfortunately, you might be making some mistakes that could cost your charity enormous sums of potential donations.

Here are just five common ways you might unknowingly short-change your organization at this special time of year:

1.  Appeals by the Numbers.

Many of the year-end appeals that I receive focus on numbers. Often, the number is “31,” as in December 31. Other numbers tout the volume of people served or the amount of a challenge grant. As I wrote last week, numbers can tell part of an organization’s story; however, numbers can’t tell the full story.

For the most effective appeals, you will want to engage hearts and minds. While some numbers can be meaningful, telling an individual story makes your nonprofit’s work more relatable and easier to understand. Individual stories are also far more likely to engender an emotional response.

The Wounded Warrior Project is a great example of what I mean. The organization could tell us how many veterans suffer from PTSD and medical issues. The charity could simply tell us how many veterans they serve each year. Instead, the Wounded Warrior Project tells the story of a single veteran. The organization’s television appeals are mini-movies that tell us of a veteran’s war experience, the problem he or she came home with, and how the Wounded Warrior Project is improving the veteran’s life. You can watch one of the organization’s television spots by clicking here.

2.  Not Asking for Gifts of Stock and Other Planned Gifts.

If you want to maximize year-end giving, you must seek planned gifts. Planned giving allows donors to make more gifts and larger gifts than they might otherwise be able to do simply from their checkbook. This is great news for your charity. Even better news is that not all planned gifts are deferred gifts. Here are some types of planned gifts that will result in immediate cash for your organization:

Gifts of Stock. With the stock market in record territory, many Americans own appreciated securities. By contributing stock shares to your organization, a donor can make a generous gift, realize a charitable gift deduction, and avoid capital gains tax.

Gifts of Appreciated Property. As with stock, many individuals own appreciated real December 31st by TransGriot via Flickrestate, art, and collectibles that they can donate. Your organization can either use the item for mission fulfillment (i.e., a museum can accept a work of art for its collection), or the organization can sell the item and put the cash to good use. You’ll just need to be clear with your donor about which option you intend to exercise.

Gifts from Donor Advised Funds. An increasing number of Americans have established a DAF. Be sure to remind your donors that they can advise that a gift be made to your charity from their DAF account.

IRA Charitable Rollover. Since the U.S. Congress has made the IRA Charitable Rollover permanent, individuals who are age 70.5 or older can donate up to $100,000 from their IRA each year without having to recognize it as income.

Year-end is also a good time to ask for deferred planned gifts such as Gifts in a Will, Beneficiary Designations, and Trusts.

You can read more about planned giving options by clicking here.

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March 25, 2016

Do Not Overlook This Gift Opportunity

Many charities have been overlooking an increasingly important potential source of charitable contributions. Many donors have also overlooked this potential philanthropic opportunity.

It’s time to change all of that.

I’m talking about Beneficiary Designations.

While the use of Wills has declined sharply since 1998, individuals are increasingly using Beneficiary Designations to pass on assets to loved ones. Instead of a Will, individuals can use a simple Beneficiary Designation form to distribute assets from IRAs, 401ks, bank accounts, certificates of deposit, brokerage accounts, life insurance policies, and money remaining in Donor Advised Funds. In some jurisdictions, individuals can also use Beneficiary Designations to distribute property such as automobiles and real estate.

If someone does not have a Will, he cannot make a Charitable Bequest commitment. However, he can easily set up a Beneficiary Designation that directs some of his assets to a favorite charity. It’s important to note here that a Beneficiary Designation supersedes any designations made in a Will should a donor have both.

For donors, using a Beneficiary Designation can be easier and less expensive than making a Charitable Bequest commitment through a Will. Beneficiary Designations do not require a lawyer, a complicated estate planning process, or an executor. Donors can use Beneficiary Designations to take care of loved ones and/or their favorite charities. Donors can designate all or a portion of a given asset to specific beneficiaries. Beneficiary Designations also provide flexibility as individuals can easily change beneficiaries at any time.

I Spy by Flood G via FlickrTo acquire more gifts through Beneficiary Designations, nonprofit organizations need to be proactive about promoting this method of giving. As with any other planned gift vehicle, organizations need to educate prospective donors about the opportunity and how it works. Then, fundraising professionals actually need to ask for the gifts.

One way the ASPCA promoted Beneficiary Designation gifts was through an article on its website that you can read by clicking here.

The University of Florida has promoted Charitable Bequests and Beneficiary Designations using a two-page information sheet that explains the options. You can find it by clicking here.

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October 18, 2013

Use of Wills and Trusts Down Sharply. Cause for Alarm?

The percentage of older Americans with a will or trust has plummeted in just a dozen years. If people do not have a will, they cannot include a charitable bequest commitment in it. So, should the latest findings from Texas Tech researcher Russell James, JD, PhD set off alarm bells for planned gift fundraisers?

In his newest book, American Charitable Bequest Demographics (1992-2012), James observes that 61.2 percent of those age 55 and over had a will or trust in 1998. By 2010, that figure had fallen to just 40.8 percent. For 2012, the projection is 40.0 percent.

Decline of Will & Trust Use - Russell James copy

There are two possible reasons for the sharp decline.

In many jurisdictions, individuals can use non-probate transfers such as transfer-on-death or pay-on-death designations. While traditionally used for financial accounts, such designations are increasingly available for automobiles and real estate. Designations can, in many cases, allow for the complete transfer of an estate without the use of either a trust or probate process.

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