Posts tagged ‘Charitable Gift Annuity’

May 3, 2018

Who Wins as a Result of New ACGA Decision?

For the first time since 2012, the American Council on Gift Annuities has approved an increase of its suggested maximum payout rates for Charitable Gift Annuities. The rates will be rising by 0.30 to 0.50 percent for those ages where most annuity contracts are done. The ACGA will publish the final rate schedules by May 15, with the new rates becoming effective on July 1, 2018.

The rate increase will make donors the winners of the ACGA decision. Beginning in the second half of the year, CGA donors will be able to receive more income than they previously could in recent years.

A CGA is a gift mechanism that allows donors to make a gift to charity, and then receive an income for life. A CGA contract sets the rate and terms with the donor. The rate is dependent on the age and gender of the annuitant(s), and the number of annuitants.

For charities, the higher CGA payout rates will make this planned-giving instrument more attractive to donors and, therefore, could generate more gifts. So, charities are another winner.

The ACGA summarizes what conditions its board considered when setting the new rates:

Generally speaking, the ACGA’s suggested maximum rates are designed to produce a target gift for charity at the conclusion of the contract equal to 50 percent of the funds contributed for the annuity. The rates are further predicated on the following:

An annuitant mortality assumption equal to a 50/50 blended of male and female mortality under the 2012 Individual Annuity Reserving Table (the 2012 IAR);

A gross investment return expectation of 4.75 percent (which is up from the previous return assumption of 4.25 percent) per year on the charity’s gift annuity funds;

An expense assumption of 1 percent per year.”

If your organization has a CGA program, you’ll want to reach-out to your prospects and donors to let them know about the CGA opportunity and higher rates. The new rate schedule provides a good reason to contact people about CGAs.

When communicating with people about CGAs, remember to encourage them to think about establishing a CGA with a gift of appreciated property (e.g., stocks, bonds, real estate). This will provide the donor with the added benefit of avoiding capital gains tax. Your organization will also benefit. Nonprofits that experienced greatest growth in their CGA programs, as well as average CGA gift size, emphasized gifts of appreciated property compared to cash, according to a recent ACGA report.

If your organization does not already have a CGA program, you might want to consider starting one. While managing an in-house CGA program can be administratively burdensome, there are third-party organizations (i.e., community foundations) that can administer your program for you.

Whether you manage the program in-house or out-source it, your organization will still be legally responsible for making payments to donors. While the CGA rates are designed to allow approximately 50 percent of a gift to ultimately go to the charity, there are many instances (particularly during the Great Recession) when that was not the case and charities received less than 50 percent, nothing, or were in a negative position. CGA programs are not without risk.

When marketing your CGA program, be careful to avoid a common mistake:

Do NOT sell CGAs as investments.

There are three reasons to avoid “selling” CGAs as an investment:

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April 9, 2018

8 Simple Tips to Boost Planned Giving Results

Planned Giving is a vital source of contributions for the nonprofit sector. Organizations that do not have a gift-planning program envy those that do. Those that do have a planned-giving program want even better results.

It’s no wonder.

Bequest giving amounted to eight percent of all charitable donations in 2016 (Giving USA). That’s just counting people who included a charity in their Will. It does not include people who gave through Beneficiary Designation, Charitable Gift Annuity, Stock, Appreciated Personal Property, or other planned-giving vehicles.

While planned giving can certainly present challenges, there are many simple things you can do to create or enhance your organization’s gift-planning efforts:

1.  Focus Your Efforts

You likely do not have the time or budget to reach-out personally to every one of your organization’s supporters to seek a planned gift. Instead, you need to focus on the highest priority prospects, those most likely to make a planned gift.

So, who are your best planned-giving prospects?

The answer to that question will depend on what type of planned gift you are seeking. For example, if you want more people to include your charity in their Will, arguably the most common form of planned giving, you’ll want to consider two key factors:

First, people who are childless are far more likely to include a charity in their Will, according to philanthropy researcher Russell James, JD, PhD, CFP®. However, just because someone is more likely to make a Charitable Bequest commitment to a charity does not mean they will be willing to commit to your charity.

Second, loyal supporters of your organization are the people most likely to make a planned gift to your specific organization, according to UK-based philanthropy researcher Claire Routley, PhD. Your loyal supporters are people who donate frequently, regardless of gift amount. Loyal supporters are also people who volunteer. People who donate cash and volunteer are nearly twice as likely to make a gift through their Will compared to individuals who do only one or the other, James’ has discovered.

When seeking other types of planned gifts, you’ll want to take into account other factors. For example, if you want people to contribute from their IRA, you’ll want to appeal to people over the age of 70.5, the age of eligibility for such giving. If you want folks to donate appreciated Stock, you’ll broaden your audience because the majority of Americans own Stock.

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March 21, 2018

15 Things You Might Not Know about Planned Giving

There’s a lot about planned giving that’s worth knowing and that can help you raise more money. Fortunately, it’s not necessarily all complicated.

Yes, vast differences exist from one planned giving program to the next. Some nonprofit organizations invest heavily in planned giving with dedicated staff and marketing. Other charities invest little and have development generalists talk with donors about gift planning from time-to-time. Despite the differences from one organization to another, there are a large number of points in common.

To help you be a more successful fundraising professional, I want to share 15 insights about planned giving:

1.  Almost everyone has the ability to make a planned gift. A common myth about planned giving is that it is just for rich people. However, that’s not the case. For example, anyone who owns a retirement account, a life insurance policy, appreciated stock, or a home can be a planned gift donor. As H. Gerry Lenfest, the mega-philanthropist, wrote in the Foreword to Donor-Centered Planned Gift Marketing,  “Planned gifts are the major gifts of the middle class.”

2.  The average age of someone who makes their first charitable bequest commitment is 40-50. Another misconception about planned giving is that it is something that old people engage in. While that’s true for certain planned gifts (e.g., gifts from an IRA, or gifts to set up a non-deferred Charitable Gift Annuity), donors of any age can create a charitable provision in their Will or set-up a Beneficiary Designation.

3.  High-income women are more likely than men to use complex gift planning tools. High-income women (those with an annual household income of $150,000 or more) are more likely than high-income men to seek expert financial advice. They are also more likely to establish Donor-Advised Funds or Charitable Remainder Trusts. So, do not ignore female prospects. Instead, be prepared to talk with high-income women about sophisticated giving options.

4.  Using a challenge grant for a planned gift appeal can create urgency leading to action. Research shows that people tend to avoid conversations or decisions involving their own demise. One way to shift the focus of the planned giving conversation from death is to use a challenge grant to encourage prospects to think about making a planned gift commitment so that the organization receives an extra benefit. A challenge grant also creates a sense of urgency that gives donors a reason to act now rather than further delay making a planned gift decision.

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February 7, 2017

Get a FREE Book for Nonprofits by a Noted Researcher

Do you like getting something for free? I do, especially when it can help me be more successful.

Now, thanks to Russell James, JD, PhD, CFP, the Texas Tech University professor and philanthropy researcher, you can download a free, 427 page book that will become an important reference source in your fundraising library.

Whether you call it planned giving, gift planning, legacy planning, philanthropic planning, charitable estate planning, charitable gift planning, or something else, the subject is complex. However, it does not have to be overwhelmingly confusing.

visual-planned-giving-2017-coverTo help you, James has put together the book Visual Planned Giving: Introduction to the Law & Taxation of Charitable Gift Planning, newly revised and updated for 2017. Designed for fundraisers and financial advisors seeking to expand their knowledge about charitable gift planning, this introductory book addresses all of the major topics in planned giving law and taxation.

The gift planning topics you’ll learn about include elements of a gift, documentation requirements, valuation rules, income limitations, bargain sales, charitable gift annuities, charitable remainder trusts, charitable lead trusts, life insurance, retirement assets, private foundations, and donor advised funds. Over 1,000 full-color illustrations and images will guide you through complex concepts in a visual and intuitive way. James makes planned giving accessible and pain-free for the busy professional.

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November 15, 2016

Will the Election be Good or Bad for #Fundraising?

[Publisher’s Note: This is not a political or partisan post. Instead, this post will explore the affects the recent presidential election is likely to have on fundraising and philanthropy in the short-term and beyond. As always, civil and on-topic comments are encouraged, whether or not you agree with the points covered in the post. However, overtly political or partisan comments will not be published nor will the rants of internet trolls.]

 

Donald J. Trump appears to have secured enough electoral votes to become the USA’s 45th president. His election will become official when the Electoral College votes on Dec. 19, 2016.

After a bruising, though not unprecedented, election cycle, the nation remains deeply divided and emotionally raw. What does this mean for fundraising and philanthropy?

Impact of Election Donations on Charitable Giving:

At the 2016 Association of Fundraising Professionals International Fundraising Conference, research from Blackbaud was presented that looked at the impact of political giving on charitable donations in the 2012 election cycle.

Chuck Longfield, Senior Vice President and Chief Scientist at Blackbaud, observes:

Fundraisers have long debated whether or not political fundraising affects charitable giving and, for decades, important fundraising decisions in election years have been based largely on the conventional belief of a fixed giving pie. The study’s overall assertion is that political giving during the 2012 election did not, in fact, suppress charitable giving. Donors to political campaigns continued their support of charitable causes.”

According to the study, donors who gave to federal political campaigns in 2012 gave 0.9 percent more to charitable organizations in 2012 compared to 2011. By contrast, donors who did not give to political campaigns reduced their giving to charities in 2012 by 2.1 percent. These data findings held true across all sub-sectors as well as the demographic segments of age range, household income, and head of household gender.

The research only provides us with a snapshot. It is not predictive. More research will need to be done to identify whether or not the results will be consistent over multiple election cycles. However, based on the analysis of the 2012 campaign cycle, we certainly have room to be cautiously optimistic about 2016.

Year-End Giving:

If history is an indicator, the 2016 election will have little or no impact on overall year-end philanthropy, according to Patrick Rooney, Ph.D., Associate Dean for Academic Affairs and Research at the Indiana University Lilly Family School of Philanthropy.

voting-by-becky-mccray-via-flickrAt times, elections have had an effect on the giving of some individuals. For example, in 2008 when Barack Obama was elected, some major donors feared that he would secure a 28 percent cap on tax deductions.

Out of fear that the cost of giving would, in effect, be going up in 2009, some of these individuals front-loaded their 2009 philanthropic support to 2008 year-end. Nevertheless, the impact on overall giving was modest.

While Trump has promised major tax reform, it’s doubtful that donors will expect significant changes to the tax code to be enacted and go into effect in 2017. Therefore, it’s equally doubtful that major donors will shift 2017 giving into 2016.

Given that the 2016 election was unusual in many ways, it is certainly possible that year-end giving will deviate from the historical norm. For example, the stock market reached a record level following the election. If stock values continue to grow, we could see an increase in year-end gifts of appreciated securities. However, regarding overall philanthropy, I think the smart bet is on history.

Giving to Individual Charities:

It is very likely that certain individual charities will see an uptick in donations as a result of the election outcome.

Many years ago, Richard Viguerie, a pioneer of conservative direct response fundraising and Chairman of ConservativeHQ.com, said that people would rather fight against something than for something. We’ve seen it before; we’re seeing it now.

For example, when Obama was elected, the National Rifle Association received significantly more contributions as some feared that the new president would impose more stringent gun control measures.

Now, Kari Paul, of MarketWatch, reports:

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November 4, 2016

It’s Not Just What They Say, but How They Say It

To raise more money, listen carefully to your prospects and donors. They’ll give you vital insights about their philanthropic interests and ability to give.

Furthermore, they’ll give you clues about how to most effectively present to them.

Tom Hopkins, the sales guru and author of Low Profile Selling, suggests that by adapting your presentation style according to prospect preference, you’ll be far more successful.

Let me explain.

If you’re visiting with a prospect to make the case for support of a particular initiative, he may say, “I see what you mean.” That could be a clue that the prospect prefers to relate to information visually.

fennec-fox-ears-by-caninest-via-flickrSo, you would be wise to adapt your presentation to be more visual. For example, you could share a printed copy of the case for support. Or, you could show the prospect a brief video that illustrates what you’re saying. Another way to engage such a prospect is to ask her to imagine. For example, if you work for an animal shelter, you might ask, “Can you imagine how happy you’ll make dozens of puppies and kittens with your support?”

Alternatively, your prospect might say, “I hear what you’re saying.” That could indicate that she prefers getting information by listening.

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October 28, 2016

Get a Free Halloween Treat for Fundraisers

If you’re like most fundraising professionals, you’re not optimally asking donors to include your nonprofit organization in their will.

You’re probably not driving as much traffic to your planned giving webpage as you could.

You’re also probably less successful at closing Charitable Gift Annuities than you could be.

lone-ranger-and-silver-via-melocuentas-flickr

The Lone Ranger and Silver.

I know. You decided to read this post to discover how you can get a free Halloween treat. Instead, you’re probably starting to feel tricked. But, fear not! Russell James, JD, PhD, CFP, the Texas Tech University professor and philanthropy researcher, along with the good folks at MarketSmart, are riding in to save the day.

Last summer, James conducted a webinar hosted by MarketSmart. During his presentation, James unveiled his latest, powerful research findings along with research insights from others. You can learn more about the webinar and get some great tips by clicking here.

Now, for your treat, MarketSmart has distilled James’ webinar into a free, 22-page e-book that will help you raise millions of dollars more. For example, here’s just one simple, yet valuable tip:

When you want to engage people in a conversation about Charitable Gift Annuities, what is the best way to describe this giving vehicle to make folks want to learn more?

James tested five phrases. Among the 2,550 respondents, he discovered the percentage interested in learning more:

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July 28, 2016

Do You Know that “Planned Giving” is Bad for #Fundraising?

That’s right. “Planned Giving” is bad for nonprofit fundraising.

For years, I’ve been writing and talking about the problems with the term “Planned Giving.” Now, new research underscores what I’ve been advising: You should stop using the term!

Sometime ago, The Stelter Company conducted a survey that I cite in my book, Donor-Centered Planned Gift Marketing. Stelter found only 37 percent of Americans over the age of 30 have a familiarity with the term “Planned Giving.” We have no way of knowing what percentage of those claiming familiarity really, in fact, know what the term truly means.

Other terms have become increasingly popular as substitutes for “Planned Giving.” However, none has yet to gain sufficient traction to overtake the use of “Planned Giving.” Consider the results from simple Google searches I conducted for this post:

  • Planned Giving — 14.8 million results
  • Philanthropic Planning — 11.1 million results
  • Gift Planning — 5.7 million results
  • Legacy Giving — 2.1 million results

What we know is that the general public has little understanding of the term “Planned Giving” although it appears to be the best term we have. Unfortunately, popular does not mean effective.

William Shatner in The Grim Reaper by Tom Simpson via FlickrWhile “Planned Giving” is a reasonable, inside-the-development-office catch-all term to describe, well, planned giving, it’s not a particularly good marketing term. That’s according to the findings of philanthropy researcher Russell James, JD, PhD, CFP.

James conducted a study to answer this vitally important marketing question: “What is the best ‘front door’ phrase to make people want to read more Planned Giving information?”

Think of it this way: Will a “Planned Giving” button at your website encourage visitors to click through to learn more or is there a more effective term?

To be a successful term, James believes two objectives must be met:

  1. Individuals have to be interested in finding out more.
  2. Individuals have to expect to see Planned Giving information (i.e., no “bait and switch”).

To find the strongest marketing term, James asked people to imagine they were viewing the website of a charity representing a cause that is important in their lives. In addition to a “Donate Now” button, the following buttons appear on the website:

  • Gift Planning
  • Planned Giving
  • Giving Now & Later
  • Other Ways to Give
  • Other Ways to Give Smarter
  • Other Ways to Give Cheaper, Easier, and Smarter

James asked participants to rate their level of interest in clicking on the button to read the corresponding information. In a follow-up, James asked study participants what kind of information they would expect to see when clicking the buttons mentioned above.

The winning term is:

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September 3, 2015

Are You Smarter than a Fourth Grader?

A few weeks ago, I got to spend time with my niece Nicole and nephew Evan who were visiting Philadelphia before the start of the new school year in Florida. They’re wonderful kids, and it was great seeing them.

Evan by Michael Rosen

My nephew, Evan.

One evening when 9-year-old Evan and I were hanging out, I decided to ask him an odd question to see where it might go:

If you wanted someone to give you money, what would you do?”

Evan, who just entered the fourth grade and has no fundraising experience, replied:

I’d ask them.”

Bingo! Evan instinctively knows one of the fundamental rules of fundraising: If you want donations, you have to ask for them.

So, are you smarter than a fourth grader?

Since you’re reading this post, I’m going to assume you know the general importance of the ask in the fundraising process. However, knowing and doing are two different things. So, let me ask you a few more questions:

Do you ask for planned gifts?

While 88.7 percent of people surveyed say that it’s appropriate for a nonprofit organization to ask for a legacy gift, researchers found that only 22 percent of those over the age of 30 have been asked. In other words, there are a huge number of people who are willing to be asked for a planned gift but who are not.

Even among those charities that do ask people to make a planned gift, the ask is reserved for a very narrow group of prospects that might include major donors, board members, and people who have requested planned giving information. Those asks are most often made during face-to-face visits.

On the other hand, wise organizations also use direct mail and the telephone to reach out to a broad number of prospects to ask them to make a planned gift commitment.

One smart nonprofit organization that has successfully used direct mail to ask for legacy gifts is the Natural Resources Defense Council. They did two mailings involving a total of 50,000 pieces that generated $8.5 million in bequest commitments. You can see a sample of the mailing by clicking here.

A university in Texas targeted 7,000 alumni with a mail promotion for Charitable Gift Annuities, following up direct-mail-generated leads with phone calls that resulted in $730,000.

An orchestra in the Pacific Northwest implemented a coordinated mail/phone campaign involving 2,200 prospects in an effort that produced an estimated $2 million in bequest expectancies.

If your organization wants more planned gifts, you need to ask more people to give. While face-to-face asks will always be important, you can ask far more people by using direct mail and the phone as well, just like your organization does for the annual fund.

You can find more details about the examples I’ve cited, additional examples, and helpful tips in my award-winning book Donor-Centered Planned Gift Marketing.

Do you ask supporters to enroll in a monthly-giving program?

In 1989, I predicted that virtually every charity would have a monthly-giving program within five years. Sadly, I could not have been more wrong. I shouldn’t have been, but I was. Now, more than a quarter-century later, shockingly few charities ask supporters to give monthly.

A great way to enhance your organization’s donor-retention rate while upgrading the amount of support from donors is to ask donors to give monthly.

Some of my friends and I believe so strongly in the power of monthly giving that we participated in this short, light-hearted video on the subject:

If you’re not asking your supporters to give monthly, you’re organization is missing a great opportunity. For powerful advice on how to run a monthly-giving program, checkout Harvey McKinnon’s book Hidden Gold, and Erica Waasdorp’s book Monthly Giving: The Sleeping Giant.

Do you ask donors to upgrade their support?

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June 30, 2015

Free Webinar Will Help You Get Great Results

Fundraising can certainly be challenging. Have you ever wondered:

  • How can I raise more money at little or no extra cost?
  • Is my organization ready for a planned giving program?
  • What simple planned giving vehicles should I promote?
  • What is my organization’s Bequest giving potential?
  • Who are my best planned giving prospects?
  • Do I need to be an expert to do planned giving?
  • What motivates planned giving donors?
  • How should I ask for planned gifts?

If you’ve ever asked yourself any of those questions, then I have the perfect free webinar for you.

FreeI’m presenting “Planned Giving: It’s Easier than You Think!” During my free webinar, hosted by Wild Woman Fundraising, you’ll get answers to all of the above questions and more. In short, you’ll learn how to easily launch and grow a successful planned giving program.

For many nonprofit professionals, planned giving sounds complicated, with its CRUTs, CRATs, CLUTs, and CLATs. Admittedly, gift planning can indeed be incredibly complex. However, as this free webinar will demonstrate, it does not have to be. Furthermore, a planned giving program can be enormously worthwhile for virtually any organization, even those with little or no budget for it.

For valuable tips to help you grow your planned giving results, register for my free webinar today, “Planned Giving: It’s Easier than You Think!” [July 17, 2015, 3:00-4:00 PM (EDT)]. To register, CLICK HERE.

As a webinar participant, you will receive a number of bonus handouts including:

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