Posts tagged ‘planned giving’

January 30, 2018

Russell James: Three for the Price of FREE!

One of the nation’s leading philanthropy researchers provides us with helpful insights about the new tax code and its impact on charitable giving. He also offers valuable information about planned giving.

Russell James, JD, PhD, CFP® articles, books, and videos will benefit any fundraising professional. Here are just three that will be a big benefit to you:

1. A Donor’s Guide to the 2018 Tax Law (video)

In just nine-and-a-half minutes, James explains how key provisions of the new tax code can benefit donors. With his insights, you’ll be in a better position to inspire more donations and larger gifts to your nonprofit organization. Simple illustrations and great examples will help you easily grasp the concepts.

Do you know?: Just one of the things you’ll learn from the video is that donors can contribute appreciated stock to avoid capital gains tax. Even non-itemizers can benefit from this. While this provision of the tax code remains unaltered, what has changed is that the new code makes this provision even more valuable for donors. James explains how in the free video:

2.Visual Planned Giving: An Introduction to the Law & Taxation of Charitable Gift Planning (e-book, updated January 2018)

I’m honored that James has allowed me to offer you a free copy of his 433-page e-book Visual Planned Giving: An Introduction to the Law & Taxation of Charitable Gift Planning. James designed the newly updated book 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 in an accessible way.

Do you know?: Wealth is not held in cash. It’s held in assets. James has found that only one percent of financial assets are held in cash! So, if you want larger donations, you need to talk with supporters about making a planned gift from non-cash assets (e.g., stocks, personal property, real estate, retirement accounts, life insurance, etc.).

If you want to learn more about planned giving or help a colleague gain a fundamental understanding, you can download your free copy of Visual Planned Giving by clicking here.

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January 19, 2018

Charitable Giving Threatened by Drop In Volunteerism

On Monday, the USA celebrated Martin Luther King, Jr. Day as a national day of service. From April 15 to 21, the nation will mark National Volunteer Week. Clearly, Americans value volunteerism.

Unfortunately, the volunteerism rate has been steadily declining for years. This trend has disturbing implications for philanthropy.

In 2003, the US Bureau of Labor Statistics reported that 28.8 percent of Americans volunteered. By 2015, that rate had steadily fallen to 24.9 percent. This is a huge problem for the nonprofit sector for a number of reasons:

Volunteers Provide a Valuable Resource. Volunteers do a great deal of work that might not be done otherwise. 62.6 million Americans volunteered 7.8 billion hours. Independent Sector reports that a volunteer hour is worth $24.14, over $180 billion of total estimated value. Sadly, with volunteerism on the decline, charities are forced to provide fewer services or incur greater labor costs.

Volunteers Serve as Ambassadors. In addition to being a valuable labor resource, volunteers are also fantastic ambassadors for an organization. The typical volunteer serves only one or two organizations, according to the US Bureau of Labor Statistics. When volunteers share their experiences, they also talk with friends, family, and professional colleagues about your organization and its mission. This could lead to additional volunteer and philanthropic support. With a drop in volunteerism, there are now fewer ambassadors for charities, which will inevitably lead to less future support.

Volunteers are More Likely to Donate. Volunteers are twice as likely as non-volunteers to make a charitable contribution, according to the Corporation for National and Community Service. Even planned giving is affected by volunteerism. As I’ve reported previously, researcher Russell James, JD, PhD, CFP states in his book, American Charitable Bequest Demographics (1992-2012):

Among those with [estate] planning documents, those who both volunteer and give ($500+) are dramatically more likely to plan a charitable estate gift than those who only volunteer or only give ($500+). Those who only volunteer, plan charitable estate gifts at approximately the same rate as those who only give.”

Those who only volunteer or only donate ($500+) are more than twice as likely to make a legacy gift than those who do neither. [For a free electronic copy of James’ book, subscribe to this blog site in the right-hand column. You’ll receive an email confirmation of your subscription that will contain a link to the book.]

With a decline in volunteerism, we can expect fewer people to make current and planned gifts. This is already happening according to an analysis by The Chronicle of Philanthropy.

There are many likely reasons for the decline in volunteerism including:

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January 12, 2018

Hang-on to the Holiday Spirit with FREE Gifts and Resources to Raise More Money!

For most of us, whether we observe Hanukkah, Christmas, or just the New Year, the holiday season is an uplifting time full of joy. However, the same cannot always be said of the post-holiday period, according to Linda Walter, LCSW. Her article in Psychology Today cites many reasons for the post-holiday blahs, for some, even depression.

As an antidote for the after-holiday letdown, I want to share several free resources with you that just might help you keep the holiday spirit going while also helping you raise more money in 2018.

The Donor-Advised Fund Widget. For starters, let me tell you about the Donor-Advised Fund Widget created and offered free-of-charge by the generous folks at MarketSmart. This useful, free gift will help you continue to celebrate the season and raise more money for your nonprofit organization.

When it comes to fundraising, a general rule is: Make it easy for people to give your organization money. You probably already do this in a number of ways. For example, your organization probably allows donors to place gifts on their credit card, mail a check in a business reply envelope you supply, give online, or contribute when they buy products (e.g., Amazon Smile).

So, why not also make it easy for someone to recommend a donation from his or her DAF account?

Rather than viewing DAFs as enemies that divert vitally needed funds away from charities, nonprofit organizations should view DAFs as a great fundraising opportunity. Unfortunately, the problem is that nonprofits have not made it easy for people to donate from their DAF accounts…until now.

Greg Warner, Founder and CEO of MarketSmart, says:

Amazon is successful primarily because they make it easy to buy stuff. Similarly, if nonprofits just made it easy to transfer DAF money, the bottleneck would get un-clogged. But no one was stepping up. So I did!”

The DAF Widget goes on your organization’s website. Your donors with DAF accounts then can easily find their account management company from a comprehensive list of over 800 service providers. Then, they simply click to go directly to their DAF management company’s website where they can enter the relevant information to make a donation recommendation for your organization. To see the widget live, visit the Navy-Marine Corps Relief Society website by clicking here.

DAFs are an increasingly valuable source of donations for charities. Consider the following market-wide insights from The National Philanthropic Trust 2017 Donor-Advised Fund Report:

  2012 2016
Number of DAF Accounts 204,704 284,965
Total Assets in DAF Accounts $44.71 billion $85,15 billion
Grants from DAF Accounts $8.5 billion $15.75 billion
Ave. DAF Asset Size $218,413 $298,809

To put the above figures into context, non-corporate private foundations gave $45.15 billion to charities in 2016. By contrast, donations made from DAFs totaled $15.75 billion that same year, equating to roughly one-third (34.8 percent) of the estimated amount granted by non-corporate private foundations.

In other words, DAF donations represent a significant and growing source of gifts for nonprofit organizations. However, to get your share, you need to make it easy for people to recommend donations from their DAF accounts. That’s why MarketSmart created the free DAF Widget.

You can learn more about the DAF Widget and claim yours by clicking here.

There is just one catch, if you want to call it that. The DAF Widget is in its Beta Edition. So, MarketSmart is looking for feedback, either directly or through comments below. Then, Greg promises to invest more time and money to make the DAF Widget even better. So, if you use the DAF Widget, please let us know how you think it could be made easier to use and more effective.

Here are seven additional resources for you to help get 2018 off to a great start:

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January 5, 2018

How Bad is the New Tax Code for Your Charity?

If you’ve been reading the mainstream press, or even some of the industry media, you might believe that the future is all doom and gloom for charitable giving thanks to the Tax Cut and Jobs Act. But, how bad will things really be for you and your nonprofit organization?

As a former newspaper editor, I know that the media lives by the axiom: If it bleeds, it leads. In other words, negativity attracts readers and viewers, which in turn attracts advertising dollars. So, it’s no surprise that the media have put the new tax code in the most negative light when it comes to charitable giving.

Fortunately, reality is something quite a bit different. Let me explain, using figures from 2016 (the most current numbers available).

Overall, charitable giving totaled $390.05 billion. US Gross Domestic Product totaled $18.6 trillion. Therefore, total philanthropy in 2016 equaled 2.1 percent of GDP.

As a result of the new tax code, charitable giving could decline by approximately $21 billion, according to Patrick Rooney, PhD, Executive Associate Dean for Academic Programs and Professor of Economics and Philanthropic Studies at Indiana University-Purdue University.

However, is that number accurate? Unfortunately, we have no way of truly knowing as Rooney himself states.

For example, the estimated philanthropic decline of $21 billion does not take into account the impact of a likely increase in Gross Domestic Product.

Because philanthropy closely correlates to GDP at the rate of approximately two percent, we can expect a rise in GDP to result in a rise in giving.

So, how much will GDP rise? Again, no one knows for certain. The estimates vary greatly from 0.08 to 0.35 percentage points. The Tax Foundation provided the latter estimate. Applying that percentage to the 2016 GDP, we would see GDP increase by $651 billion. If two percent of that increase goes to charitable giving, that would be approximately $13 billion. So, Rooney’s prediction of a $21 billion decline in philanthropy could be mitigated partially by GDP growth resulting in just an $8 billion drop in giving. However, even that number could be further offset by growth in foundation giving resulting from robust growth in the stock market.

Simply put, the new tax code could increase GDP and stock values leading to more charitable giving that could, at least partially, offset any potential decline in giving resulting from the new tax policy.

For the sake of discussion, however, let’s assume a $21 billion drop in giving, as Rooney outlined. That would take philanthropy as a percentage of GDP from 2.1 percent to 1.9 percent, using 2016 numbers. This is still within the 40+ year historical range.

The bottom line is that the new tax law could result in a decline in charitable giving. However, we don’t know for certain if that will be the case and, if it is, how much the dip will be. Even if there is a dip, giving will still remain at historically typical levels, around two percent of GDP. Furthermore, there is the possibility that the pundits are mistaken and that charitable giving will actually increase. Time will tell.

While the new tax code may change how and when people donate, history teaches us that changes in the tax code have only a short-term impact on the amount of giving though the methods and timing may vary. For example, the Reagan tax cuts resulted in greater year-end giving in 1986 before giving normalized thereafter. Furthermore, while a dip of billions of dollars is a big number, the reality is that it is not massive in the context of overall philanthropy.

Here are some of the relevant items you need to know from the 500+ page Tax Cut and Jobs Act signed into law on December 22, 2017 by President Donald Trump:

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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 10, 2017

In the News…

Over the past few months, I’ve been able to share my views about philanthropy with media outlets beyond my own blog. This will continue in the coming months. To make sure you don’t miss anything, I thought I’d share some highlights with you.

MarketWatch:

As 2016 drew to a close, MarketWatch interviewed me. In the article, I addressed the issue of philanthropy in the Trump Era and shared my optimistic prediction for philanthropic growth in 2017. You can read my detailed thoughts on these subjects in my following posts:

The Non-Profit Fundraising Digest:

At the start of the year, I was honored to be included on the list of “The Best Fundraising Blogs of 2017” published by The Non-Profit Fundraising Digest. Here’s what the Digest has to say:

There are thousands of blogs and websites out there dealing with non-profit fundraising. Every week, I get e-mails about new fundraising sites run by consultants, non-profits, universities, companies and trade associations.  It can be hard for fundraisers to keep up, and difficult to know which sites are worth reading on a regular basis.

Our goal here at The Non-Profit Fundraising Digest is to make sure that you have all of the information you need to successfully raise funds for your non-profit. As part of that mission, we are proud to present our list of the best fundraising blogs of 2017.  Each of these blogs and websites were handpicked by our editors because they are sites we trust… run by people we trust… and each is chock full of fundraising strategy, tactics and tips that you can use at your organization.”

The front page of the Digest is updated daily to provide links to a variety of must-read articles. It’s a terrific resource to help nonprofit manager and fundraising professionals easily find information that is relevant and useful. You can find the front page by clicking here.

Bloomerang:

The Non-Profit Fundraising Digest was not the only site to take notice of my blog at the start of the year. The good folks at Bloomerang included my blog on its list of “100+ Fundraising Blogs You Should Be Reading in 2017.” Here’s what Bloomerang says:

Keeping up with every quality piece of content published by and for fundraisers on the web every day would be a full time job in and of itself. There’s absolutely no way you could read it all.

While there are many very well-known speakers and writers who boast tens of thousands of daily readers and followers, we wanted to highlight some lesser-known hidden gems – as well as some long-established publishers – that may change the way you think about and perform your job.”

Productive Fundraising with Chad Barger, CFRE:

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February 24, 2017

What is the Special Ingredient that Leads to #Fundraising Success?

Do you know the special ingredient for creating fundraising success?

You’ll notice I didn’t say “secret ingredient.” That’s because it’s not a secret. It’s actually common sense. The reason I’m writing about it is that it is not yet common practice to the degree it should be.

The special ingredient is: building relationships.

Gerry Lenfest, 21st century philanthropist and Giving Pledge member, explained the importance of developing relationships when writing the Foreword to my book, Donor-Centered Planned Gift Marketing:

Knowing your prospects and understanding what motivates them are two critical steps in the [philanthropic] process. Quite simply, you cannot skip cultivation and relationship building and expect a successful outcome…. Do not make the mistake of forgetting about us once you receive our gift commitment. We may truly appreciate how efficiently and effectively you handle contributed funds so much that we entrust you with another planned gift. We are also in a position to influence others to do the same…”

While Lenfest’s comments were about planned giving, they certainly apply to any type of fundraising. Strong relationships are the key ingredient to a successful philanthropic process. By building meaningful relationships, you will:

  • Acquire more donors
  • Retain more donors
  • Upgrade more donors
  • Acquire more planned gifts
  • Generate more major gifts
  • Inspire donors to become ambassadors for your organization

Unfortunately, the nonprofit sector in general is terrible at building relationships. This is one major reason that donor-retention rates have been steadily falling for years, according to the Fundraising Effectiveness Project. While there is no shortage of great how-to material out there, charities are still failing to grasp the importance of embracing a robust stewardship program as part of the philanthropic process. You can search this site for donor retention to get some great tips.

For now, however, I want to share a heartwarming story of what can happen when you establish strong relationships with donors and inspire them to be ambassadors.

John’s Roast Pork is a destination sandwich stand in Philadelphia. John Bucci’s family-owned establishment has been around since 1930 serving the best roast pork sandwiches in the city. (Hey, Philly is about more than john-bucci-of-johns-roast-porkcheese steak sandwiches, though they serve those, too.) The James Beard Foundation designated the establishment as an “American Classic” for roast pork.

Unfortunately, earlier this month, John’s was burglarized. The perpetrator(s) got away with a few thousand dollars. The burglary also shut down the business until repairs could be made. The stolen sum included $1,500 that had been collected to benefit Be the Match, operated by the National Marrow Donor Program. The charity maintains the world’s largest and most diverse bone marrow donor registry.

Be the Match is important to Bucci. Several years ago, he fought a fierce battle with leukemia and was ultimately successfully treated with a bone marrow transplant. Since then, Bucci has been a supporter. At one point when he contacted the organization, he requested to meet his marrow donor so he could thank the person. However, he was told that the organization’s guidelines did not permit this. Here’s what Bucci told Philly.com he did instead:

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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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January 27, 2017

Your #Charity is Losing Big Money If It Ignores This Giving Option

If you’re like most fundraising professionals, you’re ignoring one high-potential giving option. Sadly, it could be costing your nonprofit organization a fortune.

I’m talking about gifts of appreciated securities (e.g., stocks).

The Wall Street Bull.

The Wall Street Bull.

Just days ago, the Dow broke through the 20,000 level to set a new record close. The NASDAQ and the S&P 500 are also in record territory. As stock values have continued their post-election rally, many more Americans now hold appreciated stocks.

In 2016, 52 percent of Americans said they owned stocks in some form, according to Gallup. While that’s down from the 65 percent who owned stocks prior to the Great Recession, a majority of Americans still hold stock, directly, in mutual funds, and in retirement accounts.

Given that most Americans own stock and many of those stocks have appreciated in value, the nonprofit sector has a tremendous opportunity.

Contributing appreciated stocks provides donors with some important benefits:

  • It gives donors access to a pool of money with which to donate that would not otherwise be available to them for other purposes without negative tax consequences.
  • Contributors who donate appreciated stocks may be able to avoid paying the capital gains tax on those securities.
  • Donors may also be able to take a charitable-gift tax deduction based on the value of the stock donated.

Given the benefits for the donor and the nonprofit organization, I’m puzzled about why more charities aren’t stepping up to promote gifts of appreciated securities.

I know. I know. You’re organization’s website probably mentions this giving option in passing. For example, my alma mater Temple University promotes gifts of appreciated stock and mutual funds on its website. Unfortunately, it takes three clicks from the Home Page to find the 82-word statement buried on the vaguely named page “More Ways to Give.” I suppose that’s a bit better than the charities that don’t mention this giving option at all.

On the other hand, the American Civil Liberties Union does a better job of promoting stock gifts on its website. Furthermore, unlike Temple University, the ACLU site provides all of the information and instructions a donor will need in order to make a gift of stock.

To help donors understand the value of donating stock, The National Philanthropic Trust, which manages Donor Advised Funds, includes a hypothetical case study on its website to illustrate the value of donating appreciated stock.

Savvy donors, perhaps more donors than in recent years, are already benefitting by donating appreciated stocks.

For example, NPT saw an increase of stock gifts last year. Eileen Heisman, NPT’s President and CEO, reports:

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January 17, 2017

Philanthropy Will Increase in 2017 and 2018

When it comes to philanthropy, I have some excellent news to share.

In 2017 and 2018, charitable giving will grow faster than the annualized average for the past ten years, according to a new report researched by the Indiana University Lilly Family School of Philanthropy and presented by Marts & Lundy. Based on careful economic modeling, the new study supports the hopeful assessment I made at the close of last year.

The report predicts that overall giving will increase by 3.6 percent in 2017 and 3.8 percent in 2018, when looking at inflation-adjusted dollars.

Amir Pasic, PhD, the Eugene R. Tempel Dean of the School of Philanthropy, says:

philanthropy-outlook-2017-2018Continued growth in the overall economy will lead to a rise in philanthropic giving this year and next. Our research indicates that all types of donors — individuals, foundations, corporations and estates — are likely to increase their giving in each of the next two years. Nonprofit organizations and the people they serve can find encouragement in the anticipated expansion of giving.”

While the report predicts 2017 and 2018 giving will exceed the most recent ten-year annualized average increase in giving of 0.5 percent, the average rate of growth will be below the most recent 25-year (4.4 percent) and 40-year (4.9 percent) annualized averages. So, while the forecast is definitely good, it’s not necessarily great.

Three of the leading economic factors that will influence the rate of growth in charitable giving are:

  1. Stock value growth.
  2. Gross Domestic Product growth.
  3. Household Income growth.

All three of those areas are likely to increase over the next two years. In turn, this will result in an increase of giving across all donor types:

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