Workshops to Encourage the Latent Philanthropist by Vaughn Henry & Associates

Vaughn Henry builds bridges. Bringing donors and non-profit organizations together-to the benefit of both-is his business.

And he dismantles obstacles. His unique expertise is in managing the complex technical details that too often stand in the way of planned giving initiatives.

“Philanthropy and ENLIGHTENED self-interest are not mutually exclusive. The challenge that non-profit organizations face today-particularly as they cultivate wealthier donors-is to demonstrate where and how the two intersect. Often these donors are insulated by a cadre of for-profit advisors. To succeed, non-profit organizations have to learn to speak the gatekeepers’ language.”

Henry is one of the nation’s leading experts in the design and administration of charitable remainder trusts, lead trusts, gift annuities and other tools that integrate charitable giving and sensible financial planning. Holding both insurance and securities licenses, Henry provides clients with a wide range of domestic and offshore financial services. In his highly specialized estate planning practice, he strongly encourages clients to examine their personal financial philosophies and to allow those philosophies to guide them as they take more active control of their social capital.

In addition, Henry’s seminars on tax efficient giving strategies have earned him national renown among charitable organizations, donors and financial advisors alike. With distinctive, plainspoken style, he addresses not only the technical-but also the interpersonal complexities that come into play in planned giving. Development officers leave his workshops equipped with a deeper understanding of gifting options, new tools for motivating donors and a framework for educating board members and other colleagues on the most tax efficient giving strategies.

To find out how Vaughn Henry & Associates can help you reach your goals by establishing mutually rewarding alliances with donors.

Henry & Associates

Gift and Estate Planning Services

Springfield, Illinois

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Just How Popular Are Those Charitable Trusts? – Henry & Associates

Just How Popular Are Those Charitable Trusts?

Clients and professional advisors assume that with all of the recent publicity about the use of charitable remainder trusts that there must be millions of them in existence.  The reality is that while they’re talked up as great financial and estate planning tools by many advisors, there are actually relatively few charitable trusts operating.  The latest data from the IRS reports that about 100,000 charitable trusts are recognized and properly filing informational returns, and while there are a few “stealth trusts” out there, the reality is that few charitable remainder trusts have operated since they were first authorized under §664 in 1969.

What’s that mean?

With so few trusts established to control the $76 billion in CRT assets it’s no wonder that financial and tax professionals concentrate instead on the more traditional and lucrative IRA, pension and non-qualified retirement planning opportunities with $10 trillion in assets.  As a result, very few advisors really understand how those split interest trusts are designed, drafted, funded and operated.  Add to that mix of trust creation tasks, the opportunities for confusion and mismanagement are practically limitless.  After consulting with a number of dissatisfied trustees, trustmakers and trust beneficiaries, it has become apparent that too many trusts have been “sold” to client-donors without adequate disclosure, especially when there’s a lot of volatility in the market.  Too many money managers fail to understand that investments inside charitable trusts can’t be managed like regular endowment funds or pension accounts if both the income and remainder beneficiaries are going to be satisfied.

Why Use Custom Trust Documents and Not IRS Prototypes?

Because it allows for:

• Donor/Trustmaker may act as CRT trustee
• Modifying trustee powers and using a special independent trustee
• Charitable remainder interests may be made revocable
• Allowing revocable and multiple ( >2 ) income beneficiary interests
• Principal may be distributed to charity before the CRT matures
• Using multiple charitable remainder interests to meet donor goals
• Using multi-generational/non-spousal income beneficiaries
• Defining “income” (DNI) for net income and “spigot” trusts
• Accepting closely-held assets when funding the CRT
• Accepting testamentary and IRD asset contributions
• Distributing assets in kind when cash flow is limited
• Unbundling trustee, investment and administrative functions
• Modifying investment objectives, e.g., tax efficient income

Sometimes donors are unhappy with the results of their trusts, here’s a question from an advisor:

“Any ideas on whether my client can set up a charitable trust and yet remain completely anonymous?  Can you point me to where I might find guidance on this issue?  A few years back my client set up a CRUT and CLAT with a college, and was completely turned off by the publicity and notoriety he received from that donation.  He has another charity in mind for more gifts, but to avoid the publicity will he have to settle for a testamentary charitable gift?”

Last Updated: February 17, 2003

Gift & Estate Planning Services © 2001, 2003

CONTACT US FOR A FREE PRELIMINARY CASE STUDY FOR YOUR OWN CRT SCENARIO or try your own at Donor Direct. Please note — there’s more to estate and charitable planning than simply running calculations, but it does give you a chance to see how the calculations affect some of the design considerations. Which tools work best in which planning scenarios? Check with our office for solutions.

Team Building and Expanding Your Practice – Vaughn W. Henry

The challenge in today’s estate planning environment is to find ways to put round pegs and round holes together, and match up client needs with advisor skills.  Since nobody can claim to have all the answers all the time, it makes sense to use as many experienced technicians in the construction of a plan as is needed.  The problem is that while professional advisors like to think of themselves as logical and analytical experts, clients don’t complete their estate planning for those reasons.  Reluctant clients might start the planning process with appeals to their tax averse nature, but without being motivated to finish by emotional or values driven needs, the construction of an elegant plan gets stuck on the drawing board.  For most clients, even when there’s not a charitable bone in their body, there’s an overwhelming desire to regain control of their planning.  Control of social capital, (defined as both charitable gifts and assets that would default to the tax system unless proactive choices are made) redirected to family influenced charitable projects gives clients an improved sense of control, and when that happens, those latent charitable interests surface.  If “cause or community capital” is more appropriate than “social capital” in a client’s mind, then develop that line of thinking as a way to explore options, but emphasize choices are available in the planning technique.

With all of the political posturing and talk about eliminating the “death tax”, an already skittish client is looking for any excuse to avoid long term planning, even when there’s no estate tax liability.  A few clients take the benign neglect approach, ignoring the problem and hoping it will go away by itself.  Others have likened it to grabbing hold of a tiger’s tail: Once they have it, they don’t know what to do with it.  To help them move out of either mindset, consider a more holistic approach to the design process.  Good plans usually are the result of a coordinated team effort.  Combine the well-briefed client, professional advisors and when there’s a charitable component, a nonprofit organization’s planned giving officer, and there’s a better chance of success.

“I find it fascinating that most people plan their vacations with better care than they plan their lives.  Perhaps that is because escape is easier than change.”

— Jim Rohn

With increased commoditization of services, most advisors offer only variations in products and services, so it makes sense to take client – advisor dealings to a higher level based on values and enhanced relationships.  To help clients achieve personal significance, an increasing number of planners are incorporating a charitable component in their estate plans, and that takes a real leap of faith for a lot of clients who don’t see themselves as altruistic donors.

“One thing is for sure. I won’t leave a lot of money to my heirs because I don’t think it would be good for them.”

— Bill Gates, Forbes, May 19, 1997

When charitable tools are introduced, very often the already unstable mix of advisors soon includes a development officer representing the philanthropic interests of the client donor.  Why is this a source of added turmoil?  The simple answer is turf and its control.  Unless the estate planning team is remarkably cooperative, each advisor has an agenda and seeks to control the client; and this battle isn’t limited to just the for-profit advisors.  Add to this volatile mix the prejudices and competing claims for attention from the client and you’ve set up some real struggles.  Where and why did this all come to pass?  It’s based on both perceptions and fact.  Rather than draw on each individual’s strengths, each group seeks to gain advantage by marginalizing the other’s skills and talents.  What should each group of advisors bring to the table and what should they leave behind?

It is critically important for the development officer to communicate the importance of the institution’s charitable mission.  Until that is done and bonding has taken place, the donor has an overwhelming number of philanthropic institutions from which to choose.  If the donor has a relationship with the organization, then selling the mission is a lot easier to accomplish.  What the development officer wants from professional advisors is an entrée to the process and validation of the proposed charitable planning tools.  Besides this obvious goal, there may be another more plebian motive.  All too often, the fund raising specialist from the nonprofit knows that booking gifts and getting immediate donor support is the ticket to advancement.  Not that those motivations are unique to the nonprofit development staff, it’s a universal inspiration, but sometimes the inexperienced fundraiser recognizes that significant planned gifts are where the real money is going to be.  For every charity with in-house legal and tax planning staff, there are hundreds of not-for-profit organizations employing unsophisticated fundraisers in a planned giving scenario.  Since they often lack the technical resources to design effective estate plans, development officers turn to professional advisors to see how to catch a ride on the gravy train.  This one sided approach is short sighted and isn’t likely to produce donors happy with planned gifts.

Since wealthy donors communicate extensively with their peers and 55.5% say they recruit other philanthropists ^(a), it’s important to recognize how quickly both good and bad news travels in the affluent community.  Russ Prince in 1997 published a study of the philanthropic affluent in which he noted that 58% of donors were unhappy with their charitable planning as proposed by development officers.  Of course, the nonprofit planners aren’t the only ones with a low approval rating; clients were unhappy 62% of the time with their professional advisors. ^(b) The most common reason donors were satisfied with the planning process was the result of their advisors’ technical competence; something that both group of advisors, in a self-evaluation of needed skills, ranked last. ^(c)

“Propose to donors only those things that you would propose to your own father and mother.  Until a donor feels good in the bottom of his/her belly about a proposed gift, it’s not a good gift.”

Roger Ellison, Vice President for Planned Giving, West Texas Rehabilitation Center

While both nonprofit and for-profit advisors have strengths and weaknesses, in order to deal with them and form effective teams, it’s important to understand the perceptions of both groups.  From the commercial sector, the following complaints are lodged against the nonprofit quarter and, unfair or not, they need to be addressed.

Development officers are highly mobile, using their positions as stepping-stones to other opportunities.  A 1992 NCPG survey of nonprofit professionals showed that planned giving officers with less than three years’ experience made up 38% and in 1996 it was 42% ^(c) of respondents working in planned giving positions.  The survey changed format in 1998, and while salary shouldn’t be a measure of competence, it’s often an indication of experience.  The latest data shows that 89.8% of planned giving specialists making less than $55,000 had three years or less of experience, this represents 48.9% of the nonprofit employees surveyed. ^(j).  Given that positions in a planned giving office tend to attract more qualified staff, that relative lack of experience and excessive mobility makes it hard to cultivate planned giving donors who seek continuity and skill.  Further aggravation exists when professional advisors become frustrated with the need to train and explain complex concepts to an ever changing new crop of development officers that seek support, since few planned gifts are completed in less than six months and many take years to realize.

Too often, nonprofit organizations are forced to place a lower market value on their employees and, by poorly compensating them, it sets up a potential for resentment when salaries are compared to those in the commercial community.  For-profit planners often see themselves as a resource to be unfairly milked in support of the nonprofit organization or characterized as commission and fee crazed mercenaries banging on the gate who should instead forsake compensation because they work to assist donor clients in meeting charitable goals.  This inequity in compensation sets the stage for jealousy and disdain when estate planning specialists lose sight of achieving their goal of helping a client donor establish an effective charitable plan.

Development officers, in their quest for support, may provide donors with sample documents and proposals that minimize the downside or fail to fully disclose the risks of making irrevocable gifts.  They object to the for-profit advisors’ meddling in the plans and dissuading the donor from completing the gift, especially when the gift is desperately needed.  On the other hand, professional advisors may have a legal obligation to poke holes in a plan they don’t understand or agree with, no matter how deserving of support the charity is.  One of the problems of focusing on just one component of the gift is that when it’s not integrated within the entire estate plan, it may create other problems.  Since clients may not provide fundraisers with complete access to their balance sheet, the charity’s development officer is working on a plan with limited access to the big picture.  Many competent attorneys don’t want to see IRS prototype or charity-authored sample documents in client hands, especially if the development officer isn’t aware of other components in the estate plan.  They rightly object to being a rubber stamp to an already concluded process without a chance to provide proper counsel.  Besides defending the time they sell in the process, there’s a concern about a patchwork quilt approach to planning.  For some lawyers there is unease about the unauthorized practice of law (UPL) by all the planners, not properly  authorized to provide documents, involved in the process.  UPL is a serious issue that exists for many legal commentators because there may be no one to represent the interests of the donor if the charity proposes the plan, and then acts as trustee and investment manager in a turnkey type planned gift.  On the other hand, inexperienced legal advisors too often improperly rely on the development officer’s number crunching and document samples without understanding the nuances of design concerns.  Even if they do nothing but sign off on the plan, the client’s lawyer and accountant are the ones on the malpractice hook when things go sour, and it’s natural they’d have some reluctance to grant a blank check to a development officer, no matter how good their intentions are.  Commercial sector advisors are often tax driven and for them, philanthropy may not be highly motivating.  Unless they hear the client express charitable intent, they fail to see any good reason for including philanthropy in a plan at the expense of heirs and client security.  However, when charitable planning takes place, the charitable institution shouldn’t expect the advisor to stop being a donor advocate.

Why is gift planning, which theoretically ought to offer a higher level of cooperation, usually worse compared to other advisor inter-relationships?

“First, because there are not too many such gifts.  Second, the gifts are usually deferred and are not of as much interest as the ‘today’ gift that is desperately needed.  And planned gifts are seemingly complex and the not for profit folks don’t like to appear to the donor to be unable to do ‘it’ themselves.”

Richard C. Zinzer, Director of Development, University of Houston

When development officers present a plan leading towards a significant gift, they feel threatened when the professional advisor won’t assume the client is being altruistic and help close the gift without throwing up a bunch of objections.  Partly, it’s a communication problem, and partly it’s a result of prior training; you can’t expect professional advisors to change the way they do work just because there’s a charity involved in the transaction.  Building networks of competent planners who understand the planning dynamics and the client donor’s goals is critical if there’s to be any chance of success.

“Attorney’s, for example, are trained in the Socratic method – subject a decision to critical analysis by probing for weaknesses as opposed to extolling it’s virtues.” — Roger Ellison

Some nonprofit employees have little experience with or understanding of the capitalist system and have a deep-seated distrust of the wealthy and their advisors.  Because they’ve not had to run a business or deal with pressures in a market driven economy they try to appeal for support by using language that may not be motivating for potential donors.  For example, asking a business owner to help a charity because it’s tax deductible or because the support is somehow owed to the charity is a tactic with little chance of success.  Couple that inexperience with a sense that the estate tax system is a good thing designed to ensure a redistribution of wealth, and it’s possible that there’s potential for conflict between the donor and the charity’s employee.  Each donor has different “hot buttons” that generate actions, but sometimes it turns out that they’re not always positive buttons.  For the reluctant philanthropist sometimes it’s easier to motivate them when they’re upset, and the proposed philanthropy solves a problem, rather than starting as a great idea to promote good works.

Accountants, attorneys and an increasing number of financial advisors are fee-based planners with no motivation to work on plans that don’t generate billable hours.  Except for any personal sense that their guidance is promoting a common good, there’s no reward for the risk.  Development officers are generally salaried and can feel comfortable investing time by encouraging their donor prospects to consider planned gifts.  Coming from a culture that encourages low-key visits and informal get-togethers, the Planned Giving Officer (PGO) doesn’t object to spending time in meetings.  For-profit advisors, in contrast, are reluctant to spend time cultivating clients in unproductive sessions, since many times their schedules are already booked with existing clients seeking appointments and willing to pay for expertise immediately.  To learn the complexities of charitable planning, an admittedly arcane part of the law, tax and legal professionals must commit to either doing the work gratis as a learning experience or charging a fee sensitive client for the time it takes to get up to speed.  Generally, that won’t happen.  It should be no surprise that carpenters build houses of wood and masons build them with brick.  Most advisors won’t have a charitable gift on their radar screen because they’re uncomfortable with it.  They simply avoid the problem by ignoring advanced and charitable planning techniques concentrating instead on activities that pay the bills.  For a development officer to expect free technical support is unrealistic, but if they find someone gracious or committed enough to offer assistance, they’d be well advised to take care of them.

Most planners agree that establishing planned giving committees and advisor councils helps charities explore charitable options with donors.  However, a charity should not expect volunteer groups to offer advice in areas for which they’ve had little training.  A property and casualty insurance agent, a divorce or real estate lawyer and a CPA who specializes in audits all may have great skills, but those skills don’t necessarily equate with experience in planned giving beyond what they received in prior schooling.  This area has become highly specialized and is constantly changing; they should find competent help.

Client advisors are concerned about incompetent charitable planners who implement plans that are one sided, or tax inefficient.  For example, highly appreciated assets contributed to a low payout CRAT will often produce income tax deductions that are wasted, and that’s a red flag to the CPA who has to listen to a client gripe about income taxes every year.  What these gatekeepers to private wealth want to see instead is something that meets the donor’s need for income security and tax relief.  It is a split interest gift, and planners must remember that both sides should have a benefit to make this gift work properly.

Before a gift should be considered, address the priorities from the donor’s perspective first; above all, do no harm.

1. Ensure financial independence – help donors accumulate and set aside adequate resources to maintain lifestyle and address family security issues; remember life expectancies are statistical medians — 50% of donors live longer than the IRS expects them to.

2. Create a sense of family legacy – help donor clients by using the basics of estate planning to shift appropriate distributions at the appropriate times to heirs.  Involve the family and help nurture the next generation of philanthropists to strengthen family supported charity.

3. Control “social capital” by creating a community-oriented sense of legacy – help donors develop the basics of economic citizenship, even if it’s enlightened self-interest.  Philanthropy can be learned.  What makes charitable planning work is the combination of logic and an appeal to the heart and soul of the client.  To do otherwise is to shortchange clients, who deserve more than an appeal to their base instincts.  84.6% of affluent investors identify themselves as highly motivated toward philanthropy; often all the advisor needs to do is to show the donor how they can afford to give more. ^(a)

Donors pass through a philanthropic progression as they become more aware of the opportunities to support charitable works. ^(d)

1. Philanthropy means more than charity.

2. Charitable giving should be proactive rather than reactive.

3. Charitable giving should be based on a donor’s commitment.

4. Charitable giving should be viewed as an investment.

5. Effective donors invest the time.

6. Charitable giving requires a certain level of competence.

7. Charitable giving must be focused.

8. Charitable giving should be driven by the donor’s values

9. Charitable giving links a client to society.

Help client donors work through these stages by presenting concepts with which they can identify.  Address the donor’s needs and goals, allay their fears about doing something that superficially is foreign.  After all, who gives away stuff they still need?  Simple one or two page summaries are easiest to work with, while detailed ledgers that support the plan should be made available to advisors.  Not that some clients or donors shouldn’t see these masterpieces of computerized number crunching, but it should be with the caveat that the numbers ultimately will be proven to be inaccurate predictions.  Making assumptions about future performance is inherently dangerous and clients tend to have selective memory when they hear how their planned gifts will function year-to-year.  It’s better to stress the charitable nature of the gift and be conservative about making projections.

“It has been said that the most effective PGO’s genuinely believe in the cause for which they seek funds.  There is some truth in that–and evidence for it.  (You won’t find any agnostics, for example, in the development office of Brigham Young University.)  This commitment to cause cuts both ways, however.  Even as it attracts highly dedicated employees, it attracts employees who are territorial in perspective–and overly zealous.  Too often, they see professionals as ancillary staff…people to be harnessed, fed an apple or two (annual recognition dinner), and put to work in the institution’s “pasture.”  The institution is able to do this because, typically, it has strong finances and good political connections (including a high-profile board).  These traits make it highly influential in the community.  Also, of course, it gets mileage from its “charity” imprimatur.

RESULT:  Too often, professionals are not treated as partners.  The playing field is tilted, and the professionals are exploited…used as second-string players. True, they may be lauded and “plaqued” by the institution’s president, but that is much ado about showmanship.

SOLUTION:  Nonprofit gift planners should put their role in perspective.  They need to recognize that the closing of most planned gifts is a team effort, and that the contribution of every player–nonprofit, professionals, and donor–is essential for success.”

Paul Schneiter, editor Planned Gifts Counselor

Of course, there’s plenty of responsibility for the professional community to acknowledge, and development officers are rightfully upset with some of their donors’ advisors.  Charitable planners understand that commercial planners act as speed bumps for wealthy clients, who use them as a foil to keep persistent solicitors at a distance, and few donors will complete a financial or estate plan with a significant planned or major gift without their advisors’ concurrence.  What a development officer needs more than anything is technical support and a willingness to implement the plan once the donor understands the choices, the necessity for making decisions and taking action.

Some gift planners refer to the for-profit community as “allied professionals”.  However, for clarity, the commercial sector advisors in this article will refer to accountants, trust officers, financial planners, stock brokers, attorneys, insurance and financial services advisors.  Using “allied professional” as a defining label seems to imply that the advisor has been deputized by the organization as an ancillary fundraising arm of the charity.

Unfortunately, this collection of planners falls into three general categories and too often fundraisers from a charity run into advisors who give everyone a bad name.  While there is a small group of professional advisors who see charitable planning as an integral part of their practice, there are far more in a second group using planned gifts as a product to be sold or as a fee generating service with little commitment to a charitable outcome.  Although it’s true that financial and tax advisors should be compensated for their expertise, too many push the process solely as a way to market products without a strong commitment to helping clients recognize and realize their charitable goals.  This second group may be somewhat competent and able to lead the client through some of the planning traps, but they tend to approach the charitable planning in a hit or miss fashion seeing charitable gifts only as a tax driven solution. The real problem lies with the third group, the mercenaries banging on the gate who give charities and committed charitable planners real heartburn.  This group sees a charity with a donor base that can be exploited as a pool of potential clients.  They market services under the guise of helping the charity.  This works because most charitable boards and their executive staff lack a strong financial background and see this offer as a way to fill their organizations’ coffers with enough revenue to meet their mission by handing off fundraising activities to these marketing experts.  They try to sell charitable trusts as products, pitching them to prospects as tax avoidance schemes, bordering on tax evasion.  Examples abound of abuses, and these include sales of inappropriate insurance products that take a donor’s ongoing annual support and convert those needed dollars to commissionable premiums or to those who expect kickbacks for steering a donor to a charity as a finder’s fee.   Occasionally seminars are offered with evangelical zeal, as a way to entice potential clients to disclose financial background and provide another way to market products that otherwise wouldn’t have been purchased in a more structured and stable environment.  This approach works because a clever promoter can appeal to a prospect’s greed by over promising the advantages and glossing over the mechanics and legal niceties.  These professional advisors, although that’s probably an overgenerous description, ingratiate themselves by joining boards and offering assistance as a way to acquire mailing lists and seek centers of influence. The more disreputable advisors “shop charities” to peddle their clients and try to find a nonprofit to act as a facade or a shill in a transaction, these actions may expose the nonprofit organization with sanctions and a loss of their tax-exempt status.

The trends are quite clear; some firms pursue charities legitimately, others see them as sheep to be sheared.  In 1991 it was reported that 55.7% of sampled trust banks and 44.6% of insurance companies were targeting nonprofit organizations for services and products, and by 1994 up to 95.9% of the same banks and 96.7% of the insurance companies were in on the action. ^(a) While there’s nothing wrong with networking and building a practice based on referrals from satisfied clients, there should be some commitment to the philanthropic mission of the charity.

Self Reported Ranking by Advisors (1 – 4, with 1 = most important)	Planned Giving Officers	For-profit Advisors
Interpersonal Skills
Technical Expertise
Donor’s Trust in the Gift Planner
Donor’s Trust in Organization
Gift Planner Profile 2 (c) — NCPG, 1996

What sins are visited upon charities by the donor’s advisors?  There’s a long and detailed list, but consider the following:

When advisors are unwilling or unable to acknowledge that estate planning with complicated charitable tools is a highly technical field, not practiced by many, they dig holes for their clients.  Since these are usually irrevocable gifts, when they blow up, the clients are irrevocably perturbed and some seek redress through litigation.  Instead of passing the responsibility to experienced planners, an advisor who tries to go it alone may provide incomplete or inaccurate advice that results in donor dissatisfaction with the charitable gift.  That mistake generates ill will and many of the donor’s peers may decline to make similar irrevocable gifts because of the advisor’s malpractice and lay the blame at the charity’s feet.  Of course, some advisors go too far towards the other extreme, promoting the use of complicated planned gifts because they generate larger fees than a simple plan that produces little revenue.  Sometimes the old adage, KISS (keep it simple stupid), makes sense.  For example, a CRUT proposed for a $60,000 gift, might be more complicated and expensive than justified.  A gift annuity might be a more appropriate tool to consider, even if it generates few billable hours.  Most advisors do a dainty dance around each other in an effort to avoid hard feelings, yet there’s nearly always an undercurrent of distrust, some of it is well deserved.

Advisors compensated by the charity for investment or legal advice may have wholly proper relationships, but when they seek to gain commissions and fees by representing both parties to a transaction, they cross an ethical line.  Full disclosure and due diligence requires that each side have appropriate counsel and not have conflicting interests.  The case of Martin v. The Ohio State University Foundation, Ohio App., 10th App. Distr., 2000, is illustrative of the problems that occur when an advisor tries to sell a CRT like any other financial product, and then compound the error with a poorly coordinated team of advisors.  That type of marketing plan is guaranteed to produce a donor who is dissatisfied with the charitable tool that didn’t perform as expected.  It’s better to lay out all of the risks and rewards and spend time on the mechanical issues with which the client will deal over the life of the trust.

The seven key factors satisfaction table (below) summarizes client – advisor perceptions that should be readily transferable to estate and gift planning relationships.  Since this survey was based on affluent ($5 million or more in investable assets) clients and their money managers, there are some observations that may suggest ways to establish better donor relations.  Unfortunately, clients are generally in no position to accurately gauge investment advisor competence, and that’s typical for any technical skill like estate planning.  Clients generally assume their financial advisors are competent, and while they may be satisfied with their advisors, they react badly when the planning process that depends on competence turns sour.  However, there are traits that clients can more readily judge which predict a satisfactory client – advisor relationship.  They include reliability, the ability to manage expectations, and avoiding surprises with good communications; some call this a “high touch” system of contact.  While most clients indicated that their advisors were polite, friendly and courteous, there was a real difference in perceptions of warmth and empathy.  Advisors who possessed active listening skills, and characteristics that allowed them to focus on their client’s needs and bond with them, retained their clients consistently.  Counselors without those skills lost clients.  Although it seems that educating clients with seminars would be an important way to service client needs, it was seen more as an effective way to let clients justify their faith in the advisor, validate prior actions and keep them informed.  Seminars are designed to encourage prospects to perceive the presenter as a resource, not as the primary way to educate and solicit new clients.  Client donor cultivation occurs when they seek counsel in follow up meetings where specific concerns can be addressed.

Seven Key Factors that Impact Client Satisfaction(a)	Client	Viewpoints
Rating the Advisor – Money Managers Client Perceptions of Their Advisors	Percent Very Satisfied	Percent Very Dissatisfied
Competence Factor -Keeping dealings confidential -Having money management expertise -Being knowledgeable in investments	82.6 80.9 72.3	64.5 80.6 64.5
Hustle Factor -Being extremely reliable -Being a perfectionist	81.7 61.7	54.8 6.5
No-Surprises Factor -Wanting to know complaints -Communicating problems and solutions	55.3 38.3	6.5 0.0
Warmth Factor -Being responsive -Being warm	74.9 64.3	45.2 25.8
First to Know Factor -Providing timely information -Giving regular client briefings	77.9 75.3	19.4 38.7
Listening Factor -Being patient while explaining -Listening well	82.6 78.7	54.8 48.4
Client-Centered Factor  -Understanding specific needs -Providing viable alternatives -Defining client needs	75.7 75.3 59.1	25.8 41.9 12.9

What should be of great concern to prospective clients and donors is a recently released study that surveyed donors, professional advisors and planned giving officers employed by nonprofit organizations. ^(e) The survey results were alarming, disappointing and surprising.  In short, assuming advisors possessed minimal competence and technical expertise turned out to be a mistake.  Advisors who claimed planned giving as a major part of their practice generally lacked the training to properly advise their clients.  A pop quiz with randomly generated estate planning and planned gifting questions produced no professional group with an average passing grade (above 70% correct).  Although attorneys specializing in estate planning had the best scores, fund-raising employees of charities produced the worst scores.  What this means is that continuing education needs to be an ongoing requirement and different levels of training need to be available for all those who make financial planning, estate planning and planned giving a part of their practices.  Unfortunately, too few professionals make an effort to stay current, much less on the cutting edge.

Understand that tax driven planning is important to professional advisors, but it’s not the principal reason donors make planned gifts in support of a charity.  Tax planners tend to take a narrow view of the planning options and are less likely to suggest making charitable gifts out of a concern for exerting undue influence on the client.  Some advisors especially avoid introducing the topic out of a fear of losing the client’s trust and business. ^(b) However, this attitude tends to minimize the opportunity to distribute just wealth to heirs, there’s also a chance to pass down the client’s value system.  Planned gifts are just that, philanthropic gifts, and in a purely analytical evaluation of that gift, it’s possible that the donor will be better off financially.  However, those gifts oftentimes come at the expense of passing those assets to family heirs.  While it’s possible and generally a great idea to set up a win-win situation, remember intangible benefits accrue to a donor by making a gift.  This emotional feedback can’t be quantified and shouldn’t be marginalized.  To help donor clients manage expectations it’s even more important to elicit charitable intent and help clients understand their opportunities to support projects and organizations with special meaning to them.

Issues that present problems for professional advisors dealing with the fallout inexperienced development officers create are numerous, but donor cultivation tops the list.  Who’s to blame?  “Fund raisers who do not have a clue how to build the relationship with their donors first before going in with a big proposal. Gifts that can transform an institution come from a deep involvement by the donor in the life of the charity and when the time is right, the gift will happen.  Fund raisers who have the attitude that the donors owe them a gift because they have so much money. Inexperienced planned giving officers who expect qualified donor advisors to include them in discussions when it only takes one conversation with the fund raiser to know that the person has very little sophistication on these complex topics. A lot of inexperienced people are trying to do planned giving, and it is scary.”

Debra Ashton, Ashton Associates

Motivations of the Charitably Affluent(g)
Communitarians – desire to help the local community	26.3%
The Devout – compelled by religious convictions	20.9%
Investors – incorporate a financial component in their decisions	15.3%
Socialites – decisions based on their social milieu	10.8%
Repayers – a sense of fulfilling a perceived obligation	10.2%
Altruists – means of self-fulfillment	9.0%
Dynasts – a function of socialization and family heritage	10.3%

Legal and financial advisors appear to play a much more significant role in the gift planning process than they did in the 1992 survey. This may be attributed in part to the increasing affluence and financial sophistication of donors in a strong economy.  However, the desire to support charity remains the primary motivation for most donors, while tax and other financial considerations continue to be secondary. ^(k)

From The Millionaire Next Door, consider the following facts uncovered about American millionaires:

• Only 19 percent receive any income or wealth of any kind from a trust fund or an estate.
• Fewer than 20 percent inherited 10 percent or more of their wealth.
• More than half never received as much as $1 in inheritance.
• Fewer than 25 percent ever received “an act of kindness” of $10,000 or more from their parents, grandparents, or other relatives.
• Ninety-one percent never received, as a gift, as much as $1 of the ownership of a family business.
• Nearly half never received any college tuition from their parents or other relatives.
• Fewer than 10 percent believe they will ever receive an inheritance in the future.
• By 2005, there will be 5.6 million households with a net worth of over $1 million.
• By 2005, the total value of private wealth is projected to be $27.7 trillion.
• 5.3 % of the households will control $16.3 trillion of this money.
• 2/3 of the millionaires are self-employed.
• 80% of millionaires are first generation.
• “America continues to hold great prospects for those who wish to accumulate wealth in one generation. In fact, America has always been a land of opportunity for those who believe in the fluid nature of our nation’s social system and economy.          More than one hundred years ago, the same was true. In The American Economy, Stanley Lebergott reviews a study conducted in 1892 of the 4,047 American millionaires. He reports that 84 percent “were nouveau riche, having reached the top without the benefit of inherited wealth.” ^(f)

With all of their advisors offering conflicting, confusing and poorly coordinated advice, it’s no wonder that clients feel whipsawed and that curmudgeon-like traits pop to the surface.  No one likes to feel out of control and when presented with no clear choices, the client withdraws and postpones future decisions.

“I have been dreading this for so long, and have put it off for years.   After I realized what choices I had and how I could make a difference, it became much easier to do.  Getting together with a team of planners who took the time to help me made it all a wonderful experience and I’ve had a lot of fun working with this.”

— 85 year-old widow commenting on the success of a family meeting discussing her estate plan

Given the human frailties that must be dealt with, there will need to be some compromise on all sides.  Donor clients need to acknowledge that there are no magical solutions to simply solve problems that accumulated over a lifetime of acquiring and conserving wealth.  Add to that a burden for dealing with longstanding intra-family squabbles and there’s a volatile mix headed down a rocky road.  If the advisors are providing conflicting advice and clients can’t differentiate between the technical nuances, how can anyone reasonably expect to get a sensible decision?  It’s far better for the advisors to elicit and acknowledge the client’s priorities.  Then in a cooperative fashion build a plan that meets those goals.  An estate plan is much like the construction of a house, each contractor contributes something to the finished project, framing, plumbing, electrical, roofing and finish work; all use different skills, tools and training and all are important if the house is to function properly.  It’s no different with estate planning professionals.

What Donors Want in Their Charitable Advisors	Charity Fundraisers	Professional Advisors
Expertise in technical details of executing gift	16.0%	97.9%
Skill and efficiency working with other advisors	60.3%	75.2%
Willingness to let donor set the pace	67.2%	86.0%
Knowledgeable about each type of planned gift	94.7%	99.4%
Sophisticated understanding of donor’s motives	99.2%	82.2%
Help in deciding what type of planned gift	85.5%	96.8%
Effectiveness in getting charity to treat donor as he or she wants to be treated	69.5%	11.2%
Technical sophistication was a defining characteristic in developing positive experiences.  Donors in this survey had previously made planned gifts worth at least $75,000 and had a net worth of $5 million or more. 603 donors surveyed  (h)

What solutions exist?  Better cooperation and an understanding of the role each advisor plays in the planning and implementing of a well-designed estate plan are essential.  Education of advisors, on both sides of the table, is critical, and although it takes a commitment of time and effort to teach clients and other advisors, in the long run it will produce a team better able to satisfy the planning needs of a client.   Before effective teaching can occur, there must be an open dialogue and a measure of trust between all the parties before any long-term success will be achieved.  Acknowledge that any discussion of death and taxes is hardly a topic enthusiastically addressed by most clients, so make the benefits more immediately realized.  Promote a sense of control by helping clients redirect assets to heirs and projects of importance in ways that provide tangible positive feedback   A successful planning strategy should provide a sense of relief, better yet – a sense of accomplishment.

The “Three C’s of Charitable Estate Planning ⁽ⁱ⁾ will summarize the approach needed.  Create Philanthropists, Client Centered, and Client Commitment all combined in one values driven plan make the process different from generic estate and financial planning.

In order for clients, professional advisors and nonprofit planners to be successful, they need to collaborate.  They can do that a number of ways, as follows.

• Promote planning partnerships, and minimize the tendency to develop an “us against them” attitude.  It’s just too easy to denigrate the other professions when you haven’t had a chance to walk in their shoes. Offer continuing education programs, workshops and joint presentations as a way to both update planners and bridge gaps.
• Find collegial partners and establish strategic alliances, seek advisors with objectivity and creativity.  If there’s going to being any sort of sharing beyond a superficial level, have an open-minded discussion that deals with more than just technical issues.
• Build a library of articles, case studies, web sites and resources suitable for clients, development staff and professional advisors as they start basic research on planning tools and opportunities.
• Attend regional and national conferences on gift and estate planning.  Even if the topics are technical, and beyond a basic level of understanding, go and stretch capabilities or learning won’t happen.
• Join estate planning and planned giving councils, network with other advisors.  Professional groups need speakers, present programs to promote charitable and estate planning concepts.
• Understand client inertia; for many there are but two choices, do something or do nothing.  Doing nothing is perceived as having less risk.
• Participate in Internet discussion forums; it’s a great opportunity to watch traffic among planners with different perspectives.  Even if there’s no agreement on a discussion point, just observing the dialogue provides a sense of what concerns each group of planners and clients.  The problem with the Internet is that too often there’s too much information to wade through without being able to discern who’s competent and what authority they have for comments made during those free wheeling discussions.  Besides trying to drink from an “information fire hose”, computerization now provides sophisticated software that eliminates many professionals as advisors, but doesn’t provide the discriminating experience that goes along with the solutions provided by generic software.  Look at Quicken® or Quick Books® as an example, by using that software the accounting functions for individuals and small businesses may have been taken over by those with data entry experience, but no accounting or tax background.  Is it a better solution? Maybe, maybe not.  Do it yourself brain surgery may appeal to some, but not all clients need that level of commitment.
• Use the Internet to establish virtual communities and create networks of other advisors who face similar challenges.  The Internet has replaced the water cooler as a gathering place for exchanging ideas and proposing solutions.  So many planning shops are staffed with less than three professionals that it’s common for people to become insular in their thinking.  Once the advisor slips into that rut, there’s little in the way of creative planning to motivate new approaches to old problems unless there’s someone to stretch and challenge existing perceptions.

If client donors and their advisors are to have successful relationships, it will take trust, collaboration and empathy.  Consensus building, rather than using dictatorial pronouncements, is the more effective way to build a solid foundation.  Until all of the advisors are telling the client donor the same story and working towards the same goal, clients can’t be encouraged to make appropriate decisions.  That skill set can be learned by advisors if they’re willing to consider adding a values oriented component to their discussions and presentations.

(a) Cultivating the Affluent – How to Segment and Service the High Net Worth Market, Russ Alan Prince and Karen Maru File, Institutional Investor Inc., 1995

(b) Doing Well by Doing Good – Improving Client Service, Increasing Philanthropic Capital: The Legal and Financial Advisor’s Role, The Philanthropic Initiative, 2000

(c) Gift Planner Profile 2, National Committee on Planned Giving, 1996

(d) The Advisor’s Role In Philanthropy: A New Direction, H. Peter Karoff, Trust & Estates, April 1994

(e) “Forging Ties to the Money Pros”, Chronicle of Philanthropy, Holly Hall, August 7, 1997

(f) The Millionaire Next Door, Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D., 1996

(g) The Seven Faces of Philanthropy, Russ Alan Prince, Jossey-Bass, 1994

(h) Prince & Associates and Private Wealth Consultants, 1997

(i) The Charitable Estate Planning Process – How to Find and Work With the Philanthropic Affluent, Prince, McBride and File, 1994

(j) Gift Planner Profile 3, National Committee on Planned Giving, 1998

(k) Survey of Donors 2000, National Committee on Planed Giving, 2000

There are practical resources for advisors working in the trenches; check these for help.

Planned Giving Design Center (pgdc.net

Gift Law (giftlaw.com

Council on Foundations (cof.org

Leave A Legacy ™ – National Committee on Planed Giving (NCPG.org

Other publications worth a review if added background is needed.

Cultivating the Affluent II – Leveraging High Net Worth Client and Advisor Relationships, Russ Alan Prince and Karen Maru File, Institutional Investor Inc., 1997

Private Wealth – Insights into the High Net Worth Market, Russ Alan Prince, Institutional Investor Inc., 1999

The Charitable Giving Handbook, Prince, Rathbun and Steiner, National Underwriter, 1997

© 2001 Vaughn W. Henry

see the final article in the Journal of Practical Estate Planning,, Published Bimonthly by CCH Incorporated, April-May 2001 Issue – page 30 – 41.

Required Distributions for Retirement Plan Assets – Christopher Hoyt’s Plain English Summary for Donors and Clients

Changes were made in a surprise announcement on January 11, 2001 to IRA distribution rules. The proposed regulations under Section 401(a)(9) have a significant impact on estate and charitable planning for retirement plan assets. While these changes may make it easier to pass retirement plan assets to heirs, qualified tax deferred dollars will continue to be some of the most efficient gifts to charity, as they will avoid the income in respect of a decedent (IRD) penalty in many donors’ estate plans.  These regulations also eliminate the past penalties associated with naming a charity as a beneficiary to share retirement plan proceeds with heirs.  There are other sites with more detailed explanations to cover the 108 pages of changes, but that’s not within the scope of this simplified summary.

Professor Christopher R. Hoyt, has presented a simple way to explain the new IRA distribution regulations to clients, donors and friends.  The following is a short summary that includes the tables and exact percentages that they will need to comply with the new laws.  He notes:

The new rules are absolutely wonderful, compared to the old rules.  For example, it is very easy to name a charity as a beneficiary of part or all of a person’s retirement account without accelerating distributions over the person’s lifetime or after death.

Over the account owner’s lifetime, the minimum distributions are the same whether a charity is named as a beneficiary or not.  After the account owner’s death, however, the administrator will usually want to “cash out” the charity’s share of the account before the end of the year that follows the year that the account owner died.  That will leave only non-charitable beneficiaries at the end of that year and will give those beneficiaries greater flexibility than if the charity is still a beneficiary.  Overall, this cash-out strategy permits a charity to be a beneficiary of part or all of any IRA or retirement plan account without causing any problems to the other beneficiaries, such as children.

At the end of this message is the summary.  It is the bare-bone basics.  For more complicated situations (e.g., a trust is a beneficiary, rollovers to surviving spouses, death before age 70 ½, contingent beneficiaries, etc.) you’ll need a competent person to look at the regulations.  Joe Hodges posted several Web sites where the regulations can be retrieved at no cost.  They are:

http://deathandtaxes.com/mrdreg.htm

http://www.ira-web.com/newreg.htm

http://www.benefitslink.com/taxregs/1.401a9-proposed-2001.shtml

http://pub.bna.com/pbd/130477.htm

DISCLAIMER: The opinions expressed in this message are those of the author and do not necessarily reflect the views of the University of Missouri. The statements apply to a general discussion of legal issues and do not constitute legal advice or a legal opinion. No attorney-client relationship is created by this message. Seek independent counsel to act upon any ideas presented in this message.

REQUIRED DISTRIBUTIONS OVER YOUR LIFETIME AFTER AGE 70 ½

GENERAL RULES

Unless you are married to someone who is more than ten years younger than you, there is one — and only one — table of numbers that tells you the portion of your IRA, 403(b) plan or qualified retirement plan that must be distributed to you each year after you attain the age of 70 ½.

The only exception to this table is if (1) you are married to a person who is more than ten years younger than you and (2) she or he is the only beneficiary on the account.  In that case the required amounts are even less than the amounts shown in the table.  To be exact, the required amounts are based on the actual joint life expectancy of you and your younger spouse.

TWO SIMPLE STEPS

Step 1: Find out the value of your investments in your retirement plan account on the last day of the preceding year.  For example, on New Years Day you can look at the closing stock prices for December 31.

Step 2: Multiply the value of your investments by the percentage in the table that is next to the age that you will be at the end of this year.  This is the minimum amount (RMD) that you must receive this year to avoid a 50% penalty.

Example: Ann T. Emm had $100,000 in her only IRA at the beginning of the year. She will be age 82 at the end of this year.  She must receive at least $6,250 during the year to avoid a 50% penalty (6.25% times $100,000).

THE TABLE:

(Law: Prop. Reg. Sec. 1.401(a)(9)-5 Q&A 4(a)(2) (2001))

Charitable Trust Planning Resources – Vaughn Henry & Associates

Charitable Trust Planning Resources

CONTACT US FOR A FREE PRELIMINARY CASE STUDY FOR YOUR OWN CRT SCENARIO or try your own at Donor Direct. Please note — there’s much more to estate and charitable planning than simply running calculations, but it does give you a chance to see how the calculations affect some of the design considerations. Which tools work best in which planning scenarios? Check with our office for possible solutions.

The CRT offers clients an excellent and creative opportunity to control their social capital.

Do you have a classic case and need a hypothetical computerized evaluation? Send us data on your asset and income projections, and we’ll provide a preliminary keep asset vs. sell asset vs. tax saving CRT scenario for your own CRT or CLT.

Professional Resources and Support

• Updates on the latest estate tax legislation from Henry & Associates
• National Committee on Planned Giving, NCPG, 233 McCrea Street, Suite 400, Indianapolis, IN 46225. Tel: 317-269-6274. Fax: 317-269-6276 NCPG EMail
• Association of Fundraising Professionals AFP, 1101 King Street, Suite 700, Alexandria, VA 21614-2967. Tel: 703-684-0410
• Association for Healthcare Philanthropy 313 Park Avenue, Suite 400 • Falls Church, Virginia 22046 Tel: 703-532-6243 • 703-532-7170 (Fax).
• The Regional Association of Grant makers and resources for professional advisorsDonors of the Future Online Knowledge Center Suite 650, 1111 19th Street, NW, Washington, DC 20036 Tel: 202-467-1120 Fax: 202-467-0055.
• Indiana University – Center for Philanthropy, 550 W. North St. Suite 301, Indianapolis, IN 46202-3162. Tel: 317-274-4200
• Council for Advancement and Support of Education CASE, 1307 New York Avenue NW, Suite 1000, Washington, DC 20005-4701, Tel: (202) 328-5900 or 202-328-2273 and Fax: 202-387-4973
• Renaissance Inc., The Social Capital Company, 6100 W. 96th Street, Suite 100, Indianapolis, Indiana 46278, Tel: 317-843-5400.
• Southestern Michigan’s Leave a Legacy Program A good example of community interaction and professional support for other new groups. Also see Pennsylvania and Hampton Roads
• Gift Planning Resources Front Desk – Canadian and Canadian Association of Gift Planners
• Planned Giving Design Center, New TAM out – Resources for Donor and Advisor Support
• Gift Law — Resources for Professional Advisors and a Midwest Regional GiftLaw Resource from the Salvation Army
• The Nonprofit \Manager’s Resource Directory, 2nd Edition by Ron Landskroner, Editor, John Wiley & Sons
• Nonprofit Websites: Cutting Through the E-Maze a free downloadable e-book from Todd Baker, 2001 Grizzard, Inc.
• Web site development for nonprofit organizations by Stelter & Co. Des Moines, Iowa. Tel: 866-STELTER.
• Instant Web Pages for Planned Giving Future Focus, Pleasant Hill, CA
• NCPG Planned Giving Discussion Email List Subscription c/o GIFT-PL [email protected] or archive and easy subscription management at Gift-Pl, for general fundraising professionals, try fundsvcs use the “join or leave the list” link, and the CASE organization has compiled an excellent electronic forum listing for professionals.

• Subscribe to “Planned Giving” here Join the Planned Giving Email Discussion Group

• American Philanthropy Review — Newslist and New Web-Forum Subscriptions Charity Channel Gift Plan Women in Philanthropy, Mentors in Planned Giving, Grantwriting, etc. Or send an email message to [email protected], and in the body of the message, type: SUBSCRIBE GIFTPLAN yourFirstname yourLastname (example: SUBSCRIBE GIFTPLAN Jane Smith)
• Fund Raising – FUNDSVCS Mailing List at Duke University Subscribe or To subscribe to fundsvcs follow the “join or leave the list” link
• Henry & Associates – Workshops for Financial Services Firms, Professional Groups, Estate Planning Councils and Gift Planners to Develop the Reluctant or Latent Philanthropists. Develop more proactive boards and planned giving committees to encourage more integrated planning for donors.
• Advisors in Philanthropy and their April, 2007 Conference Philanthropy in Chicago. **The discussion group is an forum for Planner to share legislation, planning ideas, product placement, and professional interaction with the charitable community.

Newsletters

• Charitable Giving Tax Service, R&R Newkirk, 213 W Institute Place, Suite 509, Chicago, IL 60610. Tel: 800-342-2375.
• Charitable Gift Planning News by Moerschbaecher, McCoy & Simmons, P.O. Box 214373, Dallas, TX 75221. Tel: 214-978-3325 or LMNOP Tel: 415-485-3744.
• The Planned Gifts Counselor by Practical Publishing, LLC, 1602 W. 1050 N., Provo, UT 84604-3062, Planned Gifts Counselor includes in-depth interviews with front-line planned giving officers in which they talk frankly about what works and what doesn’t.
• Planned Giving Today, G. Roger Schoenhals editor/publisher, 100 2ND AVE S, STE 180 Edmonds, WA 98020. Tel: 425-744-3837 (PG-4EVER) 800-525-5748 (KALL-PGT).
• Taxwise Giving by Conrad Teitell, 13 Arcadia Rd, Old Greenwich, CT 06870. Tel: 203-637-4553.
• The Tidd Letter by Johnathan Tidd, 9 Beaver Brook Rd, West Simsbury, CT 06092. Tel: 203-651-8937.
• Leimberg Information Services, Newsletters on Estate Planning, Financial Planning, Employee Benefits.
• The Estate Planner, American Institute for Cancer Research, Washington D.C. 20069. Tel: 800-843-8114.
• Philanthropy Journal Online
• The Journal of Gift Planning, a quarterly publication by the NCPG. 233 McCrea Street, Suite 400, Indianapolis, IN 46225. Tel: 317-269-6274.
• Advancing Philanthropy, The Quarterly Journal of the National Society of Fund Raising Execuctives. 1101 King Street, Suite 700, Alexandria, VA 21614. Tel: 703-684-0410.
• Trusts & Estates, P O Box 41369, Nashville, TN 37204-9965. Fax: 615-377-0525.
• CCH Financial and Estate Planning – Ideas & Trends, 4025 W. Peterson Ave., Chicago, IL 60646. Tel: 800-835-5224.
• AccountingWeb a resource for accounting professionals. Articles, seminars and news updates.
• The Philanthropy Monthly, NonProfit Report Inc., P.O. Box 989, New Milford, CT 06776. Tel: 860-354-7132.
• Non-Profit Tax Policy Resources and IRS CPE Text
• State Individual Income Tax Rates and State Tax Rates
• State Tax Trends for Nonprofits, National Council of Nonprofit Associations, 1001 Connecticut Avenue, NW, Suite 900, Washington, DC 20036.
• JMP Charitable Management Services Charitable Remainder Trusts, Reference Edition and Newsletter. J. Michael Pusey, 606 N. Larchmont Bl., Suite 210, Los Angeles, CA 90004.
• CRT Pro 800-422-3316. Trust administrator
• Renaissance the Social Capital Company, a Trust Administrator 800-843-0050
• Planned Giving Concepts a Trust Administrator 314-849-0741
• Charitable Trust Administration Company 800-562-2045
• Yellowst\one Trust Administration Services
• Life Fund Services Trust administrators
• Giving USA Update, “Annual Survey of State Laws Regulating Charitable Solicitations”, American Association of Fund-Raising Counsel, Trust for Philanthropy. Tel: 888-544-8464.
• Young – Preston Associates Planned giving newsletters on disk. PO Box 280, Cloverdale, VA 24077 Tel: (800) 344-5701.
• The Directory of Associations is a comprehensive source of information on associations and professional societies including business and trade associations, 501c non-profit, and other charity and community organizations.
• State Registration Requirements
• Multi-State Filings for Charities
• NASCO National Association of State Charity Officials. A state by state contact list of all agencies that have oversight of charitable solicitations. Links to their Web sites are provided for additional information and forms.
• Unified Registration Statement (URS) consolidates the information and data requirements of all states that require registration of nonprofit organizations performing charitable solicitations within their jurisdictions. The effort is organized by the National Association of State Charities Officials and the National Association of Attorneys General.
• Fund-Raising Regulation: A State-by-State Handbook of Registration Forms, Requirements, and Procedures by Seth Perlman and Betsy Hills Bush, John Wiley and Sons Publ., New York, NY.
• Florida Charity Registration Solicitiation of Contributions. Illinois Charitable Registration and Reporting
• The Complete Guide to Fund-Raising Management by Stanley Weinstein, 1999, John Wiley and Sons Publ., New York, NY.
• Charity Lobbying in the Public Interest Lobbying and the Law, Resources and Strategies
• Nonprofit Issues and Public Support Tests P O Box 482, Dresher, PA 19025-0482. Tel: 888-NP-ISSUE.
• Worth On-Line Magazine Giving Section

Technology and Software Suppliers

• The Technology Place for Nonprofits and Compumentor providing technology resources to nonprofits and schools serving low-income communities.
• IRS Index of Applicable Federal Rates Section 7520 Applicable Federal Rates (AFR) History
• Daniel B. Evans’ Wills, Trusts and Technology Listings of Charitable Giving Software, American Bar Association, Publication Orders, P.O. Box 10892, Chicago, IL 60610-0892. Tel: 312-988-5522.
• Charitable Gift Planner from Stephen Leimberg, Esq. Leimberg & LeClair, Inc., Software, Publications, Technical Support, P.O. Box 601, Bryn Mawr, PA 19010, Tel: 610-527-5216.
• Charitable Quick-Plan, Kettley Publishing, P O Box 8164, Newport Beach CA 92658. Tel: 714-752-8613. Coupon for Estate and Charitable Planning Software and Coupon for Backroom Technician handbook of planning techniques and calculation tools. Download a trial version for free
• Tiger Tables Larry Katzenstein’s Actuarial Software Tiger Tables Software, 4529 Pershing Place St. Louis, Missouri 63108.
• BeneQuick or BeneView from ViewPlan Division of CCH Incorporated, Tel: 800-826-2127.
• Charitable Financial Planner from Brentmark Software Tel: 800-879-6665.
• Intuitive Estate Planner from West Group does the basic GRAT, GRUT, QPRT and charitable trust calculations and integrates them with an estate tax and estate distribution analysis.
• Start at Square One: Starting & Managing the Planned Giving Program by Lynda Moerschbaecher. LMNOP, San Rafael, CA 94901-5172. Tel: 415-485-3744.
• Docs in a Box (CRT, CLT, PIF, CGA, and Other Planned Giving Legal Support Services for Attorneys), A Lynda Moerschbaecher Company, LMNOP, San Rafael, CA 94901-5172. Tel: 415-485-3744.
• EZGift Software – CRT, CGA, CLT, Remainder Calculators Jane Schuck & Associates
• zCalc Tax and charitable software calculations for MS Excel Spreadsheets
• CCF IRA – CRT Calculator Download Excel Spreadsheet Comparing IRA Distributions and Testamentary CRT Options
• 1972 Model Uniform Management of Institutional Funds Act at UMIFARevisions to the Uniform Management of Institutional Funds ActSpending Policies and UMIFA

  Foundation News – UMIFA

  Law of Endowments

• Bequest Income Processing Software software to track estates in distribution. PO Box 3022, Salem, MA 01970. Tel: 888-588-BIPS
• Professional Support Software (donor management software) by Gene Weinbeck FundRaiser. Tel: 800-880-3454
• Compleat Angler – Fundraising Software for the serious developer. Donations, Pledges, Memberships, Sales, Queries, Instant Mail Merge, Reports, Imports, Exports, Duplicate Resolution, Document Handling, much, much more.CEO SchoolBench.com, LLC, P.O.Box 6304, Washington, DC 20015. Tel: 301-907-8116.
• PhilanthroTec Inc. ARTIS, SCENARIO Software and Compliance Now
• Crescendo Planned Giving Software c/o Charles Schultz, J.D., Camarillo, CA Tel: 800-858-9154.
• CCH ViewPlan Advanced Charitable and Estate Planning Software
• Wealthtec Estate and Charitable Planning Software
• Ventura County Community Foundation’s CRT Calculator provided by Crescendo.
• PG Calc Inc. Software 129 Mount Auburn St., Cambridge, MA 02138. Tel: 888-497-4970.
• CMDS TEAMS Elite Software 1450 Technology Dr., Harrisonburg, VA 21602, Tel: 800-999-2637.
• TrustNet HWA International Inc., 2565 Horizon Lake Dr., Suite 110, Memphis, TN 38133, Tel: 800-328-8661.
• 2nd ½ Software Retirement planning software with options for using charitable planning vehicles. Ocaso Software Company Tel: 877-622-7600.
• Evenson: Planned Giving CompanionEmail:[email protected]
• SunGard Non-Profit Systems 5510 77 Center Drive, Charlotte, NC 28217. Tel: 704-527-6300.
• Matrix Software Nonprofit Management Systems 3033 Stratford Dr, Chesapeake, VA. 23321, Tel: 800-296-9596.
• Microsoft Community Support Software Resources
• Moves Management Institute for Charitable Giving, 500 North Michigan Avenue, Suite 2008, Chicago, Illinois 60611 Tel: 800-234-7777
• List of Estate Planning Software Links

Books and Articles

Estate Planning and Planned Giving Books

• CRT Document Drafting Manual, Steven R. Bone JD CLU, Renaissance Inc., 6100 W. 96th Street, Suite 100, Indianapolis, Indiana 46278. Tel: 317-843-5400.
• Charitable Trusts, George B. Jewell © 2003, Aspen Publishers, New York, NY 10036. Tel: 800-638-8437
• Charitable Giving and Solicitations by Stewart, Schumacher & Martin, c/o Warren, Gorman, & Lamont, 31 St. James Avenue, Boston, MA 02116-4112. Tel: 800-950-1210.
• The Tools & Techniques of Charitable Giving, First Edition, Published November, 2001 – 396 pages. Leimberg, Allen, Hays, MacNab, Shumaker, Yang, Zipse
• What is a CLAT – Forbes by Ashlea Ebling, With interest rates low, an old trust turns new tricks.
• Charitable Split Dollar Court Case Aggressive Planning Fails Court Challenge. WSJ on CHOLI Charity Owned/Financed Life Insurance or Investor Owned Life Insurance. Also Stranger-Owned Life Insurance (“SOLI”): Killing the Goose That Lays Golden Eggs! or another by Steve Leimberg and NAIFA on Investor Owned Life or National Conference of Insurance Legislators and Writer Seeks to Derail Promotion of Charity-Owned Life Insurance and NAIC Hearing – CHOLI IOLI IILI Leimberg Commentsand Why Insurable Interest is Important or Insurance Fraud
• Life Insurance as a Charitable Planning Tool: Part I Stephan Leimberg
• Estate Planning Strategies: The Top Ten List Evelyn Capassakis, PriceWaterhouseCoopers LLP, New York, NY
• Charitable Gifts, 2nd Ed. by James W. Colliton, c/o Warren, Gorman, & Lamont, 31 St. James Avenue, Boston, MA 02116-4112. Tel: 800-950-1210.
• Planned Giving Design Center Trust Forms Sample CRT documents from the law offices of Kallina & Ackerman. and PGDC – Life Estate Agreements
• Federal and State Taxation of Exempt Organizations by Hill and Kirschten, c/o Warren, Gorman, & Lamont, 31 St. James Avenue, Boston, MA 02116-4112. Tel: 800-950-1210.
• Warren Gorham & Lamont/RIA Estate Planning Tel: 800-950-1216.
• Beyond Death & Taxes, Gregory J. Englund, Estate Planning Press, P O Box 97, Boston, MA 02101, Tel: 617-451-5057.
• Vendors and providers of programs Debra Ashton .. Frank Minton .. Larry Stelter .. Robert Sharpe .. Ellen Estes .. R & R Newkirk .. Vaughn W Henry
• Trapped with Land in a Corporation? a PowerPoint Lecture Series by Ron Feinman JD, One World Legacy and Estate Planning, Lynchburg, VA 24504-1519
• A Hidden Trap for Generous Corporations 337 Regulations affecting corporate gifts of assets.
• Conservation Easements PRESERVING FAMILY LANDS by Stephen J. Small, Esq., CONSERVATION EASEMENTS: A FLEXIBLE TOOL FOR LAND PRESERVATION, 3 Envtl. Law. 319 (1997) by John L. Hollingshead; A PRACTITIONER’S GUIDE TO DRAFTING CONSERVATION EASEMENTS AND THE TAX IMPLICATIONS, 4 Great Plains Nat. Resources J. 143 (2000) by Maureen Rudolph & Adrian Gosch; CONSERVATION EASEMENTS BENEFIT BOTH THE TAXPAYER AND THE ENVIRONMENT, 28 J. Real Est. Tax’n 49 (2000) by Craig L. Byrne & Lance S. Hall; BEFORE-AND-AFTER VALUATION OF CONSERVATION EASEMENTS, 27 J. Real Est. Tax’n 184 (2000) by Christopher J. Kayser; TAX INCENTIVES AND LAND PROTECTION TECHNIQUES, ALI-ABA Course of Study on Historic Preservation Law (October 15-16, 2001) by Stephen J. Small; PRESERVATION EASEMENTS: AN APPRAISER’S PRIMER ON TAX RULES AND VALUATION ISSUES, ALI-ABA Course of Study on Historic Preservation Law (October 15-16, 2001) by Richard J. Roddewig.
• Star Ledger on Fraudulent Violin Valuations and Violin Frauds?
• McGuire Woods – A Guide to Charitable Giving
• Katrina Relief Act and RIA Tax Relief for Victims of Hurricane Katrina
• Philanthropy 400 in 2004, gifts to the largest 400 charities rebounded according to a Chronicle of Philanthropy article
• One Gift – Three Numbers (CASE, FASB and NCPG all require different assumptions to count charitable gifts) By: Derek R. Bryan, J.D., CPA, 09/30/05
• Developing a Code of Ethics for your organization
• Sudden Wealth Syndrome Money, Meaning & Choices Institute, Kentfield, CA.
• Raising Rich Kids! Growing Up Wealthy…And Human – basic advice about children and money
• Philegatia: Living a Vision, Leaving a Legacy. by Glenn Young-Preston. PO Box 280, Cloverdale, VA 24077 Tel: 800-344-5701.
• Pinpointing Affluence: Increasing Your Share of Major Donor Dollars by Judith Nichols, c/o The Compleat Professional’s Library, P O Box 338, Medfield, MA 02052-0338. Tel: 508-359-0019.
• Pinpointing Affluence in the 21st Century by Judith Nichols, Precept Press
• Estate Tax Repeal: Historical Data Indicate Philanthropy May Suffer
• Trusts & Estate magazine report on “Charitable Giving and the Great American Wealth Transfer” with an analysis of tax law changes by Robert F. Sharpe, Jr
• Katrina Tax Relief Act – Gifts of Retirement Plan Assets are an Option Until 12/31/2005 Technical Explanation from the JCT
• Retirement Assets and Charitable Gifts : A Guide for Planned Giving Professionals, Financial Planners, and Donors (Wiley Nonprofit Law, Finance and Management Series) 2001, by Christopher R. Hoyt, Bruce R. Hopkins. Wiley & Sons, 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• Stretch This Using a CRT for Retirement Plan Assets. Christopher Hoyt
• Advanced NIMCRUT Design by David Wheeler Newman, and Final Regulations (1998) Released by Jonathon D. Ackerman
• When a CRUT Will Beat a Stretch IRA by Christopher R. HoytCRT + IRD + Estate Tax = Problem by Christopher R. HoytJCT Releases Technical Explanation of Katrina Emergency Tax Relief Act of 2005 KETRA 2005 and KETRA Planning: IRA Withdrawal or LTCG Stock Sale — Which is Better? and Indirect IRA Rollovers and KETRA Rollovers and Computations
• Using the IRD Deduction to Improve Wealth Preservation, The CPA JournalIRD – The Art of Charitable Planning – Baltimore Giving ProjectTax Planning with the New Minimum Distribution Rules RMD and Charitable Planning for Retirement Plan Assets

  The Benefits of Net Unrealized Appreciation On Lump Sum Distributions and NUA audio clip with Roy Adams and Eileen Trost

• A Smart Idea For Giving To Charities And Family Using a Charitable Family Partnership By Roy M. Adams
• Gifts of S Corporation Stock and Charitable Traps by Christopher Hoyt, and Privately Held Business Interests or Encumbered Property and a CRT
• More Advisor Resources Advisors Focus on Donor Values and Family, Philanthropy Top Priorities for Ultra-Wealthy and Profiles in Family Giving and Six Steps to a Successful and Stress-Free Family Meeting and Foundation Growth and Five Reasons to Offer Philanthropic Planning and The Art of Charitable Planning Developed by the Baltimore Giving Project and Q & A Advisor: Donor Motivations, Interests, and Challenges and The Donor Advisor: The Critical Role of the Advisor in Family Philanthropy and Rich Donors Cite Displeasure With Financial Advisors Holly Hall, Chronicle of Philanthropy article, and Many big donors prefer anonymity
• Advisors Selling Charitable Gift AnnuitiesNASD Position on charitable gift annuities. See page 26. Nonprofit organizations don’t have the same prohibitions as long as they follow the rules as set out in the Philanthropy Protection Act 1995, the Charitable Gift Annuity Relief Act of 1995, and the Charitable Donation Antitrust Immunity Act of 1997.
• Gift Annuity Survey 2003, American Council on Gift Annuities (ACGA) Gift Annuity RATES Survey
• Mortality of Beneficiaries of Charitable Gift Annuities
• Gift Annuities Benefit Many
• Life Insurance as a Charitable Planning Tool: Part I by Stephan R. Leimberg and Albert E. Gibbons and Life Insurance as a Charitable Planning Tool: Part II by Stephan R. Leimberg and Albert E. Gibbons
• Charitable Gifts of Life Insurance and Annuities and Life Insurance Advisors, Articles for Charities on Insurance
• Forbes – What is a CLAT by Ashlea Ebling and Assignment of Vested Remainder in a CLAT
• WSJ.com – Some Companies Insure Lives Of Current, Former Directors or WSJ.com – Dying to Donate: Charities Invest in Death Benefits
• Donor Control Issues
• Cautionary planning articles for professional advisors – Ten Charitable Planning Mistakes to Avoid Henry & Hays. Charitable Lead Trusts Randy Zipse. PGDC – The Charitable Lead Nonreversionary Trust, a thorough overview with examples. Charitable Remainder Trusts from You Know Where Ted Batson Jr.
• PGDC – Gifts of Tangible Property and Donations of Art to Charitable Organizations
• U.S. Department of the Treasury Antiterrorism Financing Guidelines: Best Practices for U.S.-Based Charities” — Guidelines
• Foreign Activities for US Charities and US Treasury – Office of Foreign Assets Control and Guidance on Charitable Best Practices New regulations in a post 9/11 world for charities.IRS Revenue Ruling 63-252 on Foreign Charitable Organizations with US Affiliates
• Reports from the 2003 Phillip E. Heckerling Institute on Estate Planning have been posted on the ABA RPPT web site
• Exempt Purposes, “Organizational Test – IRC 501(c)(3)” by Elizabeth Ardoin, an IRS EO CPE Text.
• Nominal Gifts IRS standards for what constitutes a “nominal” gift; other searches for laws and regulations. FindLaw and the CFR is at Code of Federal Regulations and the USC is at United States Code and the new Tax Shelter disclosure rules (why charities shouldn’t be singing “nondisclosure agreements” on creative planning opportunities)
• Tax Calculators Estate, Income, Gift, etc.
• Death Clock mortality calculations for those people ticking off the seconds.
• Life Expectancy Calculators
• Consumer Price Index Calculator Why inflation is an insidious influence in your financial and estate planning.
• Fiscal Sponsorship: 6 Ways to Do It Right by Gregory Colvin JD, six models of sponsorship that have been approved and accepted by the IRS. He is also the author of Seize the Initiative and The Rules of the Game: An Election Year Legal Guide for Nonprofit Organizations.
• The Complete Guide to Planned Giving New and Revised Third Edition 2004, Debra Ashton, 24 Robertson St., Quincy, MA 02169 Tel: 617-472-9316.Jerold Panas says: “I consider this the greatest contribution of any planned giving book in the field. From technical legal matters to the art of the business—it is without parallel the most understandable step-by-step guide to planned giving that has ever been written.” Read the review and Buy now at The Complete Guide to Planned Giving
• Debra Ashton’s Incredibly Practical Marketing Tips If you’re running a planned giving program, you are probably wasting a lot of time, money and resoures on marketing activities. This article will help focus your efforts on productive strategies that save money and get more gifts.
• Chronicle of Philanthropy – CASE Survey Survey of College Fund Raisers Says That Gender Has Biggest Impact on Salary.
• The Art of Planned Giving: Understanding Donors and the Culture of Giving by Douglas White, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• Deferred Gifts: How to Get Them by George V. King, The Taft Group, 27500 Drake Road, Farmington Hills, MI 48331-3535. Tel: 800-877-TAFT.
• “Fund Raising In the United States: Its Role in America’s Philanthropy” by Scott M. Cutlip.
• A Survey of the New Rich, The Economist, June 16, 2001
• Giving It Away – Planners need more education and tools on charitable gift planning. Financial Planning Interactive
• The Charitable Estate Planning Process (How to Find and Work With the Philanthropic Affluent), by Prince, McBride & File, Lexington House, 98 Dennis Dr., Lexington KY 40503.
• The Charitable Giving Handbook by Prince, Rathbun and Steiner, National Underwriter, 505 Gest St., Cincinnati, OH 45203-1716. Tel: 800-423-2168.
• Private Wealth – Insights into the High Net Worth Market, Russ Alan Prince Institutional Investors Tel: 212-224-3800Cultivating the Affluent – How to Segment and Service the High Net Worth Market, Russ Alan Prince and Karen Maru FileCultivating the Affluent II – Leveraging the High Net Worth Client and Advisor Relationships, Russ Alan Prince and Karen Maru File
• Delighted and Disgusted Donors, GiftLaw Article by Charles Schultz JD, Crescendo Software.
• Disconnected: The First Nonprofit Survey A Survey of Nonprofit Organizations on Use of Email to Build Community, Michael Gilbert, The Gilbert Center.
• Technology Articles – The Support Center of Washington. Mobile Technology in the Non-Profit World (full PDF report) and An Introduction to Internet Service Providers (ISPs) for the Non-Profit Community
• National Center on Philanthropy and the Law
• NonProfit Risk Management Center
• Roberts Rules of Order – “Question and Answer Forum”
• American Society of Association Executives
• Links to Professional Organizations on the Concepts of Responsible Family Wealth and its Influences.
• Hurwit & Associates’ Nonprofit Law Resource Library
• High Impact Philanthropy: How Donors, Boards, and Nonprofit Organizations Can Transform Communities. Kay Sprinkel Grace and Alan L. Wendroff, John Wiley & Sons, Inc., 2001
• IsYour Board Ready to Recruit?
• Riding the Horse the Way It’s Going — A Different Approach to Boards and Fundraising by Hildy Gottlieb, Help 4 NonProfits, 4433 E. Broadway Blvd. Suite 202 Tucson, Arizona 85711
• 4944 Jeoparizing Investments IRS Code for Trusts and Charitable Organizations
• Title 26 – Income Taxes – Code of Federal Regulations
• PGDC – IRS EO CPE Text for Fiscal 2004: Automatic Excess Benefit Transactions Under IRC 4958
• User friendly article on new “Excess Benefits” affecting board members and more technical approach to IRS Section 4958 by Lisa Nachmias Davis, Esq., Tyler Cooper & Alcorn, LLP, 205 Church Street, P.O. Box 1936, New Haven, CT 06509-1910
• Income and remainder factors in Publication 1457, Book Aleph, and unitrust factors 1458, Book Beth
• Excess benefits affecting charitable boards, a Chronicle of Philanthropy article.
• Former, Current IRS Officials Discuss Intermediate Sanctions and Rebuttable Presumption Procedure and Intermediate Sanctions Compliance
• The Law of Intermediate Sanctions: A Guide for Nonprofits by Bruce Hopkins, John Wiley & Sons; (January 10, 2003)
• Profiles of Charities in the USA, based on IRS 990 reports
• IRS Statistics of Income Tax Returns for 2000
• Preventing Fraud: How to Safeguard your Organization, By Andrew S. Lang and Tammy Cicciardella and KDV and Fraud and Preventing and Detecting Fraud
• Philanthropy: Moving from Reaction to Pro-Action, Jennifer Ladd, Ed.D., Class Action – Provide workshops regarding making, spending, managing and decision-making around money. 245 Main Street, #207, Northampton, MA 01060 413-585-9709
• Yale University – The Partnership on Nonprofit Ventures
• Family Philanthropy and Community Foundations and Community foundation statistics and Foundation Expenses Tied to Operating Style
• Giving Back, the Silicon Valley Way – Survey 2002 Silicon Valley Community Foundation
• Tax-Saving Opportunities for Charities Owning Subchapter S Stock
• Even celebrities with advisors are voluntary taxpayers. Peter Jennings’ Estate as an example of tax-inefficient planning. Private foundations should be effective and go beyond ego driven motivations.
• PGDC – Symbiotic Ways Private Foundations Use Community Foundations and PGDC – Private Foundation Excise Tax Rules
• Everything You Ever Wanted to Know About Type 3 Supporting Organizations
• Supporting Organizations: Creation, Operation, and Use
• Life Cycle of the Private Foundation IRS Checklists, by-laws and articles
• Family Foundations: Donor Advised Funds and Supporting Organizations as Alternatives to Private Foundations
• A Look At Alternatives To Private Foundations
• SUPPORTING ORGANIZATIONS: A Primer By MacKenzie Canter, III and Index of Articles
• Volunteer Management / Service Leadership Online Resources Tools, Handouts, Studies for Managing Charities’ Volunteers
• Designing a Communications Plan to Enhance Your Fund-Raising Campaign and Promoting and Marketing Nonprofit Organizations.
• Nonprofit Compliance Articles, Lisa Nachmias Davis, Esq.
• Nonprofit Governance and Management, edited by Victor Futter and published by the ABA
• All About Boards Materials and Governance Issues
• Establish a Nonprofit Organization the Foundation Center tutorialFile the certificate of incorporationSelect individuals to serve on the board of directors

  Develop vision and mission statements

  Establish bylaws and board policies

  Obtain an employer identification number (EIN)

  Open a bank account and establish check signing procedures

  File for federal tax exemption

  Follow state and local nonprofit regulations

  Find office space and obtain office equipment

  Recruit staff and prepare a personnel manual

  Establish a payroll system and procure necessary insurance coverage

  Develop an overall fundraising plan

• Starting a Nonprofit Organization
• Starting a Nonprofit – FAQ’s from the Nonprofit Forum and Putnam Barber.
• Resources suggested by Donald A. Griesmann, Esq. of the Community Services Support Center, Inc.Nonprofit Incorporating – The Business PlanGrant Writing Tools Web Sites

  U.S. Federal Grants Web Sites

  The Best E-Newsletters for Grants and Nonprofit Leaders

  Insurance Questions for Nonprofits

  Nonprofit Organizations – Disclosure of Information: What Must We, What Can We Disclose to the Public, Staff, Board and Clients?

  Opportunities for grants

  A sample board agenda or Parlimentarians’ Agenda or Planning a Great Meeting

  The official Robert’s Rules site and An outline for Robert’s Rules and Two-page outline and National Parliamentarian AssociationResources, Writing minutes, Counting a quorum and board meeting issuesRules for Board Meetings

• What Goes on Behind Foundation Doors, OR, a Day in the Life of a Program Officer By Renata J. Rafferty
• Starting and Managing a Nonprofit Organization – A Legal Guide, Bruce R. Hopkins, John Wiley & Sons, 605 Third Avenue, New York, NY 10158
• Sandy Deja, Author of Prepare Your Own 501(c)(3) Application an ebook for lay people – help with the 1023 application
• Donor’s Forum and Small Foundations The Splendid Legacy: The Guide to Creating Your Family Foundation, ordered by calling 202-293-3424 or Jerry McCoy’s book: Family Foundation Handbook, call 800-638-8437. Donor resources for those interested in family foundations
• Association of Small Foundations – Foundation in a Box starting a new foundation
• Foundation Source services for private foundations
• Private Foundations: The Essential Elements and Private Foundations and Business Transactions
• The Legislative Labyrinth – A Map for Not-For-Profits, Walter P. Pidgeon, John Wiley & Sons, 605 Third Avenue, New York, NY 10158
• The Law of Tax-Exempt Healthcare Organizations, 2nd Edition, Thomas K. Hyatt and Bruce R. Hopkins, John Wiley & Sons, 605 Third Avenue, New York, NY 10158
• Creating Foundations for American Schools by Dan H. McCormick, David G. Bauer, Daryl E. Ferguson ©2000 Aspen Publishers, Inc. A review 200 Orchard Ridge Drive, Gaithersburg, MD 20878. Tel: 800-638-8437.
• Getting Started in Planned Giving, Understanding Planned Gift Forms, Marketing Planned Gifts, a 3 volume set by Kathryn Miree Associates, Birmingham, AL. Tel: 205-939-0003.
• Professional Advisors’ Guide to Planned Giving Aspen Publication, 200 Orchard Ridge Drive, Gaithersburg, MD 20878. Tel: 800-638-8437.
• Planned Giving Essentials: A Step by Step Guide to Success by Richard D. Barrett and Molly E. Ware, Aspen Publication, 200 Orchard Ridge Drive, Gaithersburg, MD 20878. Tel: 800-638-8437.
• Planned Giving Simplified by Robert F. Sharpe, Sr., John Wiley & Sons, Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• Wealthy and Wise by Claude Rosenberg, Jr., Little, Brown & Company, Canada.
• Nonprofit Investment Policies: Practical Steps for Growing Charitable Funds by Robert P. Fry Jr., 1998, John Wiley & Sons.
• Prudent Investment Practices Handbook from the Center for Fiduciary Studies
• Investing and Managing Trusts Under the New Prudent Investor Rule: A Guide for Trustees, Investment Advisors, and Lawyers. 1999, by John Train and Thomas A. Melfe, Harvard Business School Press.
• Fiduciary Duty of Trustee to Utilize Alternative Risk Management Techniques
• Managing Family Trusts: Taking Control of Inherited Wealth, 1999, Rob Rikoon et al.
• National Center for Family Philanthropy and Splendid Legacy: The Guide To Creating Your Family Foundation, Edited by Virginia M. Esposito
• Charitable Remainder Trusts, by Peter Fagan, Irwin and IAFP, 5775 Glenridge Dr. NE, Atlanta GA 30328. Tel: 800-945-4237.
• Vehicle Donations: Taxpayer Considerations When Donating Vehicles to Charities. GAO-03-608T. IRS Guidance on Vehicle Donations and 1098-C Forms New Rules in 2006
• Tricky gifts, accept with caution.For donors: Why and how to donate a boat, acceptance policies, and forms Maine Maritime Academy
• Committee for Vessels Donated – Terms of Reference University of Miami
• Online Vessel Donation Form World Vision
• A Guide to Gifts of Non-Cash Property by Jonathan Tidd, 9 Beaver Brook Road, West Simsbury, CT 06092. Tel: 203-651-8937.
• The Harvard Manual on Tax Aspects of Charitable Giving, Osteen and Donaldson, Harvard University PG Office, 124 Mt. Auburn Street, Cambridge, MA 02138. Tel: 617-495-4647.
• Harnessing the Power of the Charitable Remainder Trust, 6th Edition – 2002, Marc D. Hoffman & Leland E. Hoffman, Jr., PhilanthroTec Inc. Publishers of ARTIS, SCENARIO and Compliance Now Software. Tel: 704-845-5527 or 800-332-7832 Ext. 102.
• Planned Giving for the One Person Development Office, Taking the First Steps by David Schmeling, Deferred Giving Services, 614 South Hale Street, Wheaton, IL 60187. Tel: 630-682-4301.
• The Planned Giving Idea Book, Robert F. Sharpe & Co., 5050 Poplar Avenue, Memphis, TN 3817. Tel: 901-680-5300.
• Planned Giving Management, Marketing and Law (includes forms diskette) by Katelyn Quynn & Ron Jordan, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• Nonprofit Organization Management Forms, Checklists & Guidelines By Jamie Whaley, Managing Editor and Jeff Stratton, Research Editor, Published 2001 by Aspen Publishers, Inc., Gaithersburg, MD
• Conducting a Successful Capital Campaign: A Comprehensive Fundraising Guide for Nonprofit Organizations, by Kent E. Dove, 1988. Jossey-Bass.
• Major Gifts and Capital Campaign type books. RelationShift: Revolutionary Fundraising by Michael Bassoff and Steve Chandler. Storytelling for Grantseekers: The Guide to Creative Nonprofit Fundraising by Cheryl A. Clarke. The Insider’s Guide to Grantmaking by Joel J. Orosz. Demystifying Grant Seeking by Larissa Golden Brown and Martin John Brown.
• Planned Giving in a One or Two Person Development Office by David Schmeling, Deferred Giving Services, 614 South Hale Street, Wheaton, IL 60187. Tel: 708-682-4301.
• Practical Guide to Planned Giving – 2000, The Taft Group, 27500 Drake Road, Farmington Hills, MI 48331-3535. Tel: 800-877-TAFT.
• Tax Economics of Charitable Giving, 2005/2006 Edition, formerly from Arthur Andersen & Co,. Order through RIA Tel: 800-950-1216.
• Leave A Legacy and Affiliated Links
• Leave A Legacy – West Michigan has PowerPoint files available for those interested in how to leave a legacy in their planning.General Audience Version [831 KB]Estate Planning Version [942 KB]

  Non-profits’ version [1,195 KB]

• CRT Slide Show on the basics and some background information on Who Should be the Beneficiary of Your IRA Slide Show by James Berge JD
• Values-Based Estate Planning – A Step-by-Step Approach to Wealth Transfer for Professional Advisors, Scott Fithian, John Wiley & Sons.
• Women in a Planned Giving Environment by Cheryl L. Altinkemer, PGDC Article
• “A Call for Change …” Women as Consumers and the Marketing to Females, by Dailey & O’Brien
• Women’s Philanthropy Institute – Inspiring women to fulfill their philanthropic potential
• Women in Philanthropy
• Rating Charities – Charity Navigator – Guiding Charitable Giving or Forbes magazine ratings or Worth magazine – “America’s Top 100 Charities.” or Council of Better Business Bureaus or American Institute of Philanthropy’s Charity Watch or Guidestar – National Database of Nonprofit Organizations or Ministrywatch for rankings and criteria.
• Preparing for the Intergenerational Transfer of Wealth
• Museum Marketing Tips Marketing and Management Resource
• Fundraising for Small NonProfits – It’s Right There in the Palm of Your Hand
• LI The National Council of Nonprofit Associations offering a state by state list of resources for new nonprofit organizations
• BBB Wise Giving Alliance Give.org
• Growing Your Organization by Carter McNamara, MBA, PhD, The Management Assistance Program for Nonprofits, Suite 28, 2314 University Ave. West, St. Paul, MN 55114-1863 Tel: 651-647-1216 MAP Management Resources for non-profits or Management Topics
• Mega-Law Legal Research Resources The Lawyer’s Window to the Web.
• Charitable Remainder Trust Forms 12 specimen documents from Kallina & Ackerman, LLP, Baltimore, MD.
• The Tax Law of Charitable Giving by Bruce Hopkins, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• The Law of Tax-Exempt Organizations, 9th ed., Bruce Hopkins, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• Stewart L. Oleck, Nonprofit Corporations, Organizations and Associations, 6th edition, Prentice Hall.
• PGDC – Ten Charitable Planning Mistakes to Avoid Vaughn Henry and Johni Hays JD CLU
• Social Capital Planning – Why Insurance Producers Should Understand It George Jewell, JD
• CHARITABLE REMAINDER TRUSTS: Income Deferral Abuse and Forbes – Loose Cannons Fraudulent planning in the charitable arena.
• Mid-America Foundation’s charitable gift annuity program turned out to be a Ponzi scheme — SEC vs. Robert Dillie and State of Maine and Securities Administrator vs. Paul E. Richard for fraudulent securities sales of Mid-America gift annuities. Senate Finance Committee Testimony on Charity Abuses. Overselling NIMCRUTS NASD sanctions advisor
• Internal Revenue Service Publication 1828, a tax guide for churches, religious organizations and faith-based organizations. Covering –Tax Exempt Status, Jeopardizing Tax Exempt Status, Unrelated Business Income Tax (UBIT), Employment Tax Special Rules for Compensation of Ministers, Payment of Employee Business Expenses, Recordkeeping Requirements, Filing Requirements Charitable Contributions – Substantiation and Disclosure Rules, Special Rules Limiting IRS Authority to Audit a Church, Glossary, Help From the IRS
• IRS On-line EIN Apply for Trust Tax ID (avoid using punctuation)
• IRS Publication 4221, Compliance Guide for 501(c)(3) Tax Exempt Organizations
• Publication 1771, “Charitable Contributions — Substantiation and Disclosure Requirements,” Release on New IRS publication on rules documenting charitable deductions.
• IRS Commissioner on Abusive Charity Practices Senate Testimony 4/22/04. Publication 4302, “A Charity’s Guide to Car Donations,” addresses issues that charities need to know to properly operate car donation programs. The second publication, Publication 4303, “A Donor’s Guide to Car Donations,” is focused on individuals who make such donations.
• IRS Searchable Database – Online Publication 78, a list of all charitable organizations in the US.
• Search for IRS Publications 1457, 1458, 1459, Valuing a Life Interest – 1457 Superintendent of Documents, US Government Printing Office, Washington DC 20402.
• Publication 4220, Applying for 501(c)(3) Tax-Exempt Status — Publication 4221, Compliance Guide for 501(c)(3) Tax-Exempt Organizations
• IRS Exemption Requirements – § 501(c)(3)
• Tax Links – Find a Revenue Ruling
• Recently released – IRS Revenue Procedures 2005-52 through 2003-59, are sample charitable remainder uni-trusts1. Sample Inter Vivos CRUT Declaration for One Measuring Life – Rev. Proc. 2005-522. Sample Inter Vivos CRUT Declaration for a Term of Years – Rev. Proc. 2005-53

  3. Sample Inter Vivos CRUT Declaration for Consecutive Measuring Lives – Rev. Proc. 2005-54

  4. Sample Inter Vivos CRUT Declaration for Concurrent and Consecutive Measuring Lives – Rev. Proc. 2005-55

  5. Sample Testamentary CRUT Declaration for One Measuring Life – Rev. Proc. 2005-56

  6. Sample Testamentary CRUT Declaration for a Term of Years – Rev. Proc. 2005-57

  7. Sample Testamentary CRUT Declaration for Consecutive Measuring Lives – Rev. Proc. 2005-58

  8. Sample Testamentary CRUT Declaration for Concurrent and Consecutive Measuring Lives – Rev. Proc. 2005-59IRS Revenue Procedures 2003-53 through 2003-60, are sample charitable remainder annuity trusts replacing the forms issued in 1989 and 1990.

  1. Inter vivos charitable remainder annuity trust (CRAT) for one measuring life – Rev. Proc. 2003-53.

  2. Inter vivos CRAT for a term of years – Rev. Proc. 2003-54.

  3. Inter vivos CRAT with consecutive interests for two measuring lives – Rev. Proc. 2003-55.

  4. CRAT for concurrent and consecutive interests for two measuring lives – Rev. Proc. 2003-56.

  5. Testamentary CRAT for one measuring life – Rev. Proc. 2003-57.

  6. Testamentary CRAT for a term of years – Rev. proc. 2003-58.

  7. Testamentary CRAT with consecutive interests for two measuring lives – Rev. Proc. 2003-59.

  8. Testamentary CRAT with concurrent and consecutive interests for two measuring lives – Rev. Proc. 2003-60.

  http://www.irs.gov/pub/irs-irbs/irb03-31.pdf

• INTERNAL REVENUE CODE ‘Subtitle A’ Income Taxes and ‘Subtitle B’ Estate and Gift TaxesThe IRS Site on Charitable Organizations with IRS Publication #561, Determining the Value of Donated Property and IRS Publication #526, Charitable Contributions, available by calling 1-800 TAX FORM or IRS Publication 526 Charitable Contributions in PDF. Publication 1771 – Charitable Contributions – Substantiation and Disclosure A new publication explains the federal law for organizations (such as charities and churches) receiving tax-deductible contributions and for taxpayers who make contributions.
• IRS Publication #557, Tax Exempt Status for Your Organization
• Tax-Exempt Organizations – Improvements Possible in Public, IRS, and State Oversight of Charities, a report from the GAO
• Gifts to Certain Charitable Organizations Outside Canada . Registered Charities: Operating Outside Canada . T4016 Exempt U.S. Organizations – Under Article XXI of the Canada – United States Tax Convention.Listing of Canadian CharitiesOn-line charity Listing in CanadaCanadian Donor’s Guide: The Charity Checklist
• Canadian Association of Gift Planners
• Planned Giving Services — International Services
• Planned Giving for Canadians by Frank Minton
• “Cross Border Gifts”, Journal of Gift Planning (2nd Quarter 1999), NCPG
• European Association for Planned Giving
• The Handbook of International Philanthropy, Bonus Books (Chicago, 1998)
• “Tax Planning for Cross-Border Philanthropy by U.S. Donors,” Trusts & Estates Magazine (May 1998)
• Charitable Giving Handbook by Prince, Rathbun & Steiner, National Underwriter, 505 Gest St., Cincinnati, OH 45203. Tel: 800-423-2168.
• The Seven Faces of Philanthropy: A New Approach to Cultivating Major Donors, R. M. Prince and K. M. File, Jossey-Bass, San Francico. 1994.
• The Perfect Legacy by Russ Prince, Gary Rathbun & Karen Maru File, National Underwriter, 505 Gest St., Cincinnati, OH 45203. Tel: 800-423-2168.
• High Net Worth Psychology by Russ Prince and Karen Maru File, and Winning the War for the Wealthy by Russ Prince, National Underwriter, 505 Gest St., Cincinnati, OH 45203. Tel: 800-423-2168.
• Model Major Gift Policy Manual – Stephen C. Nill, 30021 Tomas Street, Suite 300, Rancho Santa Margarita, California 92688. Tel: 714-589-4318.
• Policy Manual for Accepting Non-Cash Gifts by Joseph McKay JD CPA, Houston, TX. Tel: 888-563-6252.
• The Portable Planned Giving Manual by Conrad Teitell, 13 Arcadia Rd, Old Greenwich, CT 06870. Tel: 203-637-4553.
• Philanthropy & Taxation (2 volumes) by Conrad Teitell, 13 Arcadia Rd, Old Greenwich, CT 06870. Tel: 203-637-4553.
• Funding Sources for Community and Economic Development 1998: A Guide to Current Sources for Local Programs and Projects – The Oryx Press Tel: 602-265-2651.
• The Law of Fund-Raising, second edition. By Bruce R. Hopkins, Published by John Wiley & Sons, Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• Family Foundation TopicsPrivate Foundations: Tax Law and Compliance by Bruce R. Hopkins and Jody Blazek. Published by John Wiley & Sons Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.Who Can Sue You? W. B. McKeown Patterson, Belknapp, Webb & Tyler LLP

  Charity Channel’s Nonprofit Boards and Governance Review Directors and Officers Insurance – Part 1 by Pamela Davis

  IRS articles “Public Charity Classification and Private Foundation Issues: Recent Emerging Significant Developments,” by Ron Shoemaker and Bill Brockner

  Splendid Legacy: The Guide to Creating Your Family Foundation

  The Practice of Family Philanthropy in Community Foundations

  The Trustee Notebook: An Orientation for Family Foundation Board Members

• Tax Planning and Compliance for Tax-Exempt Organizations, 3rd Edition, Jody Blazek, John Wiley & Sons, 605 Third Avenue, New York, NY 10158
• The First (and) Second Legal Answer Book for Fund-Raisers, Bruce R. Hopkins, John Wiley & Sons, 605 Third Avenue, New York, NY 10158
• The Legal Answer Book for Private Foundations, Bruce R. Hopkins, Jody Blazek, October 2001, John Wiley & Sons, 605 Third Avenue, New York, NY 10158
• Excess Business Holdings IRS guidelines affecting lead trusts and private foundations
• Joint Ventures Involving Tax-Exempt Organizations , 2002 Cumulative Supplement, 2nd Edition, Michael I. Sanders, September 2002
• 990 Handbook – A Line by Line Approach, Jody Blazek, John Wiley & Sons, 605 Third Avenue, New York, NY 10158
• New e-filing requirements for charities
• 990 Instructions and What Charities Need to Make Public
• National Guide to Funding for Elementary & Secondary Education, edited by Elizabeth H. Rich. Softcover. New York: The Foundation Center, 4th Edition, May, 1997.
• The Management Assistance Program for Nonprofits Guide to Strategic Planning. Tel: 651-647-1216.
• Nonprofit management resources:Index of Topics in the Free Management Library and Internet Resources for Nonprofits from the UCP, and Interactive Knowledge for Nonprofits and Online Guides to Nonprofit Financial Management or A Guide to Budget Work for NGOs or Nonprofit Financial and Accounting Guide Practitioner’s Publishing Company or Nonprofit Organization Management: Forms, Checklists, & Guidelines, Aspen Publishers
• Effective Fund Raising For Human Service Organizations and Support Center for Nonprofit Management
• Internet Resources for Nonprofit Organizations and Business Plans for Nonprofits Donald A. Griesmann, Esq. Ventnor NJ
• Grant writing assistance from —Understanding Corporate Giving: First StepsGreantselect

  Grant station

  SRA Int’l

  Network Analaysis

  Human Services Community

  A writing resource link

  Charity statistics

  Comparative Nonprofit Sector statistics

  Grants info

  Online Grants Resources

• Development Jobs & Resources —Access JobsWSJ Jobs

  CASE Jobs

  Charity Chennel Jobs

  Charity Village Jobs

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  devjobs (subscribe via “[email protected]”)

  Dot Org Jobs

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  Philanthropy Network Jobs

  Management Center Jobs

  AFP Salary Survey

  Guidestar Salary Survey

• Psychology Today, Philanthropy: What Gives? Crisis fundraising fails to motivate donors.
• Donor Research —Wealth EngineCCS Research

  Marts & Lundy

  Target America

• Things to Do Planned Giving Now for Public Broadcasters
• Practical Guide to Planned Giving 1998 by Ballard, Clough, Clough and Estes, The TAFT Group Tel: 800-877-8238.
• “Looking the Gift Horse in the Mouth” National Assoc. of College and Univ. Attorneys One Dupont Circle, NW, Washington, DC 20016 Tel: 202-833-8390.
• Nonprofit Compensation, Benefits, and Employment Law, David G. Samuels and Howard Pianko. September, 1998. John Wiley & Sons, Inc., 605 Third Avenue, New York, NY. Tel: 800-879-4539.
• Associations Unlimited, 1996, searchable charity and association database on CD-ROM, The TAFT Group Tel: 800-877-8238.
• Vernon Jacobs’ Articles on the CRT or CRT-II and Estate Planning Strategies & Newsletter.
• Barron’s Low Interest Rates Add to Charity Trusts’ Appeal and Power Donors and The Easy Way to Give Donor Advised Funds
• Historical Stock Prices Search Reference Site for Advisors Needing Fair Market Values.
• Evaluation Services, Inc., Valuations for the preparation of estate, stock and bond cost basis valuations for Trust tax, Estate tax and Gift Tax. Cost basis and income calculator software.
• Caritance – Giving More Efficiently. Stock Gifts Made Easy Why it’s better to give appreciated stock instead of cash.
• Simple Planned Gifts – Funding Outright Gifts with Appreciated Securities from the Planned Giving Design Center
• Exclusion of Gain from the Sale of a Principal Residence – Section 121 Helping Donors Preserve Assets
• Giving USA – “Annual Survey of State Laws Regulating Charitable Solicitations” AAFRC Trust for Philanthropy
• Standardized Solicitations and State Registrations for all 50 states
• State Regulators for Charities and Regulatory Resources
• Excerpts from the Office of Tax Analysis with an Emphasis on Philanthropy “The Federal Estate and Gift Tax: Description, Profile of Taxpayers, and Economic Consequences”
• Wealth in Families, by Charles W. Collier, Harvard University, 2001
• Finders Keepers, by Jerry Panas, Precept Press, 160 E. Illinois St., Chicago, IL 60611, 1999.
• Planned Giving Simplified – The Gift, the Giver, and the Gift Planner, by Robert F. Sharpe, Sr., John Wiley & Sons, 1999.
• The Artful Journey – Cultivating and Soliciting the Major Gift, by William T. Sturtevant, Bonus Books Inc., 1997. Tel: 800-225-3775.
• The Great Philanthropists & The Problem of Donor Intent, by Martin Morse Wooster, Capital Reseach Center, 1513 16th Street, N.W., Washington, D.C. 20036, Tel: 202-483-6900.
• The Rules of the Road – A Guide to the Law of Charities in the United States, by Betsy Buchalter Adler, Council on Foundations, PO Box 98293, Washington, DC 20090-8293. Tel: 888-239-5221.
• Millionaires and the Millenium New Estimates of the Forthcoming Wealth Transfer and the Prospects for a Golden Age of Philanthropy. New Physics of Philanthropy (I) and (II) (Will the repeal of an estate tax increase or decrease philanthropic planning?) … Social Welfare Research Institute, McGuinn Hall 515, Boston College, Chestnut Hill, MA 02467. Tel: 617-552-4070.Estate Planning Research on the Wealthy and Their PlanningChildren and Wealth

  Charitable Giving by the Wealthy

  The Mind of the Millionaire

• CHARITABLE REMAINDER TRUSTS: AN OVERVIEW by MacKenzie Canter, III, 2001
• Planned Giving Design Center Resources The “Top Ten” Common Errors to Avoid in Charitable Trust Planning and Kallina and Ackerman Sample Charitable Trust Documents
• Historical Discount Rates used by the Federal Reserve
• Senate Finance Committee’s Charity Oversight PanelA copy of the memo prepared by aides to the Senate Finance Committee is available for download at: Staff White PaperThe hearing transcript is available at: Transcript

  A video of the hearing is available at: Video of June 22nd Testimony

  Press Release on Presenters for July 22nd Senate Fianance Committee Meeting

  Charity Roundtable Testimony July 22, 2004

  Roundtable testimony of Vaughn W. Henry

• Need a searchable database for deceased donors or clients? Try Social Security Death Index or People Search or Accurint a locate and research tool
• Need to factor in planned gifts and calculate what likely social security benefits will be? Social Security Benefit Calculators
• Life Calculators life expectancy.

A Few National Charities

American Cancer Society | American Endowment Foundation (a national “community foundation”) | American Foundation for AIDS Research (AmFAR) | American Red Cross | American Diabetes Association | American Kidney Foundation | American Red Cross | Amnesty International | Care | Community Foundations – State Searchable Database | Cure Autism Now | Epilepsy Foundation | Experimental Aircraft Assn. Foundation | Fidelity’s Charitable Gift Fund (a national donor advised charity) | The Foundations (a national “community foundation” service) | Leave A Legacy | Lutheran Foundation | Make-A-Wish Foundation | March of Dimes | North American Riding for the Handicapped Association | The Nature Conservancy | St. Jude’s Hospital for Children | | Salvation Army | Save the Children | Schwab Fund for Charitable Giving | < a> |Sivananda Saraswathi Sevashram | Special Olympics | Toys for Tots | Vanguard Charitable Endowment Fund | World Wildlife Fund

Charitable Giving Without the Estate Tax? – Vaughn W. Henry & Associates

Charitable Giving Without the Estate Tax?

COMMENTARY ON CURRENT EVENTS

Vaughn W. Henry

Many in the charitable and estate planning community have expressed concerns about changes in the estate tax that might diminish support for philanthropic causes.  By promoting charity as the last and best tax shelter available to people seeking tax relief, now they find themselves wondering if tax relief has a down side.

Wealthy taxpayers assume that taxes will take a major chunk out of their estates, but if they had the ability to self direct their estate assets, they’d choose to reduce tax so more would flow to heirs and charitable causes – decreasing the tax increases bequests.

Recently, Professor Paul Shervish of the Social Welfare Research Institute (one of the authors of the widely quoted Millionaires and the Millennium New Estimates of the Forthcoming Wealth Transfer and the Prospects for a Golden Age of Philanthropy) has reversed course and presented interesting arguments that an estate tax repeal might not threaten charitable giving as much as many fear.  His position is that when people have choices and control of more of their assets, they feel more comfortable to support charitable causes.  The two charts above summarize the changing trends about concepts and the reasoning behind this somewhat unconventional position.  The trend in estate value has been to grow, and yet the distributions to charity, taxes and heirs have not been changed in the same proportion.

Based on recent Treasury Department figures, estimates of the total revenue generated by the estate tax have continued to increase, so there’s going to be an ongoing battle over tax cutting.

Year	Estate Tax Revenue
1990	$10 billion
1995	$15 billion
2000	$26 billion
2005	$40 billion

While it flies in the face of conventional and political wisdom (i.e., charitable giving is motivated by tax relief), most successful philanthropic planners know that having a strong connection to a charitable cause is more compelling than just tax avoidance planning.  However, many nonprofit organizations, insurance carriers, financial and legal advisors all have expressed concerns about the loss of charitable support if the estate and gift tax is repealed.  Whether this is cynical protection of a revenue stream or a legitimate expression of concern, no one really knows — but it does further confuse the issue.  A recent commentary by Professor Stephen Leimberg on the estate tax bills passing through Congress seriously pokes holes in the legislation offered to date.  Too bad, few lawmakers have read material from practitioners in the field, rather than being swayed by an emotional “call to arms”.

What has been observed from the 1992 – 1997 statistics on estate values and charitable bequests is that transfers to nonprofit organizations have grown faster than transfers to either heirs or tax payments, so there seems to have been a significant shift in thinking by clients and their advisors to conserve “social capital”.  Will this trend continue?

“In a 1997 article in Philanthropy magazine, Hudson Institute economist Alan Reynolds took a look at a prediction by Independent Sector that the 1986 Tax Reform Act, which reduced the top marginal income tax rate to 28% from 50%, would lead to an $8 billion decline in giving. Actually, giving rose $6.4 billion the following year, and a total of $40 billion a year between 1987 and 1994. (Charitable giving now amounts to nearly $200 billion annually.) The key factor in giving, it turns out, is economic growth and wealth, not tax rates. “The surest way to increase charitable giving,” wrote Mr. Reynolds, “is to increase the number of families earning high incomes.” – Wall Street Journal Feb. 27, 2001

Of special concern to planners in light of recent market gyrations is what happens to charitable trusts when there is a market downturn and how trusts should be designed to weather those periodic storms.  Here are previews of the articles due out this month:
(1.) Payouts Aren’t Payoffs – What investment strategy works in a charitable trust http://gift-estate.com/article/payout.html

(2.) Practice Building – Understanding the interaction between commercial advisors and nonprofit gift planners  http://gift-estate.com/cch-article.htm

CONTACT US FOR A FREE PRELIMINARY CASE STUDY FOR YOUR OWN CRT SCENARIO or try your own at Donor Direct. Please note — there’s more to estate and charitable planning than simply running calculations, but it does give you a chance to see how the calculations affect some of the design considerations. Which tools work best in which planning scenarios? Check with our office for solutions.

4/3/01

Private Wealth Advisor – Finding (Or Being) A Good Advisor

Reprinted from Private Wealth Advisor – February 2001

© Campden Publishing Limited 2001, London

ESTATE PLANNING

FINDING (OR BEING) A

GOOD ADVISOR

---

How should an estate plan advisor be selected to ensure the best legacy for the wealthy family?  Vaughn W. Henry looks at the issues involved.

There’s more to finding a good advisor than judging competence by expensive office furniture.  And while many successful professionals have done adequate work based on their gregarious social skills, today’s financial problems have become more complex and clients are more sophisticated.  The use of Internet databases, search functions and software resources now provides many clients with more capacity either to better solve their problems or dig themselves into a deeper hole.  Without some level of expertise, many web surfing amateurs are misled by a wide range of misinformation and outright scams.

It is important to find a team of professionals who can guide, advise and coach.  That means it is often a function of an advisor to teach a client about their choices.  While some professionals might prefer to tell the client, “don’t worry, I’ll deal with it, sign here and it’s all taken care of”, clients may be better off to ask themselves whether or not their advisor can be all things to all people.  There is often an underlying battle for influence, and it is rare to have a team work together as well as they should to address all of the estate and financial planning hurdles.

How does it happen?  Understandably, clients use advisors they are comfortable with, but  too often clients rely on their accountant who has done audit and income tax preparation – or an attorney who may have handled corporate work or a divorce.  They might lack the expertise needed to offer a full range of financial or estate planning options and be unwilling to let the client know their limitations.  Frankly, that attitude leads professional advisors into malpractice or errors and omissions liabilities when they give advice beyond their expertise.  A recently released study by Prince and Associates (see box) surveyed donors, professional advisers and planned giving officers employed by nonprofit organisations. The survey results were alarming to some experts, and disappointing to say the least.  The most surprising finding was, in terms of competence and technical expertise.  The advisers who claimed planned giving as a major part of their practice generally lacked the necessary background to give proper advise.  Randomly generated estate planning and planned gifting questions on a self administered exam produced no group average scoring above 70%, the minimum passing grade.  Test scores were best among attorneys who practiced in the estate planning arena and worst among the charity’s fund-raising employees, but it’s important to note that all groups performed well under acceptable levels.

What this means is that ongoing education needs to be a requirement and different levels of training needs to be available for all those who make financial planning, estate planning and planned giving a part of their practices.   Too few professionals make an effort to stay current, much less on the cutting edge.

What does this mean for planners and their clients?  More consideration should be given to creating teams of specialists who can craft a plan that meets the family’s need for liquidity, tax reduction, control and security.   There are professional advisors who do not feel a responsibility to save taxes or preserve an estate.  It is common to hear ‘the kids inherited more than they deserved’ or ‘it’s not my job to cut a tax bill’ or ‘the client never asked me about taxes, they only wanted a simple will’.  Many commentators feel that an advisor has an ethical duty to present a range of options to a client that includes tax reduction and a discussion of family values.  One might contrast this situation with a patient going to a physician about a head cold, and the examining doctor observes a large irregular and discoloured mole.  The patient did not ask the physician about skin cancer, but the doctor has a duty to pursue the diagnosis and treatment, not wave it off and later claim that the deceased patient never asked him to do anything about an obvious problem.

There should be no more excuses about clients not asking about whether or not tax saving techniques were available, clients generally don’t have enough background to judge what is appropriate.  After all, they chose an experienced professional advisor.  Clients should have a family-friendly plan crafted to meet their unique needs for flexibility.  Professional tax and legal advisors should make a greater effort to educate their clients and help them understand the problems and provide solutions that meet all of their clients’ concerns.  Good plans address more than great investment returns and tax efficiency – they must also meet the needs of the family.

For instance, will the plan provide for proper management by underage or unprepared heirs?  Has it been decided if there’s an upper limit on what heirs could or should receive?  What does the concept of money mean to the client?  How much is too much?  Could an inheritance provide a disincentive to work and succeed?  Does the plan try to pass assets to all heirs equally, or have past gifts and interactions been considered in an effort to be equitable?  Since there’s more to a legacy than just money, the estate plan should include passing down a family’s value system and influence.  How have the family’s core values been addressed in the master plan?

The problem is that few professional advisors like to deal with such intimate and personal questions.  Most tax and estate planners spend years honing their analytical skills only to find that clients don’t create and implement estate plans for purely logical reasons – there is an overriding emotional motivation often unsolicited in discussions with the client.  The problem is that even an elegant estate plan that does everything it is supposed to accomplish will not be well received if the family doesn’t understand and agree with its goals.  As a result, there is paralysis by analysis, and nothing gets accomplished until both the logical and emotional needs for family continuity planning occur.  Rather than try to plan an estate on an asset-by-asset basis, take a big picture view of the family’s goals and values, and see how the planning can be made to meet those needs.  Often a good advisor helps the client take the first step to address what money means to their family.  While most families do not discuss wealth, it is often illustrative to ask:

•  Did an inheritance play a significant role in the family’s acquisition of wealth?
•  Does the estate plan promote equal or equitable distributions? (They are not necessarily the same.  For example, heirs who have sweat equity in a family business may be entitled to preferential treatment since they helped create the wealth.  However, some families feel that past salary and bonus plans have more than compensated those working in the family business.)
•  Have intra-family gifts been a component of the estate plan?
•  How successful have these gifts been?
•  Did the recipients make good use of the asset?
•  Will it be possible to continue a gifting programme?
•  Have heirs been prepared to manage the estate’s assets?  (Wealth should be the glue that binds the family together, not the dynamite that blows it apart.)
•  What has been done to help heirs learn to manage wealth?
•  Will there be disagreements among the heirs over future inheritances?
•  Has the plan set up future conflict, a ‘partnership from hell’, when heirs are forced carry on a family business with in-laws or ex-partners?
•  Has the plan managed to protect family assets from unnecessary expense and tax?
•  Does family wealth create ethical burdens?
•  Can wealth be used as a tool to modify character development, responsibility and skills of heirs?
•  Will the plan achieve a zero estate tax liability?

What Donors Want in Their Charitable Advisers	Charity Fundraisers	Professional Advisers
Expertise in the technical details of executing the planned gift	16.0%	97.9%
Skill and efficiency in working with the donor’s professional advisers or with the charity	60.3%	75.2%
Willingness to let the donor set the pace in the planned giving process	67.2%	86.0%
Help in deciding what type of planned gift to make	85.5%	96.8%
Knowledgeable about the advantages and disadvantages of each type of planned gift	94.7%	99.4%
Sophisticated understanding of the donor’s personal motivations to give	99.2%	82.2%
Effectiveness in getting the charity to treat the donor as he or she wants to be treated	69.5%	11.2%
Note: 603 donors surveyed: donors in the survey had made planned gifts worth at least US$75,000 and had a net worth of US$5 million or more. Source: Prince & Associates and Private Wealth Consultants, 1997

‘Over and over again, the courts have said there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich and poor, and all do right for nobody owes any duty to pay more tax than the law demands. Taxes are enforced exactions, not voluntary contributions.’  Judge Learned Hand, 1934

If you adopt this philosophy – and most reasonable people do – consider this: with income tax, you get a chance every year to make sure you’re arranging your affairs the way you want them, but you only get one chance with estate taxes and that chance is your estate plan.  Everyone should have a plan that conserves and distributes assets, provides income for survivors and prevents unnecessary payment of excessive tax or transfer costs. A carefully crafted estate plan even offers an opportunity to pass down something more than property – that is, your system of values.  Not only should you have this kind of plan – you can.

Vaughn W. Henry

Tax Efficient Giving – Henry & Associates

Tax Efficient Charitable Giving

Vaughn W. Henry

With $203 billion given to charities in 2000, donors are more likely than ever to use planned gifts.  “Planned or deferred giving” refers to a popular charitable gifting technique that provides valuable tax benefits and/or income benefits for the donor.  Whether a donor uses stock, cash or other hard to value assets (real estate, art, or business interests), a planned gift can make charitable giving a powerful tool benefiting both donor and the non-profit organization.  Where to get help? Well-trained development officers or financial advisors craft a planned gift to meet both the donor’s charitable and financial or estate planning goals.  These gifts are made by bequests, trusts or contracts between a donor and a charity.

Advantages of many planned gifting programs

· Increases current income by repositioning assets

· Reduces income tax with current charitable tax deductions

· Lowers estate tax liabilities by strategically shrinking estate size to levels that pass tax free to heirs

· Avoids capital gains tax on appreciated assets

· Increases opportunity to pass additional assets to heirs in an organized plan

· Creates significant tax efficient charitable gifts benefiting the donor’s community

· May empower families through the concept of economic citizenship

· Controls and redirects social capital which otherwise would have defaulted to the government

Types of Planned Gifts

Bequest — When a donor leaves assets to charity through a will, he or she is making a bequest. The donor’s estate will receive a charitable estate tax deduction at death, when the gift goes to charity.  Some gifts are better at death; for example, savings bonds may be listed individually and given to charity through the will, otherwise, a gift of bonds may trigger income tax if given outright.  This is a common tool, but usually not well thought out or designed with tax efficiency in mind.

Life Insurance and Beneficiary Designations — Insurance policies (new or existing) may be given to charities in most states.  Depending on the contract’s paid-up status, the charity may need to continue paying premiums.  Donors may also name a charity as a beneficiary of an existing policy, either entirely or in part.  Additionally, a charity may be named as a beneficiary of a retirement plan (e.g., IRA, 401k, profit-sharing, etc.) or annuity contract.  The advantage of this strategy is that the charity usually receives the proceeds without the accompanying income tax liability.  This allows surviving family members to inherit assets that “step-up” in value and the charity receives assets that would otherwise be reduced by taxes paid as income in respect of a decedent (IRD).  Check with your tax advisors on this technique, as it will affect minimum required distributions.

Charitable Remainder Trust  — This § 664 trust makes payments, either a fixed amount (annuity trust) or a percentage of trust principal (unitrust), to whomever the donor chooses to receive income. The donor may claim a charitable income tax deduction and may minimize any capital gains tax if the gift is of appreciated property.  At the end of the trust term, the charity receives whatever amount is left in the trust.  Charitable Remainder Uni-Trusts (CRUT – paying a fixed percentage) may provide some flexibility in the distribution of income, and thus can be helpful in retirement planning, while Charitable Remainder Annuity Trusts (CRAT – paying a fixed dollar amount) are more rigid and restrictive.

Charitable Lead Trust –This trust makes payments, either a fixed amount (annuity trust) or a percentage of trust principal (unitrust), to charity during its term. At the end of the trust term, the principal can either go back to the donor or to heirs named by the donor. The donor may claim a charitable tax deduction for making a lead trust gift.  However, a non-grantor lead trust does not usually generate a tax deduction, but it does eliminate the asset (or part of the asset’s value) from the donor’s estate.

Charitable Gift Annuity — A gift annuity is a contract between a charity and donor. In return for a donation of cash or other assets, the charity agrees to pay the donor, (or a friend or family member if the donor so chooses), a fixed payment for life. The donor can also claim a charitable tax deduction. If a donor funds a gift annuity with long-term capital gain property like appreciated stock, the donor will report only some of the gain, and may be able to report it in installments over many years.  Income from a gift annuity may be deferred for a period of years and these are often set up by younger donors to supplement retirement income.

Pooled Income Fund — The name describes this planned gift as a charity accepts gifts from many donors into a common fund and distributes the income of the fund to each donor or recipient of the donor’s choosing.  Income recipients receive income in proportion to their share of the fund.  A gift to a pooled fund provides a charitable income tax deduction and the donor will not have to pay capital gains tax if the gift is of appreciated property.  When an income beneficiary dies, the charity receives the donor’s portion of the fund.

Retained Life Estate — A donor may make a gift of a farm or residence to charity and retain the right to live in the house for the remainder of the donor’s life. The donor receives an immediate income tax deduction for the gift. At the donor’s death, the property goes to charity.

While many of these split interest gifts and techniques are used for donors with estate tax liabilities, they still work when the donor has a modest estate.  A good advisor should be able to suggest tools to help a donor preserve personal financial security and still fulfill any charitable goals.

CONTACT US FOR A FREE PRELIMINARY CASE STUDY FOR YOUR OWN CRT SCENARIO

Charitable Trust Planning – Vaughn Henry & Associates

Charitable Trust & Estate Planning

Case studies, workshops and professional planned giving resources.

Individuals considering a charitable remainder or lead trust need to understand that their financial goals can be met without interfering with their family’s security. Heirs can be protected and families united as they redirect their social capital. Develop your potential for economic citizenship.

• Minimize Estate and Capital Gains Taxes, Reduce Income Taxes
• Use a charitable remainder trust (CRT) as a Discretionary Pension Plan
• Control Retirement Income with a NIMCRUT or Spigot Trust
• Real Estate, Stock Portfolios, Business Assets Repositioned Tax-Free (Lifetime Control of More Capital) through a CRUT
• Business Exit Strategies for Family Business Owners
• Coordinate the Control of Your Social Capital with a CRT and Family Foundation or Donor Advised Funds by Giving Away the IRS’ Money.
• Families with Donative Intent Can Meet Their Financial Goals Within an Integrated Financial and Estate Plan
• Professional Development for NPO Gift Planners and Commercial Advisors
• Host Workshops and Private Seminars for Not-for-Profits and Family Groups

Professional Resources and BooksNow booking workshops, briefings and seminars for 2006 and 2007 … Association of Advisors in Philanthropy – Conference Philanthropy … Public Link to PGDC – CRT Advisors’ Liability and … New estate and gift tax rates in place now, but what effect will sunset have?

CONTACT US FOR A FREE PRELIMINARY CASE STUDYFOR YOUR OWN CRT SCENARIO or try your own at Donor Direct

Please note — there’s much more to estate and charitable planning than simply running software calculations, but this service does give you a chance to see how the calculations affect some of the design considerations.

This is not “do it yourself brain surgery”.

When might a CRUT be superior to a CRAT? Which type of CRT is best used with which assets? Although it may be counter-intuitive, sometimes a lower payout CRUT makes more sense and pays more total income to beneficiaries. Learn why and when to use a CLUT vs. CLAT and the traps in each lead trust. Which tools work best in which planning scenarios? Check with our office for solutions to this alphabet soup of planned giving tools.