TRACY GARY, Founder of Inspired Legacies and PHIL CUBETA, CLU, ChFC, MSFS, CAP Sallie B. and William B. Wallace Chair in Philanthropy at The American College WITH SPECIAL THANKS TO RANDY FOX AT INKNOWVISION Inspired Planning Case Study

Purpose, Process, Payoff Purpose:  Help you, as fundraiser or advisor, find your place at the planning table where the big dollars are planned Process  Review current state of gift planning  Introduce an opportunity on Main Street  Present and critique a case study of a Main Street client  Invite your comments Payoff  Happier donors and clients  Larger gifts, better plans, and better world

And how to capitalize on them Trends in Gift Planning

The Future of Gift Planning NCPG Task Force Report 2007 Planned Giving is “eroding” within charities as a specialization. Number of Planned Giving Specialists is “dwindling.” PGOs have less control of the process. Information on giving tools is widely available. Many gifts are being structured by advisors with no nonprofit involvement.

A Major Shift “One of the most striking differences between the 2006 and 2008 study is the dramatic increase in donors use of legal and financial professionals to help them make charitable decisions.” “Nonprofit personnel’s involvement dropped from 41% of cases to 29%.” Bank of America Survey of 700 High Net Worth Households, 2008

Causes of Present Decline Donors access information on charitable tools via the internet Donors get sophisticated planning from advisors Gift planners have to wear many hats, only one of which is planned giving High turnover among nonprofit gift planners Nonprofit management is short term focused and demands immediate results Donors prefer more consultative, donor-centered, or transformational approach

Advisors Not Perfect 2/3 of highly experienced advisors interviewed have limited philanthropic toolboxes, relying on one or two planned giving vehicles 50%+ do not discuss their clients’ personal or social values, or help them develop a philanthropic mission Overwhelmingly, donors reported it is they who typically raise the philanthropic question Many donors say savings taxes is important, but that they are weary of the “tax lead” From studies done by The Philanthropic Initiative,

Nonprofit Edge Bank of America 2008 study of high wealth families:  95.9% instruct children in giving  80% of parents say their children learn about giving from a religious organization What role does your nonprofit play in raising flourishing families?

NCPG – Desired Future “In the future, sophisticated planned giving officers have changed their focus from structure of the gift to impact, becoming more donor centered and holistic in their approach.” “Planned giving officers are viewed as part of the support team for serving the donor.” Changing NCPG name to “Partnership for Philanthropic Planning.”

Your Seat at the Planning Table EXPERT ADVICE PLANNING ASKSELLASKSELL CONFIDECONFERCONFIDECONFER From Todd and Scott Fithian: The Right Side of the Table: Where do you Sit in the Minds of the Affluent?

Steps for legacy mentors and leaders

Are you informed about the evolution of philanthropy? Will you support your clients & members to lead, or will you follow their lead?

C0-Creating a Viable Future

Alignment? Your Personal Mission Your Donor ’ s Your Organization ’ s

Passion Professionalism Shared vision: gift planner, donor, nonprofit Inspire each other Spark a movement Often rally against an “other” Whatever client wants is fine Do not judge Do not share personal passions Provide a service Work with all comers if they have money Balancing Passion and Professionalism

Passion Professionalism Speaks a language that brings some together in common purpose, but may repel others. Leads to cultural clash. Can pander to what is worst in the client. Can be blind and deaf to what is best in the client. Can make the market motive the highest motive. Risks Either Way

An Opportunity on Main Street The Closely Held Business Market

Opportunity on Main Street 90% of US Firms are family owned 64% of GNP 33% make it to next generation 15% to third generation 25% will transfer control over next 5 years 40% over 10 years 71% have not completed succession plans 93% have little income outside business 80% want business to stay in family Many want to leave a legacy and make a difference Source: David Leibell and Dan Daniels of Wiggin and Dana

Opportunity on Main Street Are often devout Committed to their community Want to pass values on to heirs Don’t consider themselves philanthropic but are givers Rely on advisors, often on a professional insurance agent, to drive the planning process Have a CPA and attorney Have a balance sheet handy to show the banker Approachable – Doors are open for business daily

What is on Their Minds? When and how will we exit the business? Will we have enough for us? How much is enough for heirs? How do we transfer assets with minimal tax? What is next for us after we “retire”? “Is that all there is……?” – Peggy Lee

Prudent Plan Inspired plan for Impact Takes care of self And heirs And the money  Preserve it  Grow it  Reduce tax bite Has a positive impact on self, heirs, and society Now, later, at death Beyond death Gets social results Inspired Planning

The Fitzsimmons Via Randy Fox at InKnowVision Case Study

Facts Goals Own a business and will sell it over 5 years Approaching 60 Several children and grandchildren Live on $90,000 After tax Net worth: $4.5 – $12 million, depending valuation of business Financial security 85% to charity Enough for kids but not too much Reduce income and estate tax Gerald and Eileen Fitzsimmons

What We Know What was not asked Started a pre-school Want to do something more for education Current total giving is $1,300 a year When they want an impact? How? (Through what nonprofit?) With what personal engagement? With what involvement of heirs? Philanthropic Info Per Randy Fox

Back Office Randy Fox for the Financial Advisor Potential Teammates Phil as “synthesizing generalist” Tracy as coach, philanthropic expert Your role? Clients Planning Team Financial Advisor Attorney CPA

Where We are in the Planning Process per Randy 1) Financial advisor got the facts and the goals 2) Family Wealth Diagnostic showed not all goals being met 3) Family Wealth Goal Achiever 1) Iteration #1 has been run 2) Further iterations are in process

Download: The fact finder (blank) The Diagnostic (complete) The Wealth Achiever (complete)

What is in the plan Your Thoughts IRA to charity at death CRT with remainder to charity at death Charitable Lead Trust starting at death $10 million of life insurance to heirs at death What could be added? Where might you position your organization? Your next move? The State of the Case

Tracy’s observations

Phil’s Observations Impact?  On what cause? (education)  When?  How?  With what nonprofit? 85% to charity? Enough or too much for heirs?

Tracy to Phil and Randy Nonprofit engagement? Donor networks? Inter-generational communication? Both husband and wife engaged? Coach to keep case moving as they transition from business to philanthropic engagement? Coach for the kids? Can the family deepen its joy and capacity to collaborate through family philanthropy?

Phil and Tracy to Randy What if…..  We calculated how much current giving (direct to, say, a school) they could afford?  We got them engaged with the good works now  We got the children engaged?  We used the life insurance to endow the current giving?  We sparked this family’s potential to co-create?  We positioned the advisors as an active and vital planning team?

How Would Randy React? Sure Thanks, Tracy Thanks, Phil Let’s ask the advisor We can run the numbers Who else should be at the planning table as we move to planning for near-term impact on education? Now that there is better family, nonprofit, and advisor communication who else can we help?

Your Thoughts? The microphone is yours

How Will You Use This? To advance your career To help donors and clients To advance the greater good?