Laura Hansen Dean, Esq. Executive Director of Gift Planning The University of Texas at Austin

Program Assessment Discover strengths and weaknesses Focus on basic elements and functions of development: gift policies, data, gift planning tools, staffing Blueprint for reform – University of Texas at Austin

Campaign Planning Study Formerly called a feasibility study Do it right – use an RFP and get several firms bids but very few can play in this league Consider cost (duh!), experience working with your enterprises your size, past relationships with your organization

Scope of Work – short list Case or argument for support Interviews – between 40 and 60 of top donors and prospects Testing of preliminary goal Internet questionnaire Comprehensive report – written and presented to board

1.You need campaign counsel 2.You don’t have to use the firm that does your Planning Study

Goal Setting and Gift Pyramid Creating discipline Gift Pyramid will require gifts of +$100,000,000 and +$10,000,000 At the end it may be 95/5 ratio but to build Culture of Philanthropy shoot for 80/20 Be realistic with gift expectations but still stretch

Staffing and Training Do it Campaign Director – not CDO but #2 Train staff, administration, volunteers – don’t let them get off the hook Leadership Attitude Let’s talk

Screening Part of the discipline Great for the “middle” of the gift pyramid and Culture of Philanthropy goal Great for gift planning intelligence

Volunteers A lot of work but worth it They become better donors Shore up uncertain leadership Tipping point

Integration of Gift Planning into campaign Set percentage of goal expected from GP PGO’s on speed dial for every major gift officer Training opportunities for staff and volunteers Builds culture of philanthropy goal

Type of GiftNCPGCASE ( ) RevocableCount at face value if pledged during campaign and documented. Report separately from outright gifts and irrevocable gifts. Same with comment that institutions “may” want to consider age requirements with examples: Less than 50, not counted; 50 to 69 ; count at discounted value 70 and older; count at face value. Same.

Type of GiftNCPGCASE ( ) IrrevocableCount at face value if made during campaign. Report separately from outright gifts and revocable gifts. Same with requirement that both face value and discounted value must be reported to CASE. Lead trusts: report total value of payment stream as a pledge with annual distributions recorded as pledge payments as received, regardless of term of the trust. Same.

Conduct Trainings with Colleagues the gift planning process the variety of assets that can be gifted personal and estate planning goals that can be addressed by gift planning

Conduct Trainings with Colleagues how a gift planning “ask” differs from a traditional “ask” Would you consider a gift of $X if we can show you could make the gift? – here are really asking for willingness to take the time to explore some options. Would you consider a gift of $X? – yes, no and sometimes maybe are possible responses.

types and values of assets owned marital status, extent of family and loved ones likely to be heirs known charitable interests relationship with the organization and past gifts purpose of past gifts to the organization

$100,000 Gift $100,000 outright in cash or non-cash assets. $100,000 pledge over campaign period paid in cash or securities.

$100,000 Gift $100,000 charitable gift annuity Donors age 70 and 68 would receive 5.6% recommended payout in quarterly payments. At 5% federal midterm interest rate, the charitable value would be slightly more than $33,000 $100,000 testamentary gift or beneficiary designation

$500,000 Gift $500,000 outright in cash or non-cash assets Non-cash example: Gift ownership in a closely- held business worth $500,000 before selling the business is negotiated with the buyer. $500,000 pledge over campaign period paid in cash or securities

$500,000 Gift $500,000 blended gift Donors age 65 and 63 pledge $250,000 over 5 years to create an endowment. At the end of 5 years, the endowment will pay out $12,500 annually at a 5% spending rate. Donors contribute a piece of real estate worth $250,000 that cost them $100,000 to a flip charitable remainder unitrust with a 5% payout rate and quarterly payments for their joint lives and then for the survivor’s life. At 5% federal midterm interest rate, the charitable value would be about $84,500. $500,000 testamentary gift or beneficiary designation

$1 Million Gift $1 million outright in cash or non-cash assets. $1 million pledge over campaign period paid in cash or securities $1 million charitable remainder trust $1 million testamentary gift or designation

Contribution of Business Equity to CRUT Before Sale Pete wants to make a $1 million gift. He owns $3 million interest in family business, all subject to long- term capital gains tax. If the tax rate was 15% at the time of the sale, he would lose $450,000 of the $3 million sale proceeds in taxes. $2.55 million left invested at 6% = $153,000 retirement income.

Alternative to Sale: Gift $1 million equity to 5% CRUT for Life = $ 50,000 Sell $2 million, all subject to 15% LTCG tax, leaves $1.7 million to invest at 6% = $102,000 Estimated Total Annual Income $152,000 versus 6% return on $2.55 mil sale proceeds $153,000

$10 Million Gift $10 million outright in cash or non-cash assets $10 million pledge over campaign period paid in cash or securities $10 million from a charitable lead trust $10 million testamentary or beneficiary designation

Charitable Lead Trust Donors are entrepreneurs in their 50’s and could easily give $10 million, but not ready to do so. Instead they fund a 7% grantor CLAT with $20 million of assets they expect to appreciate, lasting for 8 years. 7% of $20 million = $1.4 million x 8 years results in $11.2 million to charity.

Charitable value (5% FMR) is $9.2 million, with 20% of AGI deductible in year of gift (plus 5 carryover years) as income tax charitable deduction. Since a grantor CLAT, the donors will be the taxpayers during the term of the trust. Strategies to reduce taxation: only sell enough trust assets to make annual payout and pay trust expenses.

$50 Million Gift $50 million outright in cash or non-cash assets $50 million pledge over campaign period paid in cash or securities $50 million blended gift $50 million in a testamentary or beneficiary designation

$10 million given during the campaign Plus $33.6 million from a charitable lead trust: $20 million to CLAT paying 7% lasting 24 years – at the end of 24 years, the donor’s 4 children will receive the trust assets in their early to middle 60’s. Charitable value (5% FMR) is $ million and only $323,000 is the value of the gift to the children. ● Plus $6.4 million testamentary gift.

If the $50 million gift will name a building, program, position, etc. at the charity, the charity could ask that the testamentary gift be a debt of the donor’s estate (if possible under state law) and therefore be irrevocable.

Detail Blended Gift Options Best Assets to Fund the Alternatives

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