www.pgtoday.com

pl anned giving

t u o u d u a u y®

a p r i l 2 0 1 2 • V o l u m e 2 3 • N u m b e r 4

proven, practical

guidance from

the planned

giving experts

this month

1 Is Death Taking a Holiday?

1 Family Charitable Planning Challenges During Business Succession

5 Social Media for Planned Gifts Part IV: How to Integrate Twitter

7 Roger’s Legacy: This Publication’s Operations Endowment for the PPP

9 Real Property Gifts and Plans That Won’t Frighten Your Board, Part I

10 Trench Tale

11 Marketing Reprintable: Can You Pass this Quiz on Wills?

12 Back Page: Rules of the Road

How to approach family business suc-cession and the goals for this transition process are two of the most important issues facing any family business owner. Whether it’s a sale to a third party or a transfer of ownership to a new genera-tion of family members, successfully completing a business transfer is often more difficult than building the business itself.

Charitable planning can be an impor-tant aspect of a family business succes-sion plan — and commonly one of the most overlooked. Philanthropy is rarely part of the discussion during the early

phase of a transition. However, if the family has charitable intent, charitable planning should be incorporated into a family business succession plan’s earli-est stages instead of being left until the transition is complete.

Detailed here is a framework to help guide the philanthropy-planning process during the transition of a family business.

starting the ProcessCharitable planning should begin dur-

ing the first step of the transition process.

Fundraisers and others have been wait-ing on the great wealth transfer predicted by researchers at Boston College and Cornell University, and may be wondering what has happened to the philanthropic windfall that many assumed was on the way. Has this wealth transfer simply been a casualty of the Great Recession and dropping asset values? Or is something else affecting charitable bequests, such as a lack of decedents?

The wealth transfer projections were based upon various assumptions, in-cluding economic growth and a steady increase in deaths based on U.S. Census projections. One hundred years ago, the average life expectancy in the United States was about 50 years of age. In fact, U.S. government figures report a life expectancy of only 47.3 years in 1900,

while today’s life expectancy exceeds 78.3 years of age — an increase of more than 30 years.

In light of these advances in medical care and longevity, fundraisers may wish to consider the impact of lengthening life expectancies and other factors on planned gift development efforts.

Life and Death In the early part of the 20th century,

infant mortality was a much greater factor in determining life expectancy. At that time, there was almost a 25 percent chance that newborn babies would not live to celebrate their first birthdays. Thereafter, many succumbed to com-mon illnesses like the flu and measles,

is Death taking a holiday? BY BARLOW T. MANN

Family Charitable Planning Challenges During Business successionBY JAMeS A. FITTS AND MARSHALL G. ROWe

See HOLIDAY: Page 2

See FAMILY: Page 4

pl anned giving

t u o u d u a u y®

Unauthorized reproduction of all or any part of this publication is prohibited. Written permission must be obtained from the publisher.

Planned Giving Today serves the gift planning community as a practical resource for education, information, inspiration, and professional linkage. It helps gift planners enable others to give generously and prudently. Tom Cullinan, EditorO’Meara, Ferguson, Whelan, and Conway, Inc. Elkhorn, Neb. and Corpus Christi, Texas

EdiTorial advisory BoardBruce BigelowCharitable Development Consulting Frederick, Md.stephanie C. BuckleyPepperdine UniversityMalibu, Calif.roger EllisonWest Texas Rehabilitation Center FoundationSan Angelo, TexasJackie W. FraneyBNY MellonDallas, TexasJim GroteJustFaith MinistriesLouisville, Ky.Kristen schultz JaardaCrescendo Interactive Inc.Camarillo, Calif.Cam Morin KellyDuke UniversityDurham, N.C.Edward McBrideUniversity of IdahoMoscow, IdahoFrank MintonFrank Minton Consulting LLCLake Forest Park, Wash.Philip M. PurcellBall State University FoundationMuncie, Ind.rebecca rotheyCatholic CharitiesBaltimore, Md.

FoundEr (1990)G. Roger SchoenhalsGraPhiCsSoundview Design StudioPuBlishErMary Ann Liebert, Inc.Copyright ©2012 by Mary Ann Liebert, Inc.All rights are reserved.Planned Giving Today is published monthly and sent by first class mail to subscribers. Views expressed in this publication do not necessarily represent the opinions of the publisher or the Editorial Advisory Board.The article deadline is six weeks prior to issue date, and Letters to the Editor are due four weeks prior to issue date. The publisher assumes no responsibility for unsolicited manuscripts or other materials submitted for review.Editorial CorrespondencePO Box 345Elkhorn, NE 68022Phone: 402.598.2090e-mail: tom@pgtoday.com2012 annual Personal subscription Prices ($US) us non-usOnline only $191 $191Print only $199 $243Print and Online $218 $262Call for prices on institutional and multi-year subscriptions.subscriptions, advertising, and other BusinessPlanned Giving Today®Mary Ann Liebert, Inc.140 Huguenot Street, 3rd FloorNew Rochelle, NY 10801-5215Phone: 800.654.3237 914.740.2100Facsimile: 914.740.2101 e-mail: pgt@pgtoday.comWeb: www.pgtoday.comISSN: 1052-4770

2 P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2

or fell victim to industrial and agricul-tural accidents.

However, over the past century, the percentage of deaths of those under 65 has fallen dramatically. In 1910, 75 percent of those who died were under 65, while only 25 percent were 65 and older. By 1990, over two-thirds of the deaths were among the 65-plus popula-tion and less than one-third were under age 65. early into the 21st century, death is even less common among younger and middle-age persons.

Consider that recent census reports in-dicate that the 85-plus population is the fastest-growing portion of the population. And this: The Wall Street Journal recently reported on the case of a 78-year-old woman with a history of cancer and fam-ily heart disease being able to take out a $20 million life insurance policy because of new underwriting standards.

impact on Planned Gifts With the graying of America, this means

that the number of planned giving pros-pects and donors relative to the number of persons born in earlier years will be steadily growing. Additionally, economic factors such as the advent of Social Se-curity and broader coverage by pensions have enabled more persons to accumulate substantial assets. Pew Research indicates that relative wealth and income have favored the 65-and-older group over the past decade.

According to “Giving USA” figures, charitable bequests more than doubled between 1964 and 1969, from $950 million to $2 billion. Between 1970 and 1984 another doubling occurred — to the $4 billion level. Since then, charita-ble bequests have grown almost five-fold, but they have hovered in the $20 billion range for most of the past decade.

In light of the above factors, charitable bequest totals have been relatively flat since 2000, when adjusted for inflation based upon the “Giving USA” estimates.

All-time Low Death RateIt appears that death has indeed been

taking a holiday. In general, as the popula-tion grows, so too does the number of deaths. However, recently there have ac-tually been several declines in the number

of deaths in the United States. In fact, the number of deaths declined in four of the last 10 years. After a period of very slow growth in the 1990s, the number of deaths has basically been flat for the 2000s at 2.4 million.

Since 1999, the age-adjusted death rate per 100,000 in our American popu-lation has fallen from 881.9 to 741. This age-adjusted rate has fallen every year for the past 10 years and is at an all-time low. (See graph on Page 3.)

What this may mean The decline in the number of deaths

may result in slower growth or even a temporary decline in charitable bequests and other maturities. The amount of planned giving revenue is dependent on both the number of deaths and the amount of wealth held by the decedents. With more people living longer than ever before, there will be increased spending pressure on their savings, investments, and income. There are also lingering ef-fects of the Great Recession on the value of various assets.

According to National Vital Statistics Reports, Americans currently have more than a 75 percent chance of surviving to age 70. Over half of the total U.S. population will live to see 80. Those with minimal or average savings may be forced to deplete those funds during a lengthy retirement period. Increasingly, seniors are choosing higher-paying commercial annu-

hoLiDAY continued from Page 1

Trends in Deaths in America

Year

Number

Age Adjusted Death Rate per 100,000

2000 2,403,351 872.0

2001 2,416,425 854.5

2002 2,443,387 845.3

2003 2,448,288 832.7

2004 2,397,615 800.8

2005 2,448,017 798.8

2006 2,426,264 776.5

2007 2,423,712 760.2

2008 2,473,018 758.7

2009 2,436,682 741.0

Source: Centers for Disease Control and Prevention

P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2 3

Re-evaluate

your

expectations

for the next

few years.ities to maximize cash flow while ensuring an income stream that cannot be outlived. In the case of the affluent elderly, chari-ties may find that access will be limited by a growing number of gatekeepers, includ-ing friends, family, advisers, and others.

With increased longevity, many among the ranks of seniors are now combating the chronic effects of old age, the fear of running out of money, the loss of loved ones and friends, financial schemes that prey on the elderly, and a general sense of diminished control over their lives. Quality-of-life issues may become more important than quantity of life. evidence of this development can be seen in the growth in popularity of “living wills,” du-rable health care powers of attorney, and “do not resuscitate” medical orders.

Wealth transfer’s slow start Because of the factors outlined above, it

may not be wise to count on the intergen-erational wealth transfer to generate large amounts of funds in the near term. While an unprecedented amount of wealth con-tinues to pass through estates — with charities among the recipients — there are indicators that the wealth transfer is off to a slow start.

In addition to the 55-year projections from 1998 to 2052, there were also 20-year projections for the period from

1998 to 2017. During this 20-year peri-od, a transfer of at least $1.7 trillion was projected for charitable purposes. Now, at 12 years into the wealth transfer, the data shows less than $250 billion has been received in charitable bequests.

In other words, at 60 percent of the way through the 20-year projection, we have reached less than 15 percent of the antici-pated results. even if we could double the level of charitable bequests for the next eight years, charitable bequests for the 20-year period would still reach less than half of the total that was originally projected.

While to some this may initially be perceived as bad news, remember that despite various impediments, the level of charitable bequests has never been higher than the past 10 years. The key to success may be to re-evaluate your expectations for the next few years and recognize the increased importance of careful gift planning.

While death may have taken a holiday, it is sure to return. However, with the projected growth of those in the third phase of life, it is more important than ever that America’s nonprofit community be prepared to help older donors make their gifts in ways that help them meet multiple financial objectives while still making what may be the largest gifts of their lifetime.

Barlow Mann is an attorney and chief operating officer of The Sharpe Group, a provider of philanthropic planning resources to America’s nonprofit com-munity. He is responsible for Sharpe’s training, marketing, and consulting services, with clients encompassing a broad range of charitable organiza-tions and institutions. barlow.mann@sharpenet.com

650

700

750

800

850

900

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

U.S. Age-adjusted Deaths

Deaths per100,000

4 P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2

Charitable

interests help

build the

bridge.

This is when ownership and manage-ment formulate reasonable objectives for the transition based on the family’s core values.

During this step, family members rec-oncile varied opinions to create a unified family and company vision. Their opinions may vary on philanthropy. Family mem-bers may also have to reach a common ground regarding how the family wishes to be remembered. Charitable giving may play an important role in determin-ing what type of legacy the owner and his family want to create, as well as what needs to be done to achieve this legacy.

It’s helpful that a document outlining these beliefs and goals be developed during this first phase of the transition process. This document is often referred to as a “family constitution” and should in-clude input from all family members since a collective constitution has strength, while one imposed on the family doesn’t work.

stewardship and the Family Constitution

Within the family constitution there can exist a section dedicated to the promotion of stewardship. The reality is, the longer a family business survives, the more likely its owners will develop a sense of stewardship over its existence. The common belief among many owners of a family business is that they inherited the benefit of prior generations’ efforts and thus feel a strong responsibility to pass on that legacy, not only intact but having developed it further.

Sometimes the next generation isn’t able to continue the business, however. When this is the case, stewardship re-quires that the business and the family part ways in order to preserve the value built by previous generations. A new direction can be forged which builds and diversifies the family legacy for the future. This often opens up opportu-nities for family members previously not involved in the family business to become contributing members of this new direction.

incorporating CharityIf the goal-setting process has identi-

fied charitable intent as a family objec-

tive, and the transition will create sig-nificant excess capital beyond the needs of the owners to meet personal goals, building charitable planning into the transition structure can have attractive tax benefits. More consequential, it sup-ports causes important to the family and sets an example for future generations of the responsibility that comes with success. There are various charitable structures that can provide both immedi-ate and long-term tax benefits. Working with an adviser with expertise in this area can help achieve the desired results.

A follow-up next step for charitable planning may take place during the cre-ation of the owner’s individual financial plan. Constructing a personal financial plan prior to the transition gives the owner a high degree of confidence in the outcome, and helps determine what structure and business value will best meet their needs.

Furthering a Family LegacyThe transition process is now complete.

Whether the family business was sold or passed on to the next generation, a lifetime of work has now taken on a new form. If the process was well-planned, the previous owner now has more financial independence. However, that new wealth is often in a new and largely foreign form of cash and liquid investments, versus the owner’s familiar holdings of closely held and illiquid private equity.

Successful families often turn to phi-lanthropy to further the family legacy, particularly after a liquidity event and the realization that capital exists beyond their needs or that of their families. Charitable interests help build the bridge between an active life in business and one in retirement.

However, strategic philanthropy oper-ates quite differently from checkbook charity. When pursuing strategic philan-thropy, a family should develop a charter to guide its giving, identifying the broad and then narrower areas of particular interest to support. Depending on the allocation to charitable giving, three op-tions are most often used:

u Creating an annual charitable-giving budget, with contributions coming from general family assets, though structured for maximum tax benefit

FAmiLY continued from Page 1

See FAMILY: Page 5

P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2 5

Many people

have a bad first

impression of

Twitter.

James A. Fitts, CFP™, is director of wealth counseling at Harvest Capital in Concord, N.H. He is a trustee of New Hampshire Legal Assistance, Inc., which provides legal services to low-income and elderly people. jfitts@harvestcap.com

Marshall G. Rowe is founder, presi-dent, and chief investment officer of Harvest Capital in Concord, N.H. He is a trustee and investment commit-tee chair at health-related private foundation and a trustee of Capital Region Health Care Corp. mrowe@harvestcap.com

u establishing a donor-advised fund with an initial irrevocable gift, and adding to the fund from time to time as resources allow

u Creating a family foundation, which is also funded with seed capital and expanded as resources permit

These options are listed in ascend-ing order of complexity and cost, and the charitable deductions available will vary. Many families see great value in

establishing a charitable example for the next generation, and all three alterna-tives provide the opportunity to engage several generations of family members in gift decisions. This connects children and grandchildren, not only with each other, but with the family and a world beyond themselves. These options are essentially lifetime giving opportunities, though charitable bequests upon death also provide means for achieving philan-thropic goals not previously addressed.

FAmiLY continued from Page 4

social media for Planned Gifts Part iV: how to integrate twitterBY KRISTeN SCHULTZ JAARDA

This is the final installment in my four-part series of articles on social media for planned gifts.

Claire Díaz-Ortiz, Twitter’s head of social innovation and author of “Twitter for Good: Change the World One Tweet at a Time,” says that Twitter works well for charities because it is simple and effective. Yet many people have a bad first impression of Twitter. (Most of us are not interested in whom you are having coffee with or whether you love Thursdays.) However, if you get past the nonsense, there is an extensive amount of traffic on Twitter and an audience of likely supporters to be captured for marketing purposes.

top twitter tips Some of the best tips I’ve seen for non-

profits using Twitter came from a July 14, 2011, post on the NetWitsThink-Tank blog.

The best tweets are formulated like this: [message] [shortened link] via [source] [hashtag]. Tweets (Twitter posts) can link back to your website, a secondary source, pictures, and video. You don’t need to write all of your own tweets. Retweeting (tweeting someone else’s tweet) is a way to provide additional content to your net-work. Most social media experts say that it is better to add your own comments and thereby personalize retweets to your followers.

You don’t want to retweet everything. Setting a limit for retweeting (such as

two times per week) guarantees that most of your tweets will come directly from you. Remember to listen to how your followers respond (and the type of content they retweet). This tells you what is resonating with your network and what type of tweets to repeat. The best tweets show personality and humor, and they are genuine.

Don’t over-tweet either. Nonprofit mar-keting expert Nancy Schwartz recom-mends that you tweet a maximum of five times per day (except in breaking news or Twitter chat situations).

Following and Being FollowedI recommend that you follow people

who follow you. Part of the goal of Twit-ter is to continue to expand your network of followers. Some of the people who follow you may retweet your tweets to their followers and these people may also decide to follow you. In this way, you grow your network one follower at a time. If someone who is following you retweets your information, it’s good Twit-ter etiquette to thank them.

When mentioning another Twitter follower, use the “@follower’s handle” format in your tweet. If you want to reply to a follower directly and you don’t want everyone to read your tweet, you can send your follower a DM or “direct message” by clicking on “Messages” on your Twitter page and “New Message.” To send a direct message to a follower

See SOCIAL MEDIA: Page 6

6 P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2

Many of her

tweets reflect

planning in

l ight of the

economy and

tax changes.

through your phone, begin the message with “d” and the username of the Twitter follower. Using a social media dashboard (which I discuss below) makes sending DMs easy.

hashtag helpHashtags are a way that you can group

tweets together under one subject head-ing. A hashtag is simply a searchable tag such as #plannedgiving. If I close my tweet with #plannedgiving, when I run a search under this hashtag in Twitter, I can view my tweet along with all of the other tweets with the #plannedgiving hashtag. If someone wants to see at any given moment what people are tweeting on #plannedgiving, all they have to do is run a search under this hashtag. Adding a hashtag like this is another good way to expand your social community by increasing followers.

While hashtags are important, too many limit your ability to provide con-tent (Twitter limits you to 140 char-acters). I would recommend that you include no more than two hashtags in a single tweet, and make sure they are not too generic. For example, #nonprofit is a hashtag that is likely too broad for Twitter followers to locate and differen-tiate your content from other nonprofit organization tweets. The two hashtags I use the most are #plannedgiving and #fundraising (the later is broader but appeals more to development officers as opposed to planned giving specialists).

Linking twitter to other AccountsWhile Twitter is less popular than

Facebook, people who use Twitter like it because it is instantaneous. One of the benefits of using multiple forms of social media is that you can link your accounts to save time in posting information. So, I’ll share with you my own strategy for linking accounts to demonstrate how easy it is to create and manage content for multiple social media accounts.

If I want to get information out right away, I will often tweet. I have my Twit-ter account set up so that my tweets migrate over to our company Facebook page. (The only drawback to this is that Facebook is often slow to post outside-generated content. So, the one instance

where I may double-post content is when I also want the information dropped im-mediately on Facebook.)

I link my blog to our Facebook page, so all of the content I create migrates over to Facebook. My tweets, Facebook, and blog posts are all connected to my LinkedIn account. In this way, I reach multiple audiences via different plat-forms, regardless of where my content is initially dropped.

managing social media AccountsTwo popular ways to manage your

Twitter and other social media accounts are TweetDeck (which is downloaded to your computer) and Hootsuite (available online), which offer free dashboards to manage all of your social media on one screen.

You can connect your Twitter, Face-book, blog, and LinkedIn accounts and then view all of your responses, “likes,” and retweets on a single web page. Many people prefer Hootsuite, which permits you to time your tweets and measure responses. I encourage you to explore both dashboards to see which one works best for you.

twitter for Planned GiftsFor planned giving charities, I’ve

primarily seen Twitter used to advertise upcoming events. These are tweets that require action and have a timetable for participation. Hebrew Home of Greater Washington uses Twitter to promote sign-ups for donor seminars. Atlantic General Hospital advertises its annual “Penguin Swim” fundraiser (people jump into the frigid Atlantic water off the coast of Ocean City, Md., each January) using Twitter for sign-ups. They also link to pictures posted on Facebook following the event.

Numerous organizations use Twitter to promote planned giving concepts. Toni Jernigan, director of planned giv-ing for the Medical University of South Carolina, regularly tweets about estate planning and links to the organization’s planned giving website. Many of her tweets reflect planning in light of the economy and tax changes. For example, when Congress passed the new gift and estate tax law for 2011 and 2012, she tweeted how the larger gift-tax

soCiAL meDiA continued from Page 5

See SOCIAL MEDIA: Page 7

P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2 7

The endowment

currently has

more than

$73,000.

Kristen Schultz Jaarda is an attorney and senior vice president of Crescendo Interactive, Inc. She is a board mem-ber for the American Council on Gift Annuities, where she serves on the Rates and State Regulations Commit-tees. She is a member of the Planned Giving Today Editorial Advisory Board and the Ventura County Planned Giving Council, and volunteers with numerous charities. kristen@cresmail.com

Roger’s Legacy: this Publication’s operations endowment for the PPPBY eD McBRIDe

exemption created great planning opportunities.

Twitter comes with an entirely new language complete with influencers (people who have a strong following and readership) and “klout” (a measure of your level of influence), to name a few terms. That being said, Twitter is rela-tively easy to learn and use. Your charity needs to test to see if there is a sufficient audience of your supporters on Twitter to create a presence. Then, it’s a matter of tweeting and analyzing the results to see how your community responds. To learn the fine art of tweeting, follow an influencer, observe, and learn from how followers respond to you.

There is so much to be said in the area of not-for-profit social media, and I’ve only scratched the surface in this

series of articles. Social networking is a new world for many charities engaged in planned gifts, but one with great prom-ise. Donors are already using Facebook, Twitter, and more. Now it’s time for char-ities to take the step and begin engaging with them, sharing your ideas, work, and goals in a way that compels responses and invites your supporters to invest in your mission. Professional advisers need to be aware of what their clients are learning.

I hope that I have given you some ideas on how to effectively use this new media for your organization. If you are just getting started, I encourage you to experiment — try tweeting, setting up a Facebook page, or blogging. I guarantee you will meet someone new through the process and that person could just be your next planned gift donor.

soCiAL meDiA continued from Page 6

It’s time Planned Giving Today read-ers were let in on a seemingly well-kept secret. Not an intentional secret, mind you, but little-known by the gift-planning community in general.

Before I reveal the details, you’ll probably want some background. It is a well-known fact that Roger Schoenhals was the founding editor and publisher of Planned Giving Today way back in 1990.1 It was, in so many ways, a capstone for a very successful and productive career in the planned giving arena.

Initially, the magazine’s “headquarters” were in the Schoenhals’ basement where his wife, Sandy, and other family members helped get it published and mailed each month. Later, they moved the operation to a commercial site in downtown edmonds, Wash., where other publications were created and additional employees hired. In 2006, Roger sold the business to Mary Ann Liebert, Inc. in New Rochelle, N.Y., but he continued as editor of Planned Giving Today. Roger fully retired in 2011, and the editorship is now in the very capable hands of Tom Cullinan.

Here are the facts you probably didn’t

know until now. In keeping with his high sense of philanthropy — in effect “walking the talk” — 15 years ago Roger established a $25,000 endowment for the National Committee on Planned Giving2 and pledged to fully fund it over the ensuing five years. Needless to say, that pledge was fulfilled. Succinctly and simply put, “The purpose of this fund shall be to provide support for NCPG operations.” As an upshot of the organi-zation’s name- and mission-change, the endowment is named “Planned Giving Today’s PPP Operations endowment.”

The endowment currently has more than $73,000 in principal. As is most often the case with permanent endow-ments, only income from the fund is available for spending. The agreement creating the fund specifically vested administrative oversight and expendi-ture decisions in PPP’s chief executive, in consultation with its board chair and treasurer. Among projects and programs funded to date are:

u A FranklinCovey® Institute workshop and retreat, held in Columbus, Ohio, for PPP staffers

See ROGER’S LEGACY: Page 8

8 P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2

$17,500

has been

contributed

from other

sources.

RoGeR’s LeGACY continued from Page 7

1 I am proud that the University of Idaho was the very first subscriber to Planned Giving Today, although I wasn’t employed there at that time and can’t take credit for this prescient act.

2 Now known as the Partnership for Philanthropic Planning

Ed McBride is a gift-planning specialist at the University of Idaho Foundation and has been its director of gift plan-ning and senior director of develop-ment. He served on the PPP board of directors and was president and board member of the Southwest Idaho and the Inland Northwest Planned Giving Councils. A former practicing attor-ney, he is a member of the Planned Giving Today Editorial Advisory Board. mcbride@uidaho.edu

u Staff training in John Carver’s system of Policy Governance®

u extension of these governance concepts to PPP’s affiliated councils through workshops and materials, including a “Council Conversations” event in December 2011

u ergonomic evaluations of all staff workstations, resulting in recom-mended adjustments and equipment purchases

It is highly unlikely that the activities underwritten by the Planned Giving Today endowment would have occurred if not for the fund. But isn’t that so often the case? Whether in a university setting, medical center, community service organization, or virtually any not-for-profit institution, it is the foresight and support from the hearts and finan-cial generosity of people like Roger that make the difference. Virtually all of the projects listed above helped in enhancing the professionalism and improving the work environment of PPP’s employees — a critical piece of any organization’s strategy for success — and a benefit that might not have been possible without this endowment.

While the growth of the endowment has come in part from positive invest-ment performance, much of it is a result of gifts from other donors. As of the end of 2011, more than $17,500 has been contributed from other sources. That reflects not only a belief in the purposes of the fund, but also a strong sense of loyalty to Roger and a voice of support for the publication and for the PPP.

Tanya Howe Johnson, longtime presi-dent and CeO of PPP (yet retiring this month), was instrumental in shaping the endowment and suggesting its “highest and best use” when Roger proposed it. Through the years, she has, along with the incumbent board chair and treasurer of PPP, directed the application and expen-diture of the available income.

“By creating an endowment to provide support for operations, Roger recognized that PPP’s greatest asset [is] its people, both staff and volunteers,” said Johnson. “The Planned Giving Today endowment is an investment in people serving people, helping to grow a leadership foundation that benefits all PPP councils and indi-vidual members.”

Of course, Roger is pleased with the growth of the fund in terms of both the investment return as well as through contributions from others. He says he considers it a blessing to have been able to establish the endowment initially, fund it to the activation level, and it is a double blessing that many other donors have added to it.

“One of my goals in establishing the endowment was to give something back to the planned giving community that was supporting my publications through subscriptions and otherwise,” said Rog-er. “I also wanted to serve as an example for other for-profit partners to create similar endowments, a hope I continue to embrace. Though I am no longer professionally active in the planned giv-ing arena, I will continue to be affiliated with the mission and programs of PPP through this fund. That’s the beauty of endowments!”

The Planned Giving Today PPP Op-erations endowment provides, in perpe-tuity, a means to underwrite meaningful programs, training opportunities, and other professional enrichments that are above and beyond typical budget constraints.

It is so in keeping with Roger’s sense of modesty that his name is not connected with this endowment fund. His legacy in creating and funding it through personal resources, as well as revenues from the publication, will be long-remembered. Hopefully, it will also continue to be hon-ored and amplified by ongoing donations from affiliate councils and individuals over the coming years.

It may carry the Planned Giving Today name, yet it truly is Roger’s legacy.

W R i t e U s

PGT readers are invited to respond to articles appearing in the newsletter by

writing a “Letter to the Editor.” Articles, news, humorous anecdotes, and other items of interest to the planned giving

community are also welcome.

Send editorial correspondence to: tom@pgtoday.com

P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2 9

Dealing with

real estate in

the charitable

realm sometimes

seems l ike a

game of “hot

potato.”

There are a number of reasons for char-ities to fear real estate gifts. Real property is expensive to carry while waiting for it to sell. It also comes with inherent liabilities, and the market in many states has been famously volatile for the last several years.

That being said, the bottom line is that Americans own much of their wealth in real estate. In addition, the Internal Rev-enue Code offers a significant tax benefit when giving appreciated property to char-ity instead of cash, a very rare exception to the basic rule that every dollar is taxed. The donor gets a tax deduction for each contributed dollar of fair market value, even the ones they never paid taxes on. As a gift planner, if you ignore real estate you miss out on tax-advantaged gifts that often work best with your donor’s assets and overall estate plan.

This two-part article focuses on the is-sues from the point of view of the charity and its board*. I have noticed that dealing with real estate in the charitable realm sometimes seems like a game of “hot potato,” whether from the perspective of gift planners who see a road paved with potential missteps, CFOs who have been burned previously, or board members who see the red flags of potential liabilities. If often feels as though some organiza-tions search for an excuse to say no when approached with real property instead of searching for a way to make the gift work.

I will even admit guilt to having a pal-pable feeling of relief early in my career when a potential real estate gift turned out to be impossible. To be honest, this aversion makes more sense to me than the opposite approach. Some organiza-tions seem determined to take whatever gifts they can, even when flying in the face of logic and prudence.

Wherever on this spectrum an organi-zation lies, there is almost always room for improvement. As with most things in life, everything is healthy in modera-tion and I think the same is true with real estate gifts. Automatically saying no or yes is never in the best interest of a healthy planned giving program and, ultimately, the long-term financial health of the charitable organization.

The keys to facilitating real property

gifts are to be able to separate the bad from the good, to adopt policies and procedures that will insulate the charity from liability, and to mitigate the risks inherently associated with real estate. In addition, environmental issues can cause a charity to avoid being in the chain of ti-tle of some real property at all because it may expose the charity to future liability. Certain charitable vehicles and policies can help a charity avoid these pitfalls.

The first thing to acknowledge is that just as there is a broad spectrum for charitable organizations and their will-ingness to take real estate gifts, there is similarly an array of the potential gifts themselves. On one end, we have the out-of-the-blue call from an individual who is not in your donor database and owns a property he has been trying to sell and is now looking for a place to un-load ... (ahem, sorry) give the property. Oh, and he wants income back from it, too. Plus, he doesn’t have other funds available to pay off the mortgage first.

Ideas like this will almost always gen-erate a “no” response, and rightfully so. It has happened to me several times that I will get calls from two different charity clients within 20 minutes of each other basically relating the same phone call they just received from an unknown do-nor having commercial property located in the middle of nowhere. That’s never a good sign of charitable intent by the donor, but it’s an indicator that the donor is shopping organizations.

At the other end of the spectrum are the long-time donors and friends of the organization. Often this donor will not necessarily be the one to suggest the gift. She expresses that she wants to find a way to offer additional support on a larger scale, but either she or you as the gift planner may be worried about her means to make a truly large gift. These are the cases where it is good to be armed with additional tools that lead to better understanding and discussions about real property gifts.

You may start to see a pattern develop-ing here, but I see yet another aspect in this discussion: the variety of real estate

See REAL PROPERTY: Page 10

Real Property Gifts and Plans that Won’t Frighten Your Board, Part iBY ReBeCCA BIBLeHeIMeR

10 P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2

This is a

gift that can

potential ly

take a “no” and

make it into

a “yes.”

* Please note that there are a number of issues like mortgaged property, pre-arranged sales, and deduction calculations that are outside of the scope of this article.

Rebecca Bibleheimer, J.D., LLM, is a trust officer for U.S. Bank’s national charitable services group and she previously practiced law. She is based in Portland, Ore., where she works exclusively with not-for-profit organi-zations and serves on the board of the Oregon Humane Society. rebecca.bibleheimer@usbank.com

t R e n C h t A L e

gift vehicles. On one end, we have a flip net income with makeup charitable remainder unitrust (Flip NIMCRUT), where the donor or a third-party trust company serves as trustee until after the real estate is sold. Here, the charity is nev-er even in the chain of title of the prop-erty, and there is no potential of paying out more than the charity receives from the gift. This is a gift that can potentially take a “no” to a proposed gift and make it into a “yes,” assuming that this scenario works with the donor’s needs and situa-tion, and that the property is appropriate for funding a Flip NIMCRUT.

At the other end is a charitable gift annuity in exchange for a life estate. This gift is fraught with pitfalls, from donors greatly outliving their life expectancy to the volatility of the market and all of the other risks and liabilities associated with owning real estate. The charity wants to make sure it doesn’t pay too much! In my opinion, a gift annuity in exchange for a life estate (sometimes referred to as a charitable reverse mortgage) should be entered into with meticulous care and planning and saved for special situations and donors.

Flip NIMCRUT. This is a preferred vehicle for real property split-interest gifts. The most obvious reason is that this trust avoids the liquidity issue — having to come up with cash for payments to the beneficiary before the property is sold. In addition to this celebrated benefit, the Flip NIMCRUT also can work to insulate the charitable remainder beneficiary from liability and risk. Most major charities have policies that cover when they will serve as trustee of a CRT, and it is com-mon for some charities to do so. However,

charities may also want to keep in mind that there are plenty of opportunities when they are not serving as trustee.

Having the donor as trustee can serve several purposes. There is no potential for disharmony between the donor and the trustee about what sale price to accept. The donor as trustee will be responsible for paying the expenses of the trust and will have a much clearer obligation to continue to fund the trust so as to cover expenses. Most importantly, from a li-ability standpoint, the charity never has to be in the chain of title of the property. In addition, the risks to the charity in terms of price volatility and limited marketability of the property are virtually nil. The worst-case scenario for the charity is that the gift is smaller.

If the donor does not want to be the trustee, the same goals can be accom-plished by having a trust company in that position. Many charities prefer to main-tain control over fees, investments, and other aspects of the trust that they feel may be lost if a company is named trust-ee. Yet, that control can still be achieved by granting the charity the right to fire and hire trustees in the trust document.

As a matter of fact, the Flip NIMCRUT is such an effective tool for mitigating risk and liability that in some cases it may be a rare exception to the regular rule that outright gifts are preferable to split-interest gifts. When a charity feels placed in a posi-tion that it must decline an outright gift of real estate and receive nothing, a better alternative may be to consider utilizing a donor or company trustee.

In Part II of this article (see next month’s issue of Planned Giving Today), I will look at other tools to avoid being in the chain of title and describe universal rules for chari-ties accepting gifts of real property.

ReAL PRoPeRtY continued from Page 9

Anecdotes are supplied by readers of Planned Giving Today. Do you have an interesting or amusing story related to your work as a charitable gift planner? Jot it down and send it in so we can pass it on (tom@pgtoday.com). Names are withheld to protect the “guilty.”

u To help his younger sister, my donor (who was retired, in his 70s, and never married) let her move into his spare bedroom after her husband passed away suddenly. Within a few months, she retired after working for 45 years. On my last visit, he said, “My sister just sits there all day, day after day, doing nothing but wasting her time.” I asked him how he knew and he replied, “Because I’ve been watching her.” I’m hopeful that not all three of us are wasting our time!

P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2 11

M a r k e t i n g r e p r i n ta b l epl anned giving

t u o u d u a u y®

How much do you know about the basics of having a will? Do you know more than you don’t know? We hope the short true/false quiz that follows can help you. When you are done, find the answers below. (No peeking!)

Can You Pass this Quiz on Wills?

Note to our readers: The above sample is presented as a resource to adapt and use as you see fit. Unlike the other material in this publication, our subscribers may use content on this page without written permission and without including a reference to Planned Giving Today. The Publisher, Editor, and Editorial Advisory Board assume no responsibility whatsoever in connection with the content or use of this material. Pre-publication review by a qualified professional is recommended.

P L E A S E C O M P L E T E A N D M A I L T H I S F O R M

Dear Friends at [the charity]:

❑ Please send a free, no-obligation Wills Information Kit.

❑ Please contact me (us) via e-mail. The e-mail address is: ____________________________________________________________

❑ Please contact me (us) by phone at:_______________________________ The best time to call is: _________________________

Name: _________________________________________________________________________________________________________

Mailing Address:________________________________________ City:_________________________ State:____ Zip: _____________

Mail this form to: [the charity and address]

Circle the correct answer:1. Only one will is needed for a married couple.

True False

2. Probate fees claim one-third of the estate of anyone dying without a will. True False

3. If signed by an attorney, most states will recognize a handwritten will. True False

4. By law, a codicil is the final execution that makes a will valid. True False

5. Only the attorney and executor are permitted to read your will after you die. True False

“Quiz on Wills” AnswersFalse is the correct answer to all five questions, and the following explanations may help you.

1. each person in a marriage needs a valid will, though the provisions can “mirror” each other.

2. Statutory probate fees are not automatically as-sessed in such a proportion, though in the absence of a valid will, the state does literally prescribe how all estate assets are distributed.

3. No state requires a will to be signed by an attorney. Some states may recognize a handwritten will.

4. The term “codicil” refers to a provision that amends one or more provisions of a valid will.

5. With your permission, you may allow anyone to read your will at any time. After death, a will admitted to probate will become part of the public record of your estate.

To learn more about wills, request your free, no-obliga-tion Wills Information Kit from [charity]. either send us the form below, call [name] in our gift-planning office at [number], or e-mail us at [address].

Unauthorized reproduction of all or any part of this newsletter is prohibited. Written permission must be obtained from the publisher.

Planned Giving Today is designed to provide accurate and authoritative information in regard to the subject matters covered. It is published and sold with the understanding that neither the publisher nor the authors are engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.)

12 P l a n n e d G i v i n G T o d ay u a P r i l 2 0 1 2

Back Pageu RULes oF the RoAD. Business trav-el in the U.S. is increasing again, as you have surely noticed since people working in the planned giving arena tend to travel more for business than our co-workers in other departments. Though we might en-joy the way travel alters the daily routine, the joys of going on the road don’t match an image some of our office-bound col-leagues may have — that this change of scenery can somehow be refreshing. Aside from the people we visit, travel is normally a grinding challenge.

Airline customers are now regularly inconvenienced because less than 80 percent of U.S. flights arrive on time. Getting there late caps an experience that may start with low-cost require-ments, such as needing to take a pre-dawn flight or one with an extended layover. Then add extra fees, like those assessed because you insist on checking a bag or asking for a pillow.

Veteran travelers develop ways to claim small victories over the travel-queue tyranny. For example, consider saving time at larger airports by going through security at a lower volume terminal, then catching a shuttle/train to your busy one. If you need assurance that you’ll have enough overhead bin space, board early even if it means flying in the back of the plane.

I recently had to fly to Washington, D.C., despite nursing a sprained knee. Crutches must go through a different de-vice than the person using them, which I found can be difficult for the disabled. Though my home airport’s TSA agent produced a cane to assist my shuffle through security, the return flight was a different story. No cane was available, so an agent supported my arm for a few feet but released it when the metal detec-tor was still 10 feet away. Once I had cautiously hobbled to it, the agent on the other side said nothing but instead grinned broadly as he thrust out his latex-gloved fist at me. Guessing that he shared my relief because I had not fallen yet, I returned his fist bump.

Unfortunately, his expression turned immediately to disapproval. Apparently, he was awkwardly offering a hand as if it might stabilize my steps through the sen-sor. Hey, buddy, thanks for the help, but you can keep the attitude.

Speaking of security, a U.S. senator

recently diverted himself to another airline to avoid a pat-down after setting off an alarm on what may have been a faulty body scan device. Yet, coverage of the incident made clear that elected federal officials are subject to the same laws and screening by the Travel Safety Administration as everyone else. (Could this, at last, provide new common ground for members of Congress?)

Of course, even if much of your busi-ness travel is grounded — you drive instead — you are never immune to other annoyances. Hunting for an ad-dress sometimes means following bad directions, and those Garmins, Tom-Toms, and phone apps aren’t infallible. Driving itself is a peril. You might agree with one automaker’s current magazine ad that says the amber traffic light was invented in 1920, yet today “… 85 per-cent of drivers have no idea what to do when they see one.”

Being away from home on business is a sacrifice we must make, and we put forth the effort in order to make personal and constructive human contact with people. Whether these are your charity’s donors and prospects, or clients served by your practice, seeing them on their turf and terms can mean the difference between going nowhere and moving ahead.

Of course, it all starts with making the appointment, and anyone who has dif-ficulty with that task will have a limited career in planned giving. The simple act of confirming these appointments can both minimize your inconvenience and the prospect’s potential embarrassment. It is not unusual for a visit to be cancelled by a sudden need to see the doctor or a forgotten bridge game. At some point, you will probably see the front door opened by someone in a bathrobe who was expect-ing you next week. Though not fool-proof, your advance phone call is a reminder of the date, time, and place to meet, and a courtesy that prevents disappointment (pun intended).

Other than flexibility, the key rule for business travel is minimizing inefficiency. Consider that every hour spent away from the office probably costs us two additional hours — one for preparation and another for follow-up. Managing time so that you maximize the value of the expenditures of your employer’s budget and your energy is practical and profitable.

— Tom Cullinan

next month

u On Relationships

u Yet Another View of Advisory Committees

u Real Estate Gifts, Part II

u And More ...