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Season 2, Episode 9

Amy Eisenstein and special guest, Richard Quinn, Toolkit Advisor, discuss the importance and nuance of fall fundraising. How you approach fall fundraising will depend on the stage and timing of your campaign. Your annual fund will continue throughout your campaign. Campaign gifts will be asked for in conjunction with or separate from your annual fund. Listen to get your questions answered.

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This episode was recorded as part of a live webinar held Monday, October 11, 2021. To participate in future webinars, register at ToolkitTalks.com.

Andrea Kihlstedt:
I am so pleased to have Sierra Rosen here today. Some of you have heard me talk now and again with great glee about this wonderful project that I’m involved in and I’ve been an advisor to in Providence, Rhode Island, the Community MusicWorks. And I think we have gotten to know Sierra through that wonderful little project. The development director there, Alexandra, introduced us to Sierra and we have just been looking for and wanting someone who can make complicated plan giving concepts simple. Who really understands why it is and how it’s important and can articulate it and really knows at the highest level what plan giving is about. And that turns out to be Sierra Rosen who has agreed to join us here today.

Sierra is the Executive Director of planned giving at Brown University which is in Providence, that’s the connector. She has done a lot of big planned giving jobs, but this is her most recent than current job. And I think really her special sauce is that she can make sense of planned giving to people like me, who have really little tolerance for the technical jargon of it, right? CRITs, CRATs, CRUTs. I have no tolerance for that at all. But Sierra, welcome.

Planned Giving is Often Overlooked

Sierra Rosen:
It sure comes out. Well, I’m so pleased to be here. What a great group that is here. I mean, the whole country. It’s really extraordinary. So this is very fun. And yes, I’m dialing in from rainy Providence. And I really feel it’s such an honor to be talking to the Campaign Toolkit community around planned giving in the case of planned giving and capital campaigns. Because the reality is that planned giving is often overlooked as a second class citizen in giving. And when I came to Brown, there was this sensibility that it was a really well, the there was real hostility to it, I’m very open about that. When I first got there, there was real hostility towards planned giving. And I think we’ve really turned it around because what we’ve been able to show and talk about is that planned gifts are the most transformational gifts that an institution receives.

And that’s at the institutional level. At an individual level, they are the biggest gifts that individuals make. And it’s usually by a very significant factor. I’ve been looking at it pretty closely at Brown. And it’s bigger by a factor of 400. Their planned gift is 400 times their total lifetime giving. So when you think about this right, it’s not just the biggest gift an institution receives, it’s by far the biggest gift individuals make. And I’m now working with a number of nonprofits, largely secondary schools. And it’s the same story the numbers are different, but the significant increase compared to total lifetime giving, it’s a similar story everywhere. And so I think the question is, why wouldn’t you be integrating this into a capital campaign from the very beginning if you know that what you want to do is increase the volume of these kinds of gifts to raise awareness.

And the other reason I think to do it at the beginning of a capital campaign as you’re planning it out, is first of all, planned gifts build endowments, by and large, that’s what they do, they build endowments. But they also are deferred gifts. And so you have to take a long term perspective on them and they take a long time to develop, they take a long time to come in, and you need to plan for that in your campaign. You can’t raise 90% of your money say in planned gifts, deferred gifts, right? You need that money now, you need to accomplish what you want to accomplish. From a capital campaigns perspective, from an initiative perspective with current dollars, but what you can do with planned giving is create a real sustainable future. And if you integrate it early and often you can hit all the right notes around what you want to raise now and what you want to raise through deferred gifts.

And so that’s really what we’re here to talk about, what I’m here to talk about, and I’m here to answer any questions you might have. The other thing that I want to put out there before we sort of moving to questions, is that there’s also this old idea that planned gifts will cannibalize outright giving. And in fact, the opposite is true. In fact, time and time again, studies show that they not only, donors increase their annual gifts after they’ve done a planned gift. And by planned gift, I mean, there is I think some question maybe we should spend a little time talking about what we mean by planned gifts. And largely what most people think of is estate gifts, right? That’s like the pure vanilla version, you get a donor to put your institution in their will or living trust as a beneficiary of a life insurance plan, as a beneficiary retirement plan. That’s the easiest, most effective way to have a planned giving program.

But then as Andrea noted, there are CRUTs and CRATs, and what I call those is life income gifts. That’s where you give money to an institution, they hold it, they invest it, and they pay an income back. And that’s like the pretty easy way to talk about it. And then there’s what I like to talk about at Brown in particular, though this isn’t true for everyone, is I like to talk about non cash assets. Because the way most US citizens hold wealth, 99% of US wealth is held outside of cash. So if you and your institution can be in a place where you’re talking about non cash assets, including marketable securities, but any kind of non cash assets, that’s where you can really also move the needle and get the most transformational gift. So I did see, someone asked me to —

Amy Eisenstein:
Hold on, hold on Sierra, before we get to questions, let’s unpack that a little bit.

Sierra Rosen:
Yeah, right.

Amy Eisenstein:
So I’m excited, you’re ready to jump into questions. I want to give people a chance to like collect their thoughts and put their questions into the Q&A box. I just want to make sure that everybody heard, you said so many important things right off the bat.

So first of all, I think everybody heard, but can you say that you internalized these planned gifts, are the biggest gifts that institutions make, receive, and that individuals give. So the idea that your organization now they are deferred gifts often, so I think that’s why organizations probably backburner them or aren’t as aggressive as they should be. But it is the number one way to grow your endowment. And everybody who comes to us to talk about a capital campaign says we want to grow our endowment. And so the idea that you wouldn’t have a major plan giving component as part of your campaign in an effort to grow that endowment is crazy.

Amy Eisenstein:
And so we want to make sure that you have the tools, the language, the questions answered to start to implement some of these amazing and critical tools to make sure that your organization is getting the biggest gifts that it could get, that your donors are making the biggest gifts that they could possibly make, and that you’re growing your endowment sort of all in one. So many I think exciting concepts that we’re going to unpack. But I do want to just invite everybody to ask their questions and I see that we have some coming in. Andrea, do you want to do you want to say anything else before we get to the questions?

Andrea Kihlstedt:
Yes. Sierra, you said if I got you right — and the number just bowled me over — you said that people give 400 times in the planned gift what they give in their lifetime to organizations?

Sierra Rosen:
That’s what we see at Brown, that’s what we see on average.

Andrea Kihlstedt:
Give me that in real terms, I have trouble with that math somehow.

Planned Gifts are Several Times Bigger Than Usual Gifts

Sierra Rosen:
So right I think when you look at… Give me a second and I can pull up some actual numbers, figures. I don’t have them handy right now, but there will be a presentation example and I will make sure I have these in there. But we see this all the time and where someone does maybe they are…. So here’s an example, here’s a really good example I will tell you. Let’s see if these numbers quite work out. But this is maybe more like 100X and we’re not done yet. But we have a donor who, it was right when I first started at Brown actually, he was approaching his 40th reunion. He had given, his largest gift ever had been $1,000. His total lifetime giving was just over $2,000 at his 40th reunion. In honor of his 40th reunion, he did $100,000 gift annuity. So that spread is I guess, that one in particular isn’t 400X but it’s 100X I think if I had math right.

And that just came in without us even really trying. He was sort of, he kind of connected the dots about well, I’ve got this 40th reunion. And so at that point, we weren’t including planned gifts in any reunion. So that’s been one of the things I’ve been working on pretty hard at Brown is to get them included because of examples like this. And there’s lots of them, when you look at this spread of never giving more than $1,000 and then can do $100,000 and did it because it’s their planned gift. And he’s coming up on his 45th and he is going to do another one too. And that’s the other thing that I would add, that is so great about planned giving, when we get our first gift, we’re so excited because we know planned giving donors they tend to be serial donors.

So we got our first one and we have been working with a board member. And we’ve been working on like it has taken us a long time. I mean, a lot of these are kind of tough nuts to crack, I mean, just they take a long time, they have to deal with life events or who knows. There’s all different kinds of psychologies around when they come around, he just did a $200,000 gift annuity. But we know this is just the beginning. Like we know, he’s sort of indicated as much he’s sort of testing the waters and there’s a lot more that we think is going to back this up. And he’s really, we feel like he’s really liked the experience and so we now know that there’s probably going to be a whole series of these coming in. And so that’s the other thing is once they start, it does tend to be sort of like a nice installment plan going forward in all these different varieties.

But I will make sure that I have like real clear numbers handy so that I can say like, I can match that, though I look, every time we get these planned gifts, I sort of look and see well, what were they giving before this planned gift. And in his case, he hasn’t died. And so that’s in real time but it’s a really good example that I can recall really easily. But I looked pretty consistently at what people have given total in their lifetime and compare it to what our state gifts are.

Amy Eisenstein:
Yeah, thank you. So one of the things Sierra is referring to is that we are actually going to have her back for a formal webinar in two weeks, I think two weeks from tomorrow. I’m going to post the link to that webinar in the chat right now. So you’ll need to register for that. And we’re charging a teeny tiny fee of $29 I think it is. But for our current Toolkit clients, if you’re a paying Toolkit member, it’s free. So you’ll be getting a code for that or you can email us and we’ll send you the code for that. So current Toolkit members are free for that webinar. Everybody else, I think it’s $29 that we’re charging. And Sierra will come and give so many more specific details as she’s referenced.

How to Start a Planned Giving Program

Amy Eisenstein:
But let’s look at some of these questions. I think they are really good questions coming in. So the first one is, if we finished a capital campaign and we didn’t incorporate in most cases, discussion about planned gifts, how do we do it now? And I think that could be applied pre-campaign, post-campaign, anytime during your annual fund. So let’s generalize it a little bit. How do we start a plan giving program? I think is the crux of the question.

Sierra Rosen:
Yeah, great question. So my quick answer is just start, just start. And the first place to start is do you have a Legacy Society? And if you don’t start a legacy society, that’s really, that cost you nothing. Some time to think about what’s a meaningful name? How do you want to brand it? And often I think what you’ll find though is you have plenty of members who could already be in there. And so a lot of it is like looking back and saying, who can we recognize? And then you can use that to push out a real campaign for new Legacy Society members. And say, we’ve got this new Legacy Society, we’d really love to welcome you as a founding member, whatever you think will be relevant and push that out and just start, and start to recognize and celebrate these gifts. And I think really paying attention to what’s the culture that you have at your institution in terms of what will motivate people?

Is it the impact? Is it what their peers are doing? Is it a combination of both? Usually, it’s a combination of both. But start, there’s no, I think, so that’s the first thing and then it’s very easy to get language about putting your institution in their will or living trust. You can go to anyone’s website. I mean, this is the easiest thing to do. You can just go see what other institutions are doing and you can pretty much copy it. I mean, that’s the thing that’s nice about the industry we’re in. Like that’s an easy thing to take and that cost you again, it costs you no money to simply put on your website, here’s how you could include my institution, our institution in your estate plans. The best thing that people can do really is to name your institution as a beneficiary of their retirement plan.

It doesn’t require a call to a lawyer, it doesn’t require any kind of change in their estate planning. They can just, I said, it takes five minutes, one of my donors said it actually took me more than five minutes. But maybe 15 minutes, maybe 20 minutes to go on, pull up the beneficiary designation form, they are all online now, and write your organization in as either a percentage or a dollar amount. So this is all information you can have on your website. And then you can start to plan a marketing strategy around just early and often messaging this. And what we find is that you have to commit to a long term plan with planned giving, like you can’t think we’ll do one push and we’ll get a really big, we’ll get inundated with a whole bunch of new Legacy Society members, you have to start and commit to the process and do it early and enough.

And I mean, I can give a good anecdote about this, I was working with our emeriti members of our board at Brown, and they are very numbers and results driven. And so we had this very ambitious goal. And I was quite excited because it was kind of being owned by this volunteer group at our institution. And so we just said, “Great, like, let’s have this very ambitious goal.” And we didn’t even come close, like we did not even come close. And so we had to reevaluate and reassess how we were going to measure success. And I gave them a real kind of this like don’t be discouraged. I was like a kind of trying to get them to keep them from being discouraged and just really committing to the process. Well six to 12 months later, we’ve actually now can show a ton of success.

We just couldn’t quite do it in the short timeline that we wanted to do it. And I think that’s another way to think about planned giving. It’s not like the annual fund where we say, okay, our fiscal year is ending we need you like, make your gift, get it in. Planned gifts happen on the donors timeline. And as I said before, it’s around life events, it’s pretty unpredictable, it doesn’t happen on the institution’s timeline. And so that’s why it’s really important to be committed to the process. And make sure that you can maintain what you’re doing year over year over year. What isn’t good is the stops and starts. And there’s another example where we had someone, there’s tons of these I mean, there’s like —

What is a Legacy Society and How Does it Relate to Planned Giving?

Andrea Kihlstedt:
Sierra let me stop you for a minute. Many of the people here are in, relative to Brown, smaller organizations. I mean, some are good sized organizations. Relative to Brown, most of them are smaller. And let’s see if we can break this down really simply, right? You talk about the bequest society, right? Or that’s not what you called it, you called it a —

Sierra Rosen:
Legacy.

Andrea Kihlstedt:
A Legacy Society. What actually is a Legacy Society?

Sierra Rosen:
Okay, good. Yeah, great question.

Andrea Kihlstedt:
At its simplest, what is it?

Sierra Rosen:
Great, so at its simplest, it’s a recognition society. So it simply recognizes your supporters who have provided for your institutions through a planned gift as your institution defines it. So a lot of space, a lot of opportunity. Usually, it’s some kind of deferred gift commitment coming through an estate provision. If your institution is too small to say, have a split interest or life income, get a program where you get income back, right? That takes a bit more sophistication, that’s a little bit harder to start up. But anyone can have as I said, language on their website, or through marketing materials that encourages an estate gift, a provision in a will or trust or beneficiary designation. So —

Andrea Kihlstedt:
If you have a Legacy Society though, what do you do with those people?

Sierra Rosen:
So that’s a really good question. I mean, you can start out by simply recognizing them. You can start out by, there’s a lot of space to do this. However you want to do it, a lot of places have a donor on a rule that has some drawbacks to it, because it’s pretty time intensive, it’s you make mistakes, it can be painful, it can undo all the good work you’re trying to do. A lot of places have luncheons. What we really try to do at Brown, I mean yes, we are a big institution. But we also have limited resources just like everyone else. And so one of the things I work really hard to do is look around at what our institution is already doing for some of our most important donors and asking them to scoop up our Legacy Society members. When you think about and this has taken me some time, but when you think about again, their relative importance, contributions they’ll make, they deserve to be at the table in these VIP events.

And so if there’s, and then you can also make the case on resources like it takes some pressure of our events team if we’re not doing a separate event for Legacy Society members, but we’re simply scooping them up and piggybacking on existing events. So I often try to do that as much as I can because we are very small, our planned giving program is actually very small at Brown, our team is very small at Brown. And then what you can do is you can have a special designation. So when they show up, they get a really special ribbon or a button or something that denotes that they are a Legacy Society member. And the goal of course, is that someone says, “Hey, what’s that ribbon?” And they can answer.

Sometimes I found, I need to do a better job at my institution because sometimes someone will say, “Hey what is that ribbon, the cultural society?” And I’ll say, “I don’t know.” Which is not what I want to have happen. I’ve got some work to do on my branding. But you can see that some of this can be actually fairly simple and fairly, you can just tap in to existing infrastructure with regard to events and stewardship. The other thing we do is because we know that planned gifts build endowments, and at place like Brown, they also largely support scholarships. We do an impact report every year that’s about a student. And in our case, and it’s targeted toward our cultural society members which is our Legacy Society.

And in our case, we haven’t, it’s hard to know what it’s all designated for. But we feel like we can always make a case that ultimately it comes back to the students. And so if we profile students who are interesting and inspiring and doing things that we want to profile, that it does make people feel really good about their future gift no matter where it’s going. And I think there’s lots of parallels to that at any institution. So I do spend a lot of time looking at how I can simply use existing resources and infrastructure.

How Do Gift Annuities Work?

Amy Eisenstein:
Good, all right. That’s great Sierra, that’s super helpful. Let’s go to some of the questions. I think all of these questions are great questions. I want to go to one from Dylan that says, how exactly do gift annuities work? So start with what are gift annuities? And how do they work? And I think the important thing is, how could a really small nonprofit implement them? And if you don’t know the answer to that I do, but start with what are they?

Sierra Rosen:
Well, oh, I love that.

Andrea Kihlstedt:
Gary’s question ties into that. And he wants to know if there are some compliance issues that people need to be aware of with a gift annuity? So we can put we can put those two questions together.

Sierra Rosen:
Yeah, it’s a good question. So there are, well, it’ll be interesting to see how Amy and I approach this. So gift annuities can be really, on the one hand, once you get the program going, there are some of the easiest gifts —

Andrea Kihlstedt:
Well what are they, start at what are they?

Sierra Rosen:
Good point. So the life income gifts as I described, you make a gift to the institution, they invest the money and they pay an income back. The income is a fixed income. And it’s usually but not always set according to the rates that the American Council on Gift Annuities sets. So there’s this American Council on Gift Annuities, they say, here are the rates for donors or beneficiaries, the person who is going to receive the income based on the rate. And they have a very complicated way of setting these rates. But ultimately, they set the rates based on some investment assumptions and with the idea that 50% will remain for the institution when the gift terminates which is usually but not always when the beneficiary dies. So what do donors like about these?

Donors like that, they can make a big gift and get some income back, they like that the income is fixed and dependable. So it can be a nice way to have a fixed income component of your portfolio. I mean, surely donors do think about that. I don’t like to encourage it, because I like to I get nervous when we talk about this as being an investment or a part of your portfolio. But often donors really do think about this as part of their fixed income portfolio. And it’s the nature of the income can be very tax efficient. So I just did a lot there. In simpler terms, you give money and in return, you get a fixed income back, then you get tax deduction for a portion of the gift that’s considered charitable.

Andrea Kihlstedt:
Sierra let me drill down with that just a little further. Well, I’m of an age where I might think about something like that. If I was and I am I’m a Brown alum, by the way.

Sierra Rosen:
You are one of our targets.

Andrea Kihlstedt:
Yes, exactly. If I were to give let’s say, just for the sake of discussion, if I were to get $50,000 into a gift annuity to Brown, would I get a tax deduction for that whole amount?

Sierra Rosen:
No, you would not. You would get, so if you gave 50,000, the IRS thinks about this. And it’s the IRS that sets these rules. The way that the IRS thinks about this, they say okay, you’re giving us $50,000 but you’re going to get an income back for your life. So it’s really not the same as someone who gives $50,000 away doesn’t retain any right to income. So we’ll give you some, we recognize that some amount will be left and we want to figure, we want to give you some credit for this charitable component.

And so in broad strokes, someone who understands actuarial tables and present value life expectancies will say that I’m way oversimplifying this. But in broad strokes, the IRS says, okay, we’re going to take the present value of how much we think you’re going to get over your lifetime in income and we’ll subtract that from the $50,000. So they think, okay, based on your life expectancy, how much do we think you’re going to get, what the rate is. We think you’re going to get $20,000 back from this $50,000 gift. And so they take the difference and the $30,000 would be your charitable deduction.

Andrea Kihlstedt:
Right. Now, if I were to do that to a smaller organization, how would the smaller organizations figure out what to do if I go to, Community MusicWorks and say “Gee, I want to give a gift annuity.” How would they —

Sierra Rosen:
So this is complicated, it’s complicated to have the infrastructure to do this-

Amy Eisenstein:
So let me simplify it. That’s what community foundations do for small organizations, you will not run your own program. And I don’t know if this is what you were going to say Sierra and I’ll let you finish. But most of the people on this call are not going to run their own charitable gift annuity programs. They are going to go through their community foundation and any of you that do this, chat in, go ahead, tell us if you use your local community foundation. But that’s what community foundations do is they help small, one of the many things they do, is they help small organizations run these. So if you have one donor who wants to give 10,000 for a charitable gift annuity, talk to your community foundation and they will probably help set that up for you.

Amy Eisenstein:
And basically, I just wanted to give an example. So if an 80 year old does this, and I haven’t looked at these tables in a long time. They might get 5% back for the rest of their life paid out quarterly or something. Just to give people a sense of what the payout might be, it might be 7%, 6%, 7%, 8%, back for an 80 year old. I don’t know Sierra, maybe it doesn’t matter. But just to give people a sense of what donors get back. Okay, so I-

Sierra Rosen:
I can tell you exactly for an 80 year old, it would be 6.5% for one 80 year old.

Andrea Kihlstedt:
And the reason we’re trying to drill down is just to help people on this call understand how they might actually act setting up some kind of a program like this, right? Which is to go to their community foundation and talk about whether they could set it up and then create a Legacy Society which would list the people who do this and have other forms of planned gifts, right?

Sierra Rosen:
I mean, my suggestion for what it’s worth is know that you can… So Amy is exactly right. Community foundations are really most equipped to handle this. My suggestion for what it’s worth is set up a Legacy Society focus on estate gifts. If a donor comes in and says, “I’ve heard there’s this thing called gift annuities, I want to do it at your institution.” This is how you can do it. I don’t think it’s a good use of your time and effort to spend a lot of time trying to set up a gift annuity program in hopes in case someone comes in. So that we may disagree on that.

But if I were going to come in and start a planned giving program at a small institution, and this is essentially what I’ve done with Community MusicWorks, I’ve said here are the easy things you can focus on and get going. And as you get more donors and as you’re in a better position to talk about this, you can get more sophisticated but you don’t, I wouldn’t start with this if you don’t have to.

Bequests and Planned Giving

Amy Eisenstein:
Sierra last time I checked, bequests were about 90% of planned gifts that are made. Do you think that’s still the case? There’s something like 80% to 90% of planned gifts are bequests in this country, maybe not at Brown because you have so many more sophisticated —

Sierra Rosen:
Let me look, I actually don’t know that’s it, let me look. I can be good to know and I can tell you like what we are at Brown. I can also tell you I know I’m working with a number of smaller independent schools, I can sort of just look and see what I’m seeing in the industry. Still that sounds right…

Amy Eisenstein:
The only reason I bring it up is that you don’t, if you’re getting started, you don’t have to do anything but accept bequests, right? And Sierra you’ve hinted at that. So we’re talking about charitable gift annuities which are a little bit more complicated, but you don’t need to worry about that if you’re just getting started. Start by just telling the world that you accept bequests.

Sierra Rosen:
And even more than that, not only that you accept them, but there’s a real reason to do them at your institution, there’s a real impact that they can have. Because I think we don’t do a good enough job talking about the impact and the long term sustainability. If you care about our organization, here’s a great way to make sure we’re around forever doing this really important work, put us in your estate plans. And I think we work at our institutions because we do believe in what they are doing.

Amy Eisenstein:
Yeah. Andrea what question has caught your eye?

How Planned Giving Fits with Capital Campaigns

Andrea Kihlstedt:
Well, there are a number of questions here about, and that is right in our wheelhouse, about planned giving and Capital Campaigns? And how do we fit those together? Do they belong together? And how do you think about them, Sierra, fitting together or not?

Sierra Rosen:
So I do think they fit together. And this is one of things we’ve talked a lot about, I think they fit together. And I think it’s better if you can think about them at the beginning and think about, articulate a goal from the very beginning. I think Dartmouth just did this. I think they did a really, they took a really thoughtful, comprehensive approach. I think someone also asked like, what do you do? Or, what do you do if you have it? And that is part of it is just start and think about what your goals are. Usually I think Amy you said at the beginning usually, a big goal of most campaigns is to raise endowments, right? So if you think about what do we want to raise now, what do we want to raise through planned gifts so that the next versions of ourselves have a much, they are starting with a bigger endowment. That’s an easy thing to do.

If it’s scholarships, you could start to like, think about like a scholarship goal through bequests or something like that. Capital campaigns are hard to do through planned gifts. I don’t think those lend themselves well to planned gifts. And so that’s another reason to be thinking about this at the very beginning. If what you’re doing in your campaign is a capital campaign, then really think long and hard about how you’re going to market planned gifts and if you even want to, right? I think they should be part of it no matter what because this again, it builds endowment. The other thing about capital campaigns, right, that we know or I see a lot is you raise the money for the building, but there’s no accompanying endowment to support all of the ongoing maintenance.

So that could be if it’s a capital campaign and you need the funds now, think about how planned giving could help support the long-term goals of that building and make it so that you can actually afford it, not just the building, but you can afford the cost of the building in the long term. So I think there’s a lot of really smart ways to think about this. And I think it really is looking at your program, looking at what your goals are and how planned giving can really add, be the cherry on top really, in terms of getting you where you want to go as part of this campaign but really in a much longer term view.

Andrea Kihlstedt:
Lynne has asked a question about whether there’s a benchmark or an estimated ratio to use for deferred gift in setting the goal for a capital campaign? And let me just say that we generally encourage people to have an endowment component of their campaigns, in large part because you will be talking to your largest donors through the campaign process. And you want to be able to talk to them about making a planned gift, and you can’t count that towards the building for the reasons that you’ve articulated, right? That money will come in now. I know that you don’t see it this way but we often have encouraged people not to set a planned giving dollar goal but to set an activity goal, right?

We want to talk to 30 people about including us in their wills for example, or we want to see if we can get people to document that they have included us in their wills a certain number of people, and so we have an activity goal for the campaign that over time will raise, will yield money. But it isn’t done as we’re going to raise $4 million in our endowment through planned gifts. What’s your sense of that Sierra?

Sierra Rosen:
Yeah, I think I essentially agree with that. I think having usually you don’t really want to see in your campaign, depending on how you set it up, you normally don’t want to see more than 30% coming in through deferred commitments. And I think if you can keep it to a quarter that’s very healthy so for whatever that’s worth. But it really it’s so case specific, it really depends on what you’re trying to accomplish and what you need the money for. As I said earlier, I do like to, I think it’s really important to commit to the process and committing to the process really does yield results. And that’s hard for me because I like to focus on outcomes. And I do think there’s a way to sort of split the baby on this one which is that, we try to really focus on how many new legacy society members we bring in. Because if you’re focusing on that, then a lot of the activity kind of has, and necessarily happens as, a way of kind of splitting the baby in terms of being results oriented in a way that gets to the process a little bit.

But really the process is like messaging stewardship and those things that you really can control. You can’t always control someone who wants to talk about planned giving, but you can control your messaging, you can control how often that goes out. You can control the form it takes and you can control the way you steward these donors. And so I think those are focusing on what you can control and committing to it. The other thing I tell people a lot and I just met with a marketing team recently with the school I’m working with in Mississippi and make sure that whatever you’re planning for your budget, you can sustain it year-over-year-over-year. So don’t spend a big splashy amount on planned giving, thinking okay, we’ll do like this big amount and we’ll get a good result and then we’ll make the case for it. It just simply doesn’t work that way.

So pick an amount that you can spend year-over-year-over-year and slowly but surely, you’ll see the gifts coming in. But it surely starts at a trickle. But once it starts, once it gets going, once the spigot gets turned on it really, you start to see a lot of results and it has the snowball effect. But again, it’s committing to the process.

Amy Eisenstein:
I like that.

Older Organizations Benefit Most from Planned Giving

Andrea Kihlstedt:
I want to be sure that we address a couple of very basic but important issues. One is that I think planned giving and building endowments generally are not an appropriate way for new young organizations to focus their fundraising. And I’m always, I’m sometimes amused that organizations, a startup organization they say, we want to raise an endowment so we never have to fundraise anymore. And there is no assurance that this organization is going to be in existence in 10 years or 20 years, right? But when you look at an institution like Brown or other secondary schools, or many social service organizations that have been around 50 years or 100 years. These organizations are going to be around. And that I think is one of the hallmarks of an organization that has the capacity to build a substantive planned giving program.

Sierra Rosen:
I think you’re right about that. And when you think about these gifts and donors don’t always think about them being the most transformational gifts. And when you think about, well this is this person’s life work that they are leaving behind, they are going to pick an institution that they think is going to be around, it’s everything that they work towards, it’s everything that they have to show for themselves in a lot of ways. And so they are going to very much want to make sure that the organization will still be around and will be good stewards of the money. And so I do think that that’s a real advantage that places like Brown have, and I do try to leverage that a lot. But I do think looking at impact is really important.

And showing that you’re here for the long term and making a long-term case, I think is really important. And don’t forget that when the first thing I talked about is that planned gifts help increase the annual fund gifts and I do. Someone did ask for the citations on that, I do have those. And so I’m happy to get those either via email, I’m happy to tell you that now. But there was an Indiana University study in 2007, that when a charity was in the will the average annual gift was almost $4500 without sharing it in the will, it was just over $2000. That was one in 2007, then Russell James also did his I think most people have heard of him because he’s kind of all the time everywhere talking about planned giving and philanthropy. And he shows similar results and they’re more recent.

So there is a reason also if you want to increase your long term annual fund support, whether it’s an actual annual fund or just your outright dollars that come in every year, that planned gifts do help make a difference. And I think the reason why is I don’t know if anyone’s ever said why. But when you think about who goes into your will, it’s your family and closest friends. And I think when you put that charity in your will, you’re realizing, oh, this is essentially family, this charity now has the same place as my family does. And the other thing about being in the first will is you’re likely to stay in all subsequent wills. So getting in often makes a difference.

Making the Case for Planned Gifts

Amy Eisenstein:
Let’s go to Michelle’s question. We have so many questions, I want to get to at least a few more of them. So Michelle, I think you were just touching on family. So Michelle is asking, how do you get someone who says they aren’t interested since they’re leaving everything to kids and grandkids? What do you say to that? How do you address that?

Sierra Rosen:
I mean, I don’t, I say great, I get it. Like that’s just probably not your best prospect then and you are not going to probably win them over. I think just staying engaged, continuing to make the case for your institution. I don’t think you want to be in a position where your institution is seen as competing with family members or kids and so I just don’t touch that. And that’s okay, we all make decisions on how we fundraise and when you see that a donor seems to not have the inclination that you’re looking for you continue to hold on to them but you maybe move on a bit. And so really, that’s what I actually think is the point that you brought up is, who are your best prospects? Your best prospects are people who don’t have any kids.

Amy Eisenstein:
Well, that for sure is true. There’s a lot of data on that. But I actually don’t think it’s an either/or proposition. I always respond to that great, leave 90% to kids and grandkids. And then think about your life in sort of a wheel, a chart, right? A pie chart, and what are your priorities? Your priorities are of course, our families. So leave 90% family, and then maybe you want to leave 3% to your church and 3% to your hospital, 3% to your alma mater, I don’t think it has to be an either/or proposition. But again, it’s how you want, you have to read every donor and every situation differently, and sometimes they are not a good prospect. And I think that’s — to your point — that’s okay too. And you have to acknowledge that and move on.

Sierra Rosen:
Yeah, I mean, that’s a really good point. Because the other thing is it really depends on what life stage they’re at. And that’s another reason to stay close with these donors. I mean, they might be saying that when they just don’t quite know how launched their kids are. Are they going into the arts? Are they going to be starving artists? Are they going to be running hedge funds? Like it really matters and often they can’t quite tell on the life stage or they just don’t quite know where they are going to end up. And there also might be disagreements between spouses about how they feel about this. And that’s something I encountered as well.

And so, I think, Amy you raised a good point. It’s not either/or, but it is important to stay close, but I probably wouldn’t say what Amy said. I mean, then that’s just not my comfort level and I can’t see my way to saying that. I just say, great, we love all the support you give us totally get it, we’re here. And what I have found also when I go through the files is that people who say they are not leaving you in their will, they do. So I found that too. So just stick with it. But I don’t try to do it through necessarily through persuasion in that one conversation, that’s just not how I’m wired.

Required Documentation from Donors

Andrea Kihlstedt:
So Gary has asked a really practical question. Thank you for it Gary. What forms of documentation do you recommend the organization requests from donors if they are going to put you in their will? I think is what the…

Sierra Rosen:
Okay, great question. I mean, most institutions, if you’re simply going to recognize a donor in your Legacy Society require nothing. Like just that they said, I’ve put your organization in my estate plans, most institutions, I actually think all institutions across the country say great, we’ll put you in our Legacy Society. And there’s a lot of reasons for that, like it costs you nothing to put them in your Legacy Society, it’s great stewardship, the goal is to get them closer. When you start to count these requests if you do that, and that can be a bit iffy in certain organizations, more and more institutions are celebrating and recognizing donors for their gifts now and I think you can see why these are the biggest gifts they are going to make so they should be honored and celebrated, recognized. And so that just tips my hand in how I feel about it.

But there’s a time that CFOs and other fundraisers feel like well, this is a smoke and mirrors kind of gift, like we may not get it, it’s revocable. So I definitely can understand why people might not be comfortable doing it. When you come down to recognizing these planned gifts and what kind of documentation you require. I can tell you what Brown does and I can tell you what, like Harvard doesn’t require any kind of language. Like they don’t require any kind of estate provision. But these are the assignments like basically this document that’s a lien on your estate. And people sign it which is like shocking to me, people sign it like it was no big deal. At Brown, I do actually request if we’re going to celebrate and recognize them for these gifts. I actually really try not to use the Word document because it scares donors.

And I think it seems much harsher than it is. I say we’d love to celebrate and recognize you for this gift, would you be interested in sharing some of the details about it? That’s how I talk about it. So it’s not, most of my colleagues in advancement talk about documenting the planned gifts and I’m really trying to move away from that language. But we simply ask for the provision in the real estate plan and like it doesn’t have to be a copy. It doesn’t have to be anything other than like, you can type up like it’s usually a sentence or two, type it up and put it in an email, whatever is easiest. It’s like our one moment to see what’s coming and can we even comply with what they want if they put something in there that we could never actually comply with. So that’s just kind of a nice opportunity, we get a sense of what’s coming.

And then we ask them to sign a form and the form says on its face it’s revocable. But they don’t intend to change it or reduce it. But everyone is recognizing that this is not enforceable and it’s pure, totally revocable. Most people are really comfortable with that. Every once in a while I hit a snag with someone who wants to alter the language, but mostly at Brown people are really comfortable. Every institution is different. And so I think it really depends on what your institution is comfortable with and what your donors are comfortable with. And I don’t think if we had that Harvard document that people at Brown would sign that.

Valuing Stock as a Planned Gift

Amy Eisenstein:
All right, let’s go to Jane’s question. Jane wants to know if you can address the process for accepting gifts of stock, what’s the value of the gift, the gross stock value or the net value? How do you value stock?

Sierra Rosen:
Sure. Yeah, so you should be taking stock. Like you should, if you can do one thing, you should take stock. Because again, 99% of U.S. assets are held outside of cash that’s largely marketable securities. And it’s a really tax efficient way for donors to make a gift. So I’ll just put that out there. So why it’s tax efficient is this, if you buy a stock for $40k and you sold it for $100k, you’d have to pay capital gains on that $60,000 increase, and you’d have to pay it somewhere between 15% and 23% depending on your tax bracket. If you give that $100, that stock that you bought for $40, if you give it to your institution it’s now worth $100, there’s no capital gains on it and the IRS recognizes you as $100 donor. So you got $100, you qualify for $100 tax deduction. That’s really tax efficient and I keep thinking everyone knows this and I keep coming across very sophisticated donors that are shocked by it.

So I realized I needed to be talking about this more. The way it’s valued is this, it comes into you on the day it comes into your account, the IRS says you have to take the average of the high and low and that’s the value for it. And so usually someone’s investment, you can get it on Bloomberg, your CFO can probably get that information but that’s how you value it. And then there’s a lot of tricky ways you need to handle the receiving and usually what I do, I think the best practice is to say, on this day, we received this amount of stock from you and here’s the high, here’s the low, here’s the average, and have them give back to their tax advisers. So you’re being very careful about what you’re saying about the value of the gift, you’re simply acknowledging you received it. Is that helpful?

Amy Eisenstein:
Yeah, I think that’s perfect. Andrea, why don’t you pick one more question. And then we will let Sierra leave people with some final words of wisdom in anticipation of her upcoming webinar.

Estimated Planned Gifts

Andrea Kihlstedt:
Yes. So Ann Payton has asked us, you brought up some very good topics here so let me go to her. She says if you have dollar goal for planned giving campaign, it’s hard to have dollar progress when you don’t require a donor to declare dollar amount of a bequest or percentage of the IRA. And she’s pointing to a problem, right?

Sierra Rosen:
Yeah, that’s a good point. And I realize that, so when we go to those values, that’s the other thing, we let donors tell us what it’s worth. So if they say I’ve got you in there for $100,000 in my IRA, we say that’s, and we’re going to celebrate recognize them for that gift, we take their word for it. And that feels like the right thing to do to me, I don’t make them prove it. My predecessor used to make them prove it and that just doesn’t feel right to me. So we let them estimate, we recognize and often will say we recognize it’s a snapshot in time, they could go up and go could go down.

So we let you tell us how much you feel comfortable letting us celebrate and recognize you for. And I realize I look at these a lot when they come in and I look to see, did we ever count this gift, and it’s all over the place in terms of up and down. But in the aggregate, we get more than we ever counted. So I think it works out to our benefit. I think donors tend to be conservative about it. And sometimes there isn’t anything there and it’s not that what we thought but in the aggregate we get more.

Andrea Kihlstedt:
I think you have such a wonderful gentle touch in this. It really is a donor-based touch. You’re doing this from a donor perspective rather than from an institution will give me the money perspective. And I suspect that that’s incredibly effective.

Sierra Rosen:
I think it does benefit the institution in the long run.

Andrea Kihlstedt:
Yeah, exactly. I think one might not imagine it to be true, but I think that that really makes perfectly good sense to me. Because once people feel well treated and well cared for and as though, then they will come to you again and again. I have just a very quick question which we might touch on at some other time. But I have periodically been fascinated by this idea of a bequest challenge. If you worked with bequest challenges and I’ve often thought that-

Sierra Rosen:
No, but I would like to. I love the idea of a bequest challenge. And I haven’t had any institution have the appetite. I know Boston Children’s did one, I think they had a ton of success. And I really love the idea of it, but for whatever reason and I’ve sort of floated it. But do you want to talk about how you see them Andrea?

Andrea Kihlstedt:
Sure, I’ll just be really, very simple and very quick about it. But the idea of the bequest challenge is that you get someone and get a donor who is keen on building for an organization they are involved with to build their endowment. And that donor understands that one of the reasons staff doesn’t spend time and energy doing that is because it doesn’t benefit the immediate bottom line. So the donor will say, I’m going to put up a challenge of let’s say, $100,000. And every time someone indicates that this organization is in their will, I will give X number of dollars from this challenge to the annual fund, right? Or to the campaign. They’ll give money to a current need because they will have triggered, they will have challenged people to give planned gifts to the organization.

And in doing that it makes planned giving present, right? It turns planned giving from deferred giving. It gives it a result that will benefit the bottom line of the people doing the fundraising today. The American Civil Liberties Union has a huge luck with positive results from that. And a bunch of smaller organizations we’ve been involved with through the generosity of a guide and I told about this once. Yes, he has seated these all over the place and they have been incredibly successful. I mean, little bitty ones, have been successful.

Sierra Rosen:
That’s great.

Final Thoughts

Amy Eisenstein:
Before we wrap up, I’m going to let Sierra leave us with some final thoughts and just some last minute ideas. I just want to remind everybody and encourage everybody to sign up for Sierra’s webinar that we have coming up in a couple of weeks, bring your board members and your boss, your board members. And I’m going to paste again in the chat the link so that you can go immediately and sign up as soon as we’re finished. All right, Sierra, what else would you like to add and to share with people as their final key takeaways?

Sierra Rosen:
Well, I really appreciated this conversation. And I think the point is that planned gifts can really move the needle for you in big transformational ways. And to start, what you can do just start, and there are lots of easy ways to begin, you don’t have to get really complicated right away.

Amy Eisenstein:
Great.

Andrea Kihlstedt:
Sierra, What happens, we got two questions here, I just want to tie them up because they are here.

Sierra Rosen:
Sure.

What Happens to Planned Gifts if an Organization Fails?

Andrea Kihlstedt:
What happens when someone makes a planned gift to an organization and the organization fails? What happens to the money?

Sierra Rosen:
What does happened to the money? I think it goes back into the estate, and then it goes back into, it becomes part of the pool that’s left to distribute to all the other beneficiaries.

Andrea Kihlstedt:
Right, yeah. That’s actually reassuring. Kind of get it out there that somebody’s not going out to a fancy dinner on it, right?

Sierra Rosen:
It just goes back into the estate, yeah.

Andrea Kihlstedt:
Amy, planned giving is so important, it really is so important. We are sort of cogitating the idea of including some kind of a planned giving component in the Capital Campaign Toolkit, we don’t yet know what that will be like or what that would look like. But we think it probably is important and if any of you think that we would be interest in that we’d love to know whether having a program that actually guides you step-by-step to put a little planned giving program together would be interesting, or it seems a hole in the field and it looks big and intimidating. But as you can tell from Sierra, it doesn’t have to be big and intimidating, it can be simple and well done. So let us know if you think something like that would be interesting where —

Amy Eisenstein:
And I think just based on the questions we’ve gotten today, such good, good, important questions. And I think we’ll make sure that Sierra answers some more of these in the upcoming webinar. We clearly know to leave lots of time in the webinar for lots of good questions. I think that will be a clear component.

So come back for more and it was great to see everybody today. Sierra, thank you so much for sharing your wisdom and your brilliance around this really important topic. I think that these gifts are transformational and that’s what campaigns are all about. So they really do go hand in hand. Alright everybody, we’ll see you next week. Thanks so much for joining us.

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