Posted June 1st, 2001

Back to Basics

The last several decades have brought tremendous changes and advances to society in general and to the field of gift planning in particular.

As a newly minted planned giving officer in the 1970s, available computer resources at my university employer consisted of a UNIVAC Sigma Nine mainframe computer that performed its functions by punching and sorting paper cards. We were allowed to run our complete donor report only twice a year because it required a dedicated weekend to perform the task. Gift calculations were performed by hand and as veterans of that procedure can attest, the answers were rarely the same twice!

At that point, most development professionals were still trying to figure out the rules and regulations governing planned giving vehicles introduced as part of the Tax Reform Act of 1969 and many were expressing serious concerns over the impact on charitable giving of pending legislation which would exempt over 90% of estates from taxes. Gas prices had seen record levels and there were ongoing worries about the economy.

Today the typical automobile has more computer technology than the Lunar Landing Module, or the spacecraft that took it to the moon! Satellite TV and the Internet have helped to create a global village, and space tourism has begun, even if not exactly as envisioned by Stanley Kubrick in 2001: A Space Odyssey. Once again gasoline and energy prices are reaching record levels, there are ongoing concerns about the health of the economy, and the specter of the impact of tax legislation that some believe may reduce incentives for charitable giving through estate is upon us.

Once again it seems that the more things change the more things stay the same. This is particularly true in the area of planned and major gift development. Much may be gained by looking to the past as you consider your future plans for your gift development efforts. Consider the following as you set your priorities for the remainder of this year and beyond:

1. Non-tax motivations will continue to be recognized as the prime motivators for making large gifts.

We need to be familiar with tax law and how it affects the overall giving climate and attractiveness of specific gift methods. But we also need to remember tax changes come and go while human nature changes slowly and deeper motivators for gifts remain the same.

From a practical standpoint, nonprofits that base their marketing on universal motivations will not risk having their strategy outdated with each session of Congress. The tax benefits are the “icing”—not “the cake.”

With greater realization of the primacy of donative intent, we will continue to see a shift from heavy emphasis on marketing of plans to the charitable gift planning approach where the emphasis is on gifts and how best to structure them for the maximum benefit to all concerned. This may be a subtle shift, but one we believe will be vital to continued success.

2. Gift planners will increasingly call on professional advisors to supplement their skills.

While technical specialists will be required in large shops due to economies of scale, in general staff members working in the area of charitable gift planning will increasingly require human relations/marketing skills rather than the ability to complete the details of complex gift arrangements.

An understanding of how gift methods work together to meet various donors’ estate and financial priorities and the needs of the institution will be of great importance. After the outlines of a plan are in place, the services of increasingly knowledgeable allied professionals in the fields of law, accounting, investments, and other fields will be required.

Pending tax reform will hasten this trend as donors’ advisors must be more and more involved in major gift decisions as well as estate and financial planning.

This division of labor has two advantages. First, the gift planning professional, skilled in communications necessary to help a donor explore his or her desires and emotions, may not be oriented toward the technical details.

Second, the donor is usually better served by more than one advisor. Any conflict of interest is eliminated when the financial development executive acts as facilitator of the gift planning process, not as the technician who completes documentation of the plan and advises on the tax consequences.

3. The roles of development staff members specializing in planned and major gift development will have to be integrated more than ever.

The emerging tax law will change many of the rules about giving. A donor who might have benefited from a gift of one sort last year might be better served by giving in another form this year.

Those who are assigned to work closely with major donors will need to know when to call on a colleague who may know more about a gift option that may suit a particular donor. This will especially be true when working with an increasingly older, wealthy donor population. In some organizations and institutions, this interaction does not always come easily. Where successful interaction regularly occurs, it begins with a change in perception of top staff and volunteer leadership in the way the development process works most effectively. Where the perspective of leadership on the process is out of date, change must come quickly if their organization is to fully serve the best interests of their donors in today’s complex environment.

4. Wills and bequests will continue to be recognized as a promising source of gifts via the estate.

Many marketing programs will go “back to basics,” as charitable bequests appeal to the broadest number of donors. Bequest income from individuals continues to grow each year. The organizations that are seeking it will receive it.

Bequest marketing also can open a dialogue with charitably motivated people who may benefit from other giving arrangements discovered through the charitable estate planning process. Bequest marketing efforts can also be an excellent way to help discover the most motivated persons among the ranks of younger donors.

Remember the basics

With so much change on the horizon some gift planning executives will be tempted to try bold new initiatives while abandoning tried and true methodology. Past experience has shown time and again that the most successful programs in times of change have been those that have stayed with basic approaches that have stood the test of time, while adjusting and evolving to meet the nuances of the current environment. Remember, for example, that proposed estate tax revisions will hold no change for over 90% of persons who are currently planning gifts through their wills and other long-range plans. Don’t forget what motivates these persons as we strive to put a positive “spin” on changes for the small percentage who will be affected.

Simply put, today as in the past, those who work for organizations that they believe in and focus their efforts on working with individuals who are also passionate about their organization’s mission will continue to prosper despite the continual winds of change.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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