Posted October 1st, 2010

In Today’s Economy, Gift Planner Finds ‘People Are Giving What They Have’

Phillip Adcock is Assistant Vice President for Development at The University of Alabama. Before assuming his role with the University in 2002, Mr. Adcock spent a number of years working with the American Cancer Society and consulting with a variety of nonprofit groups. Here he shares with Give & Take how the current economic environment is affecting gifts to the University, including two of the more unique gifts his University has recently received.

Give & Take: I understand The University of Alabama recently obtained a valuable historical collection. How did the gift come about?

Adcock: In June we finalized the acquisition of a remarkable collection of rare American documents, photographs, and books—one of the largest private collections of such materials in the country. The donor is an alumnus of the University, and this collection is the result of his lifelong passion. He spent more than 50 years assembling the materials, starting with documents by or about American presidents. The collection now contains at least one manuscript signed by every former president, as well as thousands of documents, photographs, maps, diaries, and letters detailing life in the American South, particularly Alabama. Roughly 20,000 rare and valuable books are also included, featuring many first editions and signed copies.

Though it started out as a hobby, over the years the collection grew in size and value. At the time of the gift, the collection was valued at over $12 million, substantially more than the donor had invested in it. In his retirement, maintenance of the documents had become a full-time occupation. Eventually, the donor grew concerned about the long-term fate of his collection. The threat of estate and capital gains taxes made him worry that his collection may have to be broken up and sold off to settle tax bills. He wanted to find a way to ensure that his life’s work would remain together, intact, and available for future generations to learn from and enjoy. He also wanted to leave a portion of the monetary value of the collection to his family.

The dean of libraries approached the donor about giving the materials, and after learning of the donor’s interest, involved me. We thoroughly reviewed the situation with both the donor and his advisors and decided that what is known as a “bargain sale” appeared to be the best solution for everyone. The donor received an amount equal to a portion of his initial investment, and our University acquired a world-class collection at a cost far below market value. Most importantly, the donor was able to ensure that the collection would remain intact.

A bargain sale is an often-overlooked tool that can help a donor receive something back from an asset while at the same time providing a valuable gift for the charitable recipient. In our case, a bargain sale allowed the donor to recover some of the funds he had invested in his collection, benefit from a substantial income tax deduction based on the fair market value, and avoid costly capital gains and/or estate taxes. And by doing so he was able to provide an institution-changing gift to our University.

G&T: How have the weak economy and the uncertainty over estate and income taxes affected the types of gifts you’re receiving?

Adcock: The fact that the future of estate and income taxes is still undecided has led to a lot of confusion. Many donors are worried about an increased tax liability in the future and so are speeding up income distributions. Others have decided to accelerate their charitable giving. No one seems sure how to handle the uncertainty.

As for the impact of the sluggish economy, I’ve seen more property gifts in the last two years than I’ve seen in my entire career. Real estate and other property is often expensive to maintain, so it can be an ideal gift for those whose income may be down but who have a deep love for and commitment to certain causes. We have received gifts ranging from the Americana collection I just mentioned to a vintage Ferrari, from primary residences to vacant land. People are giving what they have.

G&T: Can you tell us more about the Ferrari you were given?

Adcock: The Ferrari, valued at over $1 million, was donated to the University by an alumnus who bought it for $1,500 while he was a student here in the late 1960s. Although he drove it in college, the donor eventually decided to house it in a warehouse, where it remained for many years. After researching the car’s history, he discovered the 1950 Ferrari had an impressive racing career that made it extremely valuable to collectors.

By donating the car to the University, the donor was able to establish a $1.2 million charitable remainder unitrust that provides additional income for him in retirement and will ultimately fund a scholarship in honor of his father.

G&T: What led you to a career in gift planning?

Adcock: After college, I took a job with the American Cancer Society in southeast Alabama, which turned out to be one of the greatest experiences of my life. As a field representative, my duties ranged from recruiting volunteers to distributing materials at health departments and schools to working with community leaders in my region. It was that job that made me realize that fund raising is what I enjoy.

After a few years I was offered the position of Vice President for Development for the Virginia division of ACS. It was then that I became involved in planned giving. From Virginia I went to the national office in Atlanta, where I oversaw major gifts and planned giving nationwide. I was charged with the task of centralizing the program, which enabled us to minimize expenses and maximize revenue.

After several years of extensive travel and in an effort to afford more time with growing children, I made the difficult decision to leave the American Cancer Society and took a job with The Sharpe Group in Memphis, where I conducted seminars and consulted with a variety of nonprofits. After a few years, The University of Alabama contacted me, and I decided it may finally be time to come home to Alabama. Our goal at the University has been to take a very good planned giving program and turn it into one of the flagship programs in the country. I’m proud to say that with the help of a number of colleagues we have come a long way toward achieving that goal.

G&T: As someone with decades of experience in fund raising, what advice do you have for someone just starting out?

Adcock: Focus on your philosophy. This will dictate whom you seek counsel from, what service providers you use for marketing strategies, and the overall approach you have to gift planning. Some people believe donors are driven to give by the gift plan or the tax savings and other economic benefits they may enjoy by making the gift. They treat gift planning as selling products. Others feel that donors are motivated by a strong commitment to and love for the organization. They believe that for most donors, the way the gift is made—the gift plan—is secondary. I am of this opinion as well. Most of the donors I’ve worked with through the years—whether at the American Cancer Society or at The University of Alabama—are motivated to give by their strong commitment to the mission. They want to create their legacy.

With the American Cancer Society, many times donors were motivated by a desire to cure a disease that had negatively impacted their lives. The investment was for future generations in a hope that others will not suffer as they or possibly a loved one had suffered. In the case of the University, the experience is more positive. Often they met their spouse while on campus. Many credit their education with their ability to achieve financial success, and there is a strong affinity with other alumni and a desire to give back to an institution that has held a special place throughout their lives. Helping them achieve these goals in the most cost-effective manner is where the real satisfaction in charitable gift planning comes into play.

The key to success as a gift planner is to be a good listener. Listen to what your donors want to accomplish. Some need no income and have no heirs to provide for. Others have a special situation that the right gift plan can help address. For each gift, strive to balance the needs of the charitable recipient with the interest of the donor. Not every gift is necessarily a good gift. It’s important to ensure that every gift is a positive experience for everyone involved.

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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