Planning Matters | Sharpe Group
Posted November 1st, 2003

Planning Matters

When a donor first approaches a charity about a potential gift, those in the charity’s development office may be tempted to view the gift solely from their own perspective. But a failure to consider the impact a large gift may have on other interested parties—such as the donor’s family, other potential heirs, or other offices within the charity—may lead to less than favorable results. Understanding and accommodating various points of view from the outset may save everyone involved from unwelcome surprises later on.

Consider the donor’s perspective

Remember that a donor may have family, friends, or professional advisors that have a potential interest in a gift under consideration. If a gift is too large or is structured in a peculiar fashion, it may have a detrimental impact on one of these parties and could keep the gift from being completed. For example, friends or family members may be adversely affected by the size or timing of a gift, while the donor’s professional advisors, such as a lawyer, bank trust office, or financial consultant, may have a particular interest in the way a gift is structured.

The charity’s perspective

While such considerations may be relatively commonplace, it is crucial to also consider the impact of a particular gift on the institution as a whole. Not every gift is a good gift. Fundraisers should always ask themselves these questions: Will the gift be restricted or unrestricted? Can we credit it in a campaign? Is there a need to involve legal counsel? Will the gift require more work than it is worth? What impact will this gift have on the business office? On the legal department?

Cooperation is vital

Suppose a donor has included a provision for your charity in a will or trust. Depending upon the circumstances,
such a gift may qualify for inclusion in your planned gift recognition society and be counted as a planned gift expectancy. While the bequest notification originated in the development office, recognition and other issues may dictate that others within the institution be consulted before and after the gift is completed.

For example, the finance office may be required under financial accounting standards to recognize irrevocable deferred gifts as income and reflect them on the institution’s balance sheet, yet it may be difficult in practice to ascertain the required information from the donor.

The legal office may want to keep copies of wills and trusts in official documents files and review them periodically to make sure that there are no troublesome restrictions or provisions. They may also be of help in the settlement process and may facilitate the transfer of assets to the charity. In other cases the legal and financial aspects of the gift may be handled by experts in the charity’s development or business office.

In some cases, colleagues may exert influence over the development office to give priority in their work to gifts of an irrevocable nature. Each department within an organization has its own agenda, but they should also have the same ultimate goal—to see their institution be the best it can be.

United we stand

The best results may well be achieved by acknowledging and utilizing the perspectives, and vested interests, of all of the parties—both on the donor’s side and the charity’s. Doing so may involve putting your legal counsel in touch with the donor’s attorney to assist with a legal question. Or your finance office may need to assist the donor’s financial advisor with the transfer and subsequent sale of a gift of stock.

Wise fundraisers do not operate in a vacuum. They understand that charities that pool their resources from development, business, legal, and administrative offices—rather than allowing themselves to be pulled apart—will be the ones that enjoy the greatest success in the long-term.

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The publisher of Sharpe Insights 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 Sharpe Insights 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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