Outsourcing: Part 4

By Todd Cohen

Managing the investment of planned-giving assets also involves a broad range of complex tasks, experts say, from asset allocation and tracking investment-managers’ performance to keeping track of the crazy-quilt of state rules for investing charitable assets.

The Jewish Federation of Greater Atlanta, for example, outsources the management of charitable remainder trusts and charitable lead trusts to Wachovia Charitable Services, and the management of the investment of planned-giving assets to SEI Investments in Oak, Pa.

“We’re saving a lot of bucks and a lot of aggravation,” says Jack Balser, the federation’s endowment director.

Those firms select individual portfolio managers, make day-to-day decisions within the federation’s investment policies and guidelines, and report quarterly to its investment committee, says Balser.

The federation, which has $150 million in planned giving assets, also works with an Endowment Fund Professional Advisory Committee consisting of about 30 volunteers, including insurance executives, financial planners, lawyers, certified public accountants and wealth managers, says Barry Berlin, a member of the committee and managing director in Atlanta-based Atlantic Trust Private Wealth Management.

Part of the committee’s role is to report on the planned-giving marketplace to the federation, and take its planned-giving message to their clients, Berlin says.

Rollins College looks to TIAA-CREF Trust Co. to manage the investment of assets that consist of different types of planned-giving vehicles with needs for different types of returns.

Each quarter, for example, donors to the school’s pooled income fund receive a share of investment income based how much they contributed to the fund proportionate to other others, and when donors die, the school receives their share of the fund.

“So whatever the fund earns, that’s what they’re going to be sharing,” says Robert Cummins, director of planned giving.

A gift annuity, by comparison, consists of a contract that typically calls for a charity to pay the donor and donor’s spouse a fixed percentage of the donated assets for their lives based on the donor’s age, with the charity receiving the remaining principal when the donor and spouse die.

And a charitable remainder trust consists of assets the donor contributes to a trust, which pays a set income to the donor until death, with the remainder going to the charity.

So investment of those assets should provide an income stream that will allow the college both to make payments to the donor and add to the principal to ensure there will be a gift to the school, Cummins says.

Other stories in series:

Part 1: Nonprofits farm out planned giving.

Part 2: Planned giving an untapped resource for nonprofits.

Part 3: Nonprofits face questions in deciding whether to farm out planned giving.

Part 5: Some nonprofits use multiple vendors to handle planned giving.

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