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Charities, donors, advisers turn to planned giving

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Todd Cohen

CHAPEL HILL, N.C. — In 1822, using funds from the sale of Tennessee land it received as a donation, its first planned gift ever, the University of North Carolina at Chapel Hill began building what is now Gerrard Hall.

Today, with the economy stumbling, competition for charitable dollars growing, and unprecedented wealth being created and starting to flow between generations, planned giving has emerged as an increasingly popular philanthropic strategy.

Fundraising, consulting and investment programs focusing on planned giving, typically involving gifts that are deferred or complex, or consisting of assets other than cash, have sprouted at a growing number of charities, community foundations, colleges and universities, and financial-services institutions. For example:

* Planned giving accounted for roughly 20 percent of the $2.38 billion UNC-Chapel Hill raised in its recently-completed comprehensive campaign.

* Deferred gifts that living donors have designated to the Triangle Community Foundation in Durham are expected to total over $100 million.

* Planned giving represents roughly 7 percent of the $14 billion in charitable assets under management at Winston-Salem-based Wachovia Trust Nonprofit and Philanthropic Services, which employs roughly 140 professionals dedicated to its charitable line of business.

Ranging from simple bequests set up in wills to more complex transactions involving charitable trusts, gift annuities or donations of securities, real estate or art, planned giving typically aims to generate future income for charities and requires their patience, experts say.

“A planned-giving program does not produce immediate rewards,” says Fred Stang, director of development at Triangle Community Foundation. “It is an exercise in cultivation and building trust long-term with the donor. So organizations that enter into planned giving need to have a horizon that is far into the future.”

While they may believe they cannot afford to invest in a planned-giving program, many smaller nonprofits, colleges and universities can take some simple steps to develop planned gifts, and can turn to other groups for help, experts say.

The Triangle Community Foundation, for example, provides planned-giving advice and assistance to smaller nonprofits that have funds with the foundation.

David Routh, director of planned giving at UNC-Chapel Hill, serves as a planned-giving resource to smaller schools in the UNC system, and Wachovia provides planned-giving assistance to individuals, nonprofits, and private colleges and universities.

Making simple bequests that will benefit charities, or designating charities as beneficiaries of retirement accounts, are two easy planned-giving strategies nonprofits can use, Routh says.

Nationally, bequests represent 70 percent of all deferred gifts, says Routh, who as managing director in Greensboro for U.S. Trust Co. headed the New York City-based company’s national Planned Giving Services Group.

And designating charities as beneficiaries of retirement accounts can eliminate stiff taxes that otherwise would be charged to the donor’s estate and heirs.

“A big mistake charities make is they go to more complicated options first,” Routh says. “And simpler options are more popular with donors and raise the most dollars.”

Another popular strategy consisting of life-income vehicles such as charitable remainder trusts or gift annuities typically involves a donor who makes a gift that provides the donor, and often the donor’s spouse or family, with an income stream until death, when the remaining corpus in the trust or annuity goes to a charity the donor designated.

Dan Taylor, vice president and philanthropic consultant in the Raleigh office of Wachovia Trust Nonprofit and Philanthropic Services, says over 95 percent of families throughout the United States with net worth over $1 million are giving to charities each year.

Handling that business has huge potential in the face of estimates by researchers at Boston College that at least $41 trillion in wealth will pass between generations over the next 50 years, with at least $6 trillion of that going to charity.

Taylor says donors are becoming more knowledgeable about planned giving, and are more willing to donate appreciated assets than cash because gifts of appreciated assets can have less impact on their cash flow while reducing the taxes on their estates and capital gains.

Working closely with donors’ lawyers, accountants, financial planners and other professional advisers, experts say, charities’ investment in planned giving can yield a big payoff.

“It’s a long-term investment,” Taylor says, “that will require dedication of resources and patience.”

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