Arts groups tune up for planned giving

Todd Cohen

CHARLOTTE, N.C. — In the past six months, roughly one-third of the 24 arts and cultural partners of the Arts & Science Council have launched initiatives to cultivate donors for planned gifts, while another third have formed committees or task forces to launch planned-giving initiatives.

Those efforts represent the fruit of 18 months of work by The Greater Charlotte Cultural Trust to help partner groups of the Arts & Science Council prepare themselves to build their endowment by securing gifts that are deferred or involve assets other than cash.

Typically made by a nonprofit’s “most loyal and devoted donors,” planned gifts tend to be larger than “major” gifts or those made to an annual fund, and often are made without restrictions on their use, says Chris McLeod, vice president of the Cultural Trust, which is housed at Foundation for the Carolinas.

Hired in August 2006 to help spur the development of planned-giving initiatives at cultural groups, McLeod meets regularly with their fundraising staff and their boards to talk about the impact planned giving can have on their organizations, and to suggest strategies the agencies can use to secure planned gifts.

“Planned giving is a part of an integrated development strategy,” she says. “If you don’t ask for a planned gift, you’re leaving money on the table because that is when donors often make their largest gifts.”

In the past two years, assets of the Cultural Trust have grown to $135 million from $77 million, mainly through $56 million in contributions to a endowment campaign that aims to raise $83 million to support construction and renovation of cultural facilities in downtown Charlotte.

In addition to advising arts groups on setting up planned-giving initiatives, the Cultural Trust also handles the management of gift pledges, as well as investment services for endowments that arts groups create at the trust.

McLeod says donors like to make planned gifts because they are “inspired to make an impact” on the cultural community.

And they are motivated to use appreciated assets such as securities, real estate or businesses because of significant tax benefits that can help them avoid the big tax liabilities they otherwise might incur if they tried to use or sell those assets, she says.

And by making certain types of planned gifts, she says, donors also can ensure that they or their families will receive an income stream until their death.

Planned giving has the potential to grow more rapidly than annual giving or earned income and can generate “a permanent source of working capital or a new revenue stream to support a nonprofit’s mission,” McLeod says.

But nonprofits also must recognize that planned giving requires patience because it can take years of cultivating donors before they make planned gifts, and often years more before the nonprofit actually receives income from the gift.

“You’re investing now for a larger payoff down the road,” she says.

To develop a planned-giving program, McLeod says, a nonprofit first must develop a “case” it can make to its board about the value of planned giving, and to its donors about the work and mission of the organization.

The nonprofit should ask its board members themselves to make a planned gift so they can understand the gift-giving process and the impact it has on both the donor and the nonprofit, and so they can be prepared to ask other donors for planned gifts, McLeod says.

Nonprofits also should promote planned-giving in all their online, email and print publications, she says, giving donors an opportunity to identify themselves as prospects for making planned gifts, or to simply ask for more information about planned giving.

Nonprofits also need to begin visiting donors and asking for planned gifts, McLeod says.

“Ninety percent of planned giving is relationships,” she says.

And bequests alone represent roughly 75 percent of all planned gifts, with another 10 percent representing giving strategies like simple beneficiary designations on life-insurance policies or individual retirement accounts that function like bequests.

The remaining 15 percent involve more complex transactions, such as charitable remainder trusts, that donors typically make with the advice of their own professional advisers.

“Don’t let the 15 percent of the technical stuff get in the way of the 85 percent,” McLeod says.

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