First Citizens focuses on downturn’s upside

Carol Yochem
Carol Yochem

Todd Cohen

RALEIGH, N.C. — The economic gloom has a philanthropic silver lining, giving charitable institutions and individual donors an opportunity to focus on the basics of investing charitable funds, says the executive who oversees philanthropic services for First Citizens Bank.

“In working with clients, we have consulted with them to help take the anxiety and emotion out of the process and redirect the conversation to the fundamentals and the discipline of investing,” says Carol Yochem, executive vice president and head of wealth management for Raleigh-based First Citizens.

“What it really boils down to is, what are an investor’s objectives, whether a nonprofit or an individual,” she says. “What’s the time horizon and what are the risk tolerances?”

Managing just over $14 billion in assets for institutions and individuals, including its charitable clients, is the bank’s wealth-management unit.

The unit includes First Citizens’ brokerage arm, which serves mainly emerging affluent clients and works through its retail-branch network; its high-net-worth channel, which serves individuals whose needs may be more complex, often involving trusts, tax planning or gifting strategies; and its institutional group, which works mainly with organizations and includes philanthropic services.

Serving over 300 customers, mainly in North Carolina and Virginia, First Citizens’ philanthropic-services group employs 12 consultants providing advice and asset management to philanthropic clients.

Those consultants also partner with 17 professional money managers in the wealth-management unit’s capital-management group.

With First Citizens also providing basic banking services to thousands of nonprofits in the 14 states it serves, its wealth-management unit markets its philanthropic services to all bank associates so they can offer those services to their individual and nonprofit clients.

In addition to advising institutional and individual philanthropic clients on managing their investments, Yochem says, the bank’s philanthropic-services unit provides support for donors, gift administration, board development, fund accounting and planned giving, or gifts that are complex or deferred or involve assets other than cash such as stock, real estate or art.

The unit focuses special attention on educating nonprofit board members, both in their governance role and as individual donors, Yochem says.

Key issues for boards, she says, include the importance of investing in planned giving because it provides an ongoing source of future income, and on developing investment policies because they provide a tool for calculating risks and rewards.

The bank has seen a shift in giving strategies in the face of the steep decline in the capital markets, which has meant a “double whammy” for nonprofits because it has meant a decline in their own investment assets and in the net worth of individual donors, she says.

While many donors may not be giving outright cash during the recession, she says, they are making more gifts by designating nonprofits as the beneficiaries of insurance policies, individual retirement accounts and bequests.

Deferred gifts are doubly important in a recession, she says, because they help keep donors engaged in the nonprofits they support.

“You want your donors to stay involved in any way you possibly can,” Yochem says.

She also says the bear market represents a “contra-indicator” for philanthropy.

“If an endowment for a foundation is going to exist in perpetuity, then you want to not look at things from a short-term perspective, you have a very long-term perspective,” she says. “And it does get back to    reexamining risk tolerances.”

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