Improve Your Planned Giving Program
Observations from the field

Quick News: That Spousal Election and Remainder Trust Law

Quick News: Still Following Direct IRA Contributions

Against the Grain
Could KETRA have been bigger?

Consulting News
A new client and a speaking engagement

Your Feedback
I’m interested in your opinion

“[W]hat you love about fundraising—meeting people and closing gifts.”

In the first of two parts, I will share three observations that hold back Planned Giving programs from achieving their potential or prevent new programs from emerging. (Part two will appear in the next issue.) All of these are born of good intentions but end up restricting the program they hope to expand. I advise you to avoid these traps.

Split responsibility
I commonly encounter institutions where responsibility for Planned Giving is part of a person’s job title along with another development function. I see “Director of Major and Planned Giving” often, but variations include the dreaded “Annual and Planned Giving” or even the triple-header “Corporate, Foundation and Planned Giving.”

The institutions with a development officer so named remain confident they have Planned Giving covered. Regrettably, they don’t.

Whenever Planned Giving is part of a shared job responsibility it always gets short shrift. Whatever it is paired with will have more immediate goals, shorter timetables and quicker results. That makes Planned Giving the lower, or lowest, priority. The non-profit that pairs Planned Giving with, say, Annual Giving, is deluding itself that the person in that job can spend 50% of their time on Planned Giving. It would be lucky to get 10 percent.

What’s especially unfortunate is that the organization recognizes the value of Planned Giving, or else the administration wouldn’t have staffed it. But recognizing its value, the program will not achieve its potential because it is not adequately staffed. The development officer will never devote enough time to Planned Giving.

Reliance on research
I often hear a fundraiser say they need more research before they can develop a cultivation strategy for, or try to meet, a suspect or prospect.

“I need a profile” is a common protest.

That is true for isolated cases, but for the vast majority of prospects it isn’t. If you know someone is 55 or over and you have one other piece of information that leads you to think they love your organization or they have considerable assets (and could love your organization) then you’ve got enough to go on. Devise a simple strategy or try to get a meeting. Sure, look in your constituent database to learn what your organization knows, but you don’t need a profile or further research at this stage.

Everything else you need to know you’ll learn when you meet the person. You can start your learning when you engage them on the phone to ask for the meeting. If they turn you down, all the research wouldn’t have helped and the research time will have been lost. (I don’t suggest giving up on the prospect. Just devise a longer term strategy to engage them subtly, through an event or mail channel perhaps. Then move to your next prospect.)

To pursue a meeting, you don’t need to know how many children your prospect has, what jobs they’ve held, who they know or how they feel about your institution. These all make great topics of conversation on the phone or face-to-face.

Focus on paperwork
If your office is like most I see it is under-resourced. You have to prioritize and you never seem to have the time you need. I understand.

Be careful, though, not to use paperwork and administration as a reason to never get out to meet suspects, prospects and donors. You need to set aside sufficient time to make calls to get meetings and leave your office to meet constituents so you can build the relationships that large planned gifts emanate from, however your organization defines “large.”

Can you devote one hour a day to making calls? At the end of the week you will have spent about half a day and you’ll probably have some meetings lined up. As you spend more time out at meetings, gift conversations will emerge and you can start feeling good about delaying paperwork. When gifts begin closing you’ll have a sound rationale for some administrative tasks not meeting the same happy ending.

I know this doesn’t happen overnight or in a week. I work side-by-side with development officers and I was one for seven years. I urge you not to let paperwork keep you from what you love about fundraising—meeting people and closing gifts.

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Remember the ruling or “Revenue Procedure” (Rev. Proc. 2005-24) from the IRS last summer that had the potential to rescind the charitable status of Charitable Remainder Trusts? Its potential impact is quite widespread. I explained it in the May-June 2005 issue and informed you of the controversy it created in the following issue.

As you’ll see in the May-June article, the IRS declared it would disregard the right of election for Charitable Remainder Trusts created before June 28, 2005, as long as the donor’s spouse did not exercise their right.

Now, the Service has extended that date indefinitely until it provides further guidance. Hold on and let’s see what guidance we get. I assure you I’ll report on it here.

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Senator Rick Santorum (R-PA) sits on the Senate Finance Committee. You will recall the recent charitable reform legislation emanated from there and the CARE Act hospiced there for years before its death. Vestiges of it remain in other bills.

The provision that allowed charitable gifts directly from IRAs was part of the Senate’s tax reconciliation bill and enjoys the privilege of being Senator Santorum’s highest priority. He wants it in the reconciliation bill that is scheduled to go to a conference committee in weeks. It did not pass in the House’s tax reconciliation bill. The House-Senate conference committee will determine whether it gets included in the bill that goes to both houses for final vote.

Recall, when this was part of the CARE Act it did not allow universal transfers to non-profits. It was only for donors beyond a certain age and not all planned gifts qualified. No point in remembering the past because what, if anything, makes it into the reconciliation bill could be very different. I’ll report it here.

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“The misunderstandings occurred at information sources and were fueled by skepticism at non-profits.”

The Katrina Emergency Tax Relief Act of 2005 created generous tax incentives for late-year gifts to all non-profits. It motivated substantial gifts throughout the country for mostly wealthy donors who could take advantage of the higher deductibility limits for gifts of cash. But in our experience, there would have been more gifts if the message had been more correctly disseminated and more widely accepted.

Most prominently, KETRA increased charitable deductibility from 50% to 100% of Adjusted Gross Income and suspended the 3% reduction on overall deductibility for high income donors. Our September article explains the many details and qualifications.

KETRA applied to gifts to all non-profits, not only hurricane relief organizations, and that was widely misunderstood in some circles for two to three of the four months the Act was effective. The misunderstandings occurred at information sources and were fueled by skepticism at non-profits.

In October, Practical Accountant Magazine, of all places, reported to practitioners that the deduction and limitation suspensions were restricted to gifts to non-profits engaged in hurricane relief. That restriction, in fact, applied only to gifts from corporations. Both the language of the Act and its technical explanation, written by Senate Finance Committee staff, made that explicit.

In November, I got an alarming phone call from a client. He informed me an IRS phone agent had told the financial advisor to a potential 6-figure donor that only gifts to hurricane relief qualified for KETRA’s tax advantages. I provided KETRA’s text and technical explanation to assuage the confused advisor.

As late as early December I was still trying to persuade the executive director of a social service organization that KETRA could be applied to gifts throughout the non-profit community. She agreed in time to capture a 5-figure gift. Might there have been more with willing acceptance and earlier communication to donors?

Similar anecdotes were reported to me by other consultants.

We won’t know KETRA’s impact until all the 1040s for 2005 are in and IRS can tally the KETRA elections. (Our last issue explains the election donors must make in this article). As an aside, the analysis could be tricky. We’d have to compare 4th quarter 2005 with the same period in 2004, but I don’t, at writing, know a source for gift data by quarter. Although KETRA giving started on August 28th I very much doubt there is a source for gifts by date, so that a quarter analysis will be as close as we can hope to come. Regardless, I strongly believe there was little KETRA-induced giving before the 4th quarter.

I fear the non-profit community was both subject to, and agent of, miscommunication and misunderstanding of KETRA’s value, and that it cost some gifts. I have no doubt we will see a considerable dollar value of KETRA elections. (We closed a $5 million KETRA gift reported here.) I will always lament there could have been more.

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• Symphony Space
  I am pleased that we recently started working with Symphony Space to expand the reach of their Planned Giving program. Located at 95th Street and Broadway, Symphony Space is a multidisciplinary performing arts center and prized cultural resource of New York City.


• Jewish Organizational Exposition and Fundraising Conference
  The event is April 25-26, 2006 at the Meadowlands Exposition Center and I will be speaking on the 26th at 10 o’clock. Event information is here.


• Visit our website
  At the Martignetti Planned Giving Advisors website you will find a full list of clients, consultants’ bios, archived articles from The Martignetti Report and recent company news

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I am always interested in your opinion of The Martignetti Report. You can send me a message from here with your comments. Or, you can always reach me through the company website

Best regards,

Tony Martignetti, Esq.
Managing Director
Martignetti Planned Giving Advisors

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