What Your Board Should Know About Planned Giving
Trustees' support is critical

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“[Y]ou will minimize questioning of your program if you properly manage expectations.”

I spend a good deal of time acquainting our clients' boards of trustees with what they need to know about their organization's Planned Giving program. Following is some of what I would report to a board that has approved inaugurating a program.

This may prove valuable to you even if you have an existing program. My experience is that trustees are generally not well informed even where a program has been in place for many years.

Whether your program is inaugural or mature, board understanding and support are essential. Your trustees can be very good prospects, can lead you to other prospects, and can help you with cultivation and solicitation once they grasp the basics. As fiduciaries, they need to know the program's risks and why it's worth spending current dollars for long term future payoff.

Plus, you will minimize questioning of your program if you properly manage expectations.

Here are a number of topics to start with.

This is long term fundraising. We are expending current dollars for long term gifts of cash. We market planned gifts to prospects age 55 and over and most planned gifts mean cash to our organization only upon the death of the donor. There are current income possibilities, like the lead trust and some gifts of life insurance, but they are the exceptions. Don't count on planned gifts to fund next year's salary budget or the five year capital plan.

Building endowment. Planned gifts typically have a 10 to 25 year lead time before we will recognize cash received. In most cases the time horizon will depend upon the ages of our planned gift donors. Planned gifts are ideal for building our endowment because they will often be restricted to program purposes for perpetuity.

Current balance sheet impact is not uncommon. Though many years may pass before we recognize cash, there are frequent opportunities to recognize a current increase to net assets. Working closely with our CFO, we can quantify and book the present value of the expected income for all of our irrevocable gifts.

You need a basic understanding of the gift vehicles. We need you to understand all the types of planned gifts—revocable and irrevocable. As our ambassadors, you can open conversations for follow up by development staff, so you need to develop comfort with the basics of Planned Giving vehicles. As we discuss them, you may start thinking about which vehicle is most appropriate for your own gift.

Our goal is 100% board participation. Donors will expect you, the institution's closest and most trusted volunteers, to lead the program with your own planned gifts. Only full board participation will give you, our CEO and the development staff credibility when soliciting leadership level planned gifts from non-board major donors.

Most planned gifts will be revocable bequests. Bequests comprise the vast majority of planned gifts. Count on them for at least three-quarters of the total number of gifts in our institution's program. This has enormous implications for stewardship, which will always be integral to the program you have approved. We don't want any of our donors to change their mind about their gift.

Our investment committee has considerable responsibility. We need the committee that oversees our endowment management to take responsibility for financial management of our planned gifts. Best practice is to hire a commercial fiduciary for day-to-day money management, administration, and trusteeship. We need our investment committee to oversee the work of that provider.

We should not act as trustee of trusts. There is too much potential liability for us to act as trustee or co-trustee of charitable trusts. If a donor becomes unsatisfied with “their” trust's financial performance, or if a disgruntled heir sees a potential challenge to the way the trust was invested, our organization may find itself on the undesirable end of a lawsuit.

There is risk in our Charitable Gift Annuity program. You need to recognize that every gift annuity executed by a donor is a contract that obligates us to make annuity payments irrespective of the investment performance of their gift or of our entire gift annuity fund. We can minimize the risk through prudent gift policies, conservative management and thoughtful oversight, but we cannot eliminate it.

Help us with prospects. After the finance committee's responsibilities, the most important contribution you can make to our Planned Giving program is to consider yourself a prospect and help us with other planned gift prospects. Help us meet, cultivate and solicit them. Our development staff will support you all the way, but we need your influence to open doors and keep the process moving.

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• New clients
  We are delighted to recently have been appointed Planned Giving counsel to Abilities! and The Long Island Museum of American Art, History & Carriages. It will be a pleasure to work with Vice President Susan Gordon Ryan at Abilities! in Albertson, NY and Jackie Day, President & CEO of the Museum in Stony Brook, NY.
  
  Thank you both for placing your confidence in us.



• Great gift news
  After we secured authority from the state of New Jersey for client Englewood Hospital and Medical Center Foundation to execute Charitable Gift Annuities, we embarked on aggressive marketing. In August they closed their first one—for $100,000. Congratulations!

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I am always interested in your opinion of The Martignetti Report. You can reach me through the company website

Best regards,

Tony Martignetti, Esq.
Managing Director
Martignetti Planned Giving Advisors

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