You are already familiar with my disgust over congress letting this taxation law expire when they had years to deal with it beforehand.  Apparently David Bruckman of Citrin Cooperman Wealth Management agrees with me.

By David Bruckman
Personal Financial Planning Advice from your FAMILY FINANCIAL CONFIDANT™

Estate Planning in 2010-Effect of Congressional Inaction

As you may know, the estate tax expired on December 31, ...

<< MORE >>

http://www.kattenlaw.com/possible-one-year-elimination-of-estate-and-generation-skipping-transfer-tax-in-2010/

If you've been all wrapped up in the health care machinations in congress, and you haven't yet read my e-newsletter The Planned Giving Key^TM, it may have slipped your mind that we are beginning 2010 without a federal estate tax.  The above link to the e-newsletter from the esteemed law firm of Katten Muchin Rosenmann LLP discusses some of the issues that will need to be addressed if something isn't passed before December 31st.  

I have to say I'm stunned things have gotten to this point.  Our country is facing unparalleled deficits and our legislators let an important tax just fall off the page.  I'm not sure which horrifies me more, the mess this will make for estate planners (including the fact that state taxation will remain) the fact that these revenues are so desperately needed and no one cared enough to handle this in a timely manner, or the fact that heirs (probably already greif-stricken) will be mired in issues regarding capital gains, state taxes, wondering what the federal tax will be once it's decided and can they make it retroactive!

Some may think that 2010 will be a good year to die (just joking-ha,ha) - while you can't beat death you can at least beat the tax!  But when stepped-up-basis is eliminated it may create potentially huge capital gains exposure.

And what's a planned giving officer to do without an estate tax lowering technique?  Of course we know this isn't the main reason bequests are made but this is definitely not a good precedent to set.

What do you think of this mess?



P.S. You can sign up for our free planned giving newsletter, The Planned Giving Key^TM on our website www.breakthroughphilanthropy.com.  Holiday greetings and best wishes for the new year!

There's an old fable about a great storm that comes along and blows over the tall strong timbers - pillars of an important forest. But the younger, more flexible trees and plants sway with the winds and remain standing once the storm is over.  They become stronger with time and thrive and eventually become the pillars of another forest.

I think we can apply this today to the storm rumblings arising over how nonprofits are evaluated.  For decades the ratio between funds received and dollars spent on program vs. administration/fundraising has been the rule of thumb.  Supposedly, if more than 20% of income was going towards anything other than program, a nonprofit was not handling its finances properly; the greater the percentage toward program, the better run the charity. Perhaps this became a popular way to judge performance because it's so easy to decipher and it's so easy to understand. But it never made sense to me when looking at the bigger picture.

The call for more transparency has actually helped many supporters see the relationship of their support to the outcomes of a charity's work.  This is what should be a donor's rule of judgment in my opinion.  If one charity's ratio appears "better" than another's and the outcomes are equal for all intents and purposes, then it may be easier to decide which will get the gift.  But what if a charity has a less attractive ratio but significantly better results or impact?  I know where I would put my money.  Perhaps a nonprofit is willing to pay more for superior skills; perhaps travel expenses are higher because the reach of programs is geographically broader; perhaps the light bill is higher because people are working around the clock.  All of this could result in superior program results, despite a less attractive ratio. But donors don't want to think their gifts are paying a salary or the light bill. 

So, while greater transparency is helping to educate donors about how revenues are spent,  nonprofits will also have to better demonstrate how a new measure will play a role: the "success ratio".  Money spent vs. improvement or growth, or the lack thereof.  This doesn't mean that the program vs. administration/fundraising ratio will become irrelevant.  In fact, I think it will have a lot more meaning as just one piece of evaluating a nonprofit's work.

The willingness to be more flexible in the methods used to judge the worthiness of nonprofits is a definite sign that the philanthropic community is growing in knowledge and sophistication - and bodes well for a more productive future for this community.

What do you think?



P.S. You can sign up for our free planned giving newsletter, The Planned Giving Key^TM on our website www.breakthroughphilanthropy.com.  Holiday greetings and best wishes for the new year!

Here comes Thanksgiving, a holiday much beloved by many Americans.  While most of us gather with family members, often multiple generations, there are also lots of people who just get together with friends for a big meal of traditional treats and the good company.  

We sometimes have to put up with atrocious and aggravating travel arrangements, but let's face it - people want to be part of  this holiday. It doesn't carry the stress and imagined implications of spending New Years alone and the presents are usually food or wine so the pressure is off regarding gift giving for this event. There's the Macy's Parade to go to beforehand (if you're a visitor to New York City) and then football afterward so what can be bad?

Well, this year may hold some clunkers that we're not used to in such depth: cuts in salary and furloughed work days, prolonged unemployment, loss of home or credit rating, postponed retirement dates, education, or travel dreams. This time last  year we were fearing what has by now arrived. So, what is there to be thankful for?

How about, if you have so far escaped the unemployment horror?  You're bringing in the money you need! What if you fell in love since last Thanksgiving or if no one in your family caught the H1N1 flu?  How about if  your elderly parents are still healthy and they're living on their charitable gift annuity income so you don't have to worry if they can pay their bills? What about your favorite four old turning five, or the fact that this year your diet worked and you lost those pesky 20lbs, even if some of it was stress related.

I think, if you're breathing, you can find cause for thankfulness. In fact, in times like we've been living through since last Thanksgiving, many of us get a lot more basic about what makes us happy and that's not always a bad thing.

If you're in nonprofit development, which is the community I serve as a fundraising consultant, it might be a good idea to send out Thank You notes to donors now who have found ways to continue their support of your mission, or perhaps finally let you know that you're "in the will" or decided to find out how to handle that process. Certainly let your volunteers know you're grateful - there are certainly a lot more lately.  For those nonprofits that received large bequests, just when most needed,  thank your lucky stars.  

If nothing else comes to mind, be thankful for a four day week-end.  

I'm always pushing recognition and thanking donors.  I'm so especially thankful to my clients, who continue to feel my services are valuable in spite of tight budgets. I'm very thankful to be so lucky that I can work in a field I love and make a difference in so many lives. I'm so thankful for the joy my family brings me. I definitely want to thank everyone who reads this blog (THANK YOU!). 

Wishing everyone things they can be thankful for - Happy Thanksgiving.


P.S. You can sign up for our free planned giving newsletter, The Planned Giving Key^TM on our website www.breakthroughphilanthropy.com

Everywhere I look I see articles and "how to's" on social media.  What charity doesn't at least "tweet", have a page on Facebook and a YouTube account? It seems to me that every nonprofit has bought into the idea that if your not involved in social media, you're missing out and you'll be less competitive.  Great marketing of course! What else would you expect from media?

But, in reality, how much is really being raised from these resources? My understanding is: not much.  Great visibility but very little money.

Well, I understand that, once mastered, these sites are great fun and present new ways to interact with donors and prospects. Hey, I'm a fundraiser - I know relationships, cultivation, stewardship, and connecting constituents are important to success. Yet how close can you get to donors when everything is for everybody?  Where's the personal touch?  Yes, you can get out more information, but how does someone feel more special to a nonprofit when the contact comes through a video or page that's usually visible to the whole world?  

Of course, traditional fundraising methods are also being used - thank goodness. Still, I wish planned giving was as much fun as social media.  Maybe then it would attract as much attention from nonprofits as do Twitter or Facebook.  I have to admit, planned giving is not as well known. But it should be because it definitely brings in a lot more money that any social media site, hands down.  In fact, according to Giving USA 2009, it brought in $22.6 billion dollars, almost 8% of all money raised in 2008.  

If nonprofits paid just half as much attention to getting planned gifts as they do to what they can say with only 140 characters, I'll bet their endowments, programs, and staff would be in much better shape, even in these tough economic times. And, they'd be closer to their donors than they ever imagined.

So, I know it's not as much fun but aside from that, can someone please explain to me why social media trounces planned giving? 

Once again Wall Streeters have found a way to take an old idea and make it dangerous enough to ruin people's lives. First it was different types of bundled mortgages; now it's life insurance.

http://www.nytimes.com/2009/09/06/business/06insurance.html?th&emc=th

Wall Street Pursues Profits in Bundles of Life Insurance

While there were many factors that contributed to the current recession, the demise of once esteemed financial institutions is certainly a major factor and can be directly attributed to the greed behind the creation of new forms of mortgage backed (and not so backed) derivites and "bonds". 

Mortgage backed securities are not new to Wall Street.  I was trading them myself, as an over-the-counter and third market trader for various firms and banking institutions a few decades ago. But, these new securities were reworked versions and became so convoluted that no one could determine their value and they could no longer be traded. They were labeled "toxic" and it stopped business in it's tracks - globally.   Hello major financial collapse and recession.

But before the fall, Wall Street made bazillions on these securities.  And they were so unscrupulous that they continued to offer these securities even after the problems began to surface. The very people who created these toxic securities could no longer figure out their true value - they knew they were a mess but continued to offer them anyway because the word hadn't gotten out yet.

So, now Wall Street has another new idea about an old market - the viatical insurance market.

What's viatical insurance? Basically, people with a very limited time to live sell their life insurance policies at a discount to the death benefit.  They get to use the cash before they die and the people who buy these discounted policies get the full death benefit when the time comes. This market has been around for a very long time and became quite active when there was zero long-term life expectancy for AIDS victims.  It fell off a lot when people with AIDS started living much longer lives and the value of the transactions diminished.  Of course there is still a viatical insurance market, but it's mostly been handled in the insurance industry.

Most people I speak with are unsure how permanent life insurance works to begin with. This includes many Wall Street traders and brokers who make millions and own life insurance because they want to protect their families' lifestyle if something should happen to them. Usually, people are totally confused about cash value, premiums, built in costs, death benefit expenses,etc.  They just get it for protection for their family, or to leave something to friends or a beloved charity. This is what insurance does.

Well, back up the truck because Wall Street has found a new way to put together a complicated derivitive with a huge return: bunching life insurance policies into pools (like those "sick" mortgages were) and marketing them. 

People will be able to sell their life insurance policies and receive more money than if they just cashed them in, or worse let them lapse. Then Wall Street will package the policies into "securities".

But, we've seen how greed on Wall Street works.  What if the insured people behind these policies don't die soon enough to make the policy pools a good investment?  Will these people be hiding from Wall Street traders (or their hit-men) trying to improve the value of their pools? Kind of scary isn't it? Maybe even very scary.

For hundreds of years, Wall Street grew rich on good corporate financial values - good earnings, innovative management, low debt ratios, etc .  Why don't they think this is a good idea any more?

Some of you may be animal lovers (I am) although from the stories covered recently by the New York Times and The Associated Press, there may be a real shortage of dog lovers now that Leona Helmsley is gone.

A.S.P.C.A. and Others Want More Helmsley Money to Help Dogs - NYTimes.com

Associated Press: Animal Groups in Court Over Helmsley Fortune.

Most often, the charitable gifts folded into estate plans are the extension of support for things that mattered very much to the deceased in life. The late real estate mogul’s wife and hotelier Leona Helmsley, sometimes referred to in the media as The Queen of Mean, had a charitable trust so we can guess that philanthropy was a part of her life.

We soon learned after her death that what mattered to her most was her doggie Trouble, and others like him. She apparently cared most about dogs – unconditional love, a desire to please, usually cute and needy of someone to care for them, and above all trustworthy – hard to resist if I say so myself. :)

But it seems that the people she trusted to implement her last wishes are not great dog lovers and obviously cared about Leona even less.(No wonder she left her money to dogs!) While many of us may find her estate planning unconscionable (or not), those who were supposed to guide her in the process were either too dumb or too smart to argue with her about legalities and possible pitfalls arising from the way her plans were drawn up.

Still, this was a woman of wealth, capable of major change. Where is it written that the wellbeing of man's best friend (and apparently Leona's too) is not worthy of philanthropy. Her last wishes should be adhered to rather than sadly or vindictively disregarded by the living powers that be. It’s outrageous that her remaining wealth is being distributed in a way almost totally unrelated to her written instructions. If these were the people of responsibility in her life, no wonder she left her wealth to the dogs!  

So where’s the person who suggested this gift to Mrs. Helmsley? Where's the fundraiser who helped her with this planned gift? Leona’s may not be a perfect example since I can’t imagine anyone actually soliciting her for anything but if someone actually did talk to her about planned giving, why have they not spoken up sooner! The trustees, the judge, and even the Attorney General seem to be ignoring the deceased’s very expressed wishes, and no one is owning up to actually helping create this planned gift. It was left to three potential beneficiaries, each well regarded humane and animal rescue organizations to challenge what’s happening. Good that someone is doing it!

Think how you would feel knowing that you have the ability to create a legacy for a better world but it's pointless to even try to implement it because once you're gone it's a sure thing other people will do whatever they want with your legacy. 

I don't believe it's the job of the fundraiser to ensure donor intent is fulfilled but you have to be acting in good faith as a solicitor when you seek a gift.  It's up to the nonprofit board to make sure they adhere to the wishes of the deceased. And it's supposed to be the job of all the trustees, executors, attorneys in the Attorney General's office, etc. to ensure this is done properly.  The challenge to Leona's bequest is coming from "wannabe beneficiaries" because apparently the sound of Leona's last wishes can only be heard by dogs - and those who care for them, of course. 

What do you think?



P.S. You can subscribe to my e-newsletter, The Planned Giving Key^TM on my website www.breakthroughphilanthropy.com

In the upcoming issue of my e-newsletter, The Planned Giving Key, scheduled for publication this Tuesday, August 4th, I make reference to a former client and one of my favorite nonprofits. This organization, which never (to my knowledge) raised more than mid-seven figures prior to the recession, is in the process of receiving an extremely large bequest. 

Distribution to them begins shortly and will probably save quite a few jobs and salaries, not to mention valuable programs. I'm guessing some of the windfall will also go towards their endowment because it was hurt like everyone else's, and I have to think that my constant harping on planned gifts going to endowment was heard. 

Occasionally, nonprofits receive bequests and they're surprised because they can't identify the deceased.  This nonprofit has been actively soliciting bequests and other planned gifts for many years and I can say with certainty the surprise in this case was definitely the amount.  It 's possibly the biggest such gift they've ever received, and I'm so happy for them.  Good times or bad, this is a wonderful gift.

Do you think any of the banks that are choosing to close so called "smaller" planned giving accounts gave any thought to the possibility of my former client's situation occurring for their soon to be "orphaned" nonprofits? It's hard to understand the reasoning in throwing out a client that already exists. Even if they're small, surely they're expected to grow and those assets would presumably remain with the bank.  If these banks want to only open larger accounts in the future, OK-that's certainly one method of upgrading assets under management.  But why get rid of business already on the books? I'm guessing it's not that the assets are too small, only the fees generated. 

Let's face it - banks think BIG - not necessarily smart but definitely BIG. This morning, the headline of a lead article in today's NY Times Business Section read something like: Bankers Reaped Lavish Bonuses During Bailouts "Thousands of top traders and bankers on Wall Street were awarded huge bonuses and pay packages last year, even as their employers were battered by the financial crisis".

I have more than 17 years of over-the-counter trading for various Wall Street firms and banks under my belt - I firmly believe in earned bonuses. It seems to me that banking's commitment to serve nonprofit clients should be at least as strong as its determination to pay outrageous "unearned" bonuses to those who have really hurt them. We know the reason for not wanting a nonprofit's small account, but what's the reason behind wanting to pay a lavish, unwarranted bonus?  

I'm somewhat reassured and gratified that there are several other banks that handle planned giving investment and administration that are scurrying to find these rejected nonprofits. I hope every nonprofit planned giving account thrown out by a bank due to its size receives a staggering bequest or planned gift after it finds a new home. I'll be happy to work on it for them!

What do you think?


P.S. You can subscribe to The Planned Giving Key^TM on my website www.breakthroughphilanthropy.com

I'm on a mission to make Planned Giving a "household word" in the nonprofit community. 

After consulting for several years now, it's become clear to me that "planned giving" is actually more of an exotic than commonly understood term. Lots of nonprofit leaders know the words, but so many don't know what it really means or the incredible impact it has on a nonprofit's bottom line. If better knowledge and understanding about the topic prevailed, it would become far more widespread among charities - no question about it.

When I bring up planned giving in conversations with nonprofit leaders, both professionals and board members, I can't believe how often I get one of the following reactions:    

        You know, we have to get into that at some point - we keep talking about it but we don't do anything;
        We're not ready for it yet;
        We can't afford to hire someone with planned giving expertise;
        What's planned giving?

If you fall into one of the above situations, please sign up for my FREE webinar on July 21st at 1:00PM: PLANNED GIVING - HERE'S WHAT IT IS - HERE'S WHAT IT TAKES
http://www.ventureneer.com/planned-giving-here%E2%80%99s-what-it-%E2%80%93-here%E2%80%99s-what-it-takes.

Planned giving 
     brings in a practically guaranteed cash flow; 
     strengthens donor loyalty;
     leads to larger gifts; and 
     is a nearly perfect  way to grow endowment. 

If your charity is around for more than seven years, has a growing and committed donor base of individuals (people), and a mission with a logically long time-frame, you and your donors can be reaping the excellent benefits of this type of fundraising program.  

Planned giving is not just gift annuities.  Planned giving isn't only for seniors.  Planned giving is not always too complicated and complex. Planned giving is simply another charitable option for your individual donors and successful programs will inevitably help support your charity forever.  It takes two things, the willingness to ask (as is the case with every charitable gift) and the willingness to wait - sometimes it's referred to as deferred giving, for obvious reasons, and it's usually a longterm proposition.  

Planned giving programs present an image to the world of longevity, credibility, financial stability, and serious impact.  It says, our mission is ongoing, our supporters believe in us, and we plan to always be relevant.  

Keep in mind that today's planned giving solicitation helps tomorrow's budget or endowment, and believe me tomorrow is definitely coming.  Hopefully planned giving will become more of a "household word" by then.  I'm going to keep working on it!

When I went off to camp as a kid, I hated playing sports in the first few days. I was tinier and scrawnier than my fellow campers and inevitably I was the last and very reluctant pick when the team captains were deciding which players would be best. Then, whoever got stuck with me either benched me or stuck me way in the outfield or in some other "unlikely to be important" spot for the game.  

It wasn't until camp was in full swing that they got to see how athletic and valuable I could be as a player because they mistakenly overlooked my talent as a runner and very spry jumper, thanks to my tiny build. 

Is it any wonder that when I grew up I chose to become a fundraising consultant specializing in planned giving? Not just a fundraiser - a planned giving fundraiser! I understand from whence being overlooked comes. 

So often, when nonprofits work at expanding their development revenues, they look at the obvious but not always the easiest or smartest way to go: 

• They may decide to add an annual event, which can be a very labor intensive process. 
• Others look towards strengthening an existing major gifts campaign, or creating a new one or raising their levels of major gifting. This can get really complicated. 
• And there's the direct marketing campaign which may help raise giving levels and bring in new supporters - or not. 

Executive Directors and VPs of Development nod their heads and say it won't happen overnight but will eventually prove successful because every professional fundraiser knows that building campaigns and developing new money-raising avenues takes time (I know this too).

So, what's missing? Do I even have to say it? The campaign that will absolutely be a slam-dunk: where's the planned giving campaign!?!  This is something that will, without any doubt, result in more gifts than if there' s no campaign for it.  With no qualms at all - I GUARANTEE IT!  If people are regularly giving you money,  then you can ask them to leave you money. 

I've asked some development professionals why they're "not in the game" and their replies are something like "who wants to think about death?" or "I'm concerned I'll offend our donor." Some even admit that they think it may be complicated (like fundraising isn't often complicated). And - most shocking - I've even heard "what's planned giving?"

If you're not using some form of planned giving fundraising, I suggest you re-evaluate what you're using to win more gifts. More and more charities are using planned giving as an extra way to stay in touch with their donors during this recession. It will definitely bring something new to your "team" and make your organization more competitive. I wouldn't be so passionate about it if I wasn't sure.

You can also check out my FREE webinar entitled: Planned Giving - What It Is - What It Takes, on July 21st at 1:00PM.

Here's the link to register:  
http://www.ventureneer.com/planned-giving-here%E2%80%99s-what-it-%E2%80%93-here%E2%80%99s-what-it-takes