A Planned-Giving Primer

Part I

As with many aspects of life and business, people often find ways to avoid those things that can be difficult to understand. This is the first of a two-part article that is designed to shed some elementary light on the subject of planned giving - a gift source oftentimes ignored because of a lack of knowledge of planned-giving donors, techniques and vehicles.

Below are a few basic vehicles used when structuring planned gifts:

Charitable Gift Annuity - A donor transfers cash or other assets to a nonprofit for its benefit. The nonprofit in turn gives the donor a fixed, annual dollar amount for as long as he lives. The principle remaining after death is the donor's charitable gift to the nonprofit.

Charitable Remainder Unitrust - A donor creates a trust, managed by a donor-appointed trustee. The income generated by the trust is paid to one or more donor-specified beneficiaries. The beneficiaries receive the income for their lifetime, or a period of 20 years - whichever is less, then the assets of the trust pass to the nonprofit.

Charitable Annuity Trust - This trust is very much like the Unitrust. The major difference is that the beneficiary receives a fixed annual income. The donor receives a substantial tax deduction at the time he or she establishes the Annuity Trust. The assets pass to the nonprofit after the lifetime of the beneficiary.

Charitable Lead Trust - A donor in a high gift- and estate-tax bracket establishes a trust. A fixed annual amount or percentage goes to the nonprofit for the duration of the trust; the assets pass to the trust's beneficiaries. This trust can greatly reduce estate taxes.

Wealth Replacement Life Insurance - A donor purchases a life insurance policy naming his or her heir as the beneficiary, assuring that the heir receives the gift after the death of the donor. The nonprofit is able to receive the gift or other asset during the donor's lifetime or after the death of the donor.

Part II of this article will explore donors' needs and how to satisfy those needs utilizing these tools.

Another Smart Idea...From the Hartsook Best Practices Collection^SM

"When soliciting a gift, don't be afraid to ask for more money than is in your 'comfort zone.' If the right person is asking at the right time for the right project, you will be successful. The best-case scenario is you will get the gift; the worst is that the prospect will be flattered you thought they could give such a high amount!" - Anonymous

If you are interested in Best Practices and smart ideas, see these additional resources from Hartsook Companies:

"Fundraising Magic - 33.5 Strategies for Turning Board Members into Money Makers" by Robert G. Swanson (2007, ASR Philanthropic Publishing). This book shares proven strategies you can implement immediately to give Board members the confidence and tools needed to cultivate donors, solicit gifts and strengthen your organization's position in the community. To order this book, follow this link http://www.ASRpublishing.com.
"Reality Fundraising: Proven, Practical Ideas for the Enlightened Fundraiser" by Bob Hartsook (2005, ASR Philanthropic Publishing). The book features great ideas, insights and lessons learned through hundreds of best practices from nonprofit professionals nationwide. To order the book, follow this link http://www.ASRpublishing.com.
"Best Practices Coast to Coast^SM," a compilation of best practices from every state in the union.
"Hartsook Best Practices Collection^SM," our original collection of 250 best practices and great ideas.

For a free copy of "Best Practices Coast to Coast^SM" or the "Hartsook Best Practices Collection^SM", please email Tammy Weinman, tammy@hartsookcompanies.com, or visit our web site at http://www.hartsookcompanies.com/bestpractices2.shtml. We also invite you to contribute your own best practice by emailing Tami Druzba, tami@hartsookcompanies.com.

Interested in Speakers?

Hartsook consultants are available to speak to your organization on a variety of topics. To read more, visit http://www.hartsookcompanies.com/speak.shtml or email Tami Druzba at tami@hartsookcompanies.com to discuss the possibilities.

Visit the Hartsook Companies web site for:

• Educational opportunities
• Books/reference articles
• Conference/workshop speakers

Strategies for Success explores smart ideas, connecting with more than 1,500 fundraising professionals bi-weekly. We welcome your contributions or comments. If you'd like a free subscription to Strategies for Success - or its monthly companion, eHartsook on Philanthropy - contact Tammy Weinman, tammy@hartsookcompanies.com. You also can reach her at 316.630.9992.

Our web site is located at http://www.hartsookcompanies.com.