Case Study
Planned Giving

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Situation: Planned gifts, which include lifetime income gifts (i.e. charitable gift annuities, charitable trusts, etc.), and bequests are often the source of a large part of an organization’s endowment. These dollars may not be large today, but they allow organizations to connect with donors who can support their cause more substantially in the future. Cornerstone has a planned giving client whose staff received a call from an unknown potential donor requesting information on a gift annuity based on a physical asset valued somewhere between $3 mm - $15 mm. The amount and range of values of this potential gift caused the staff to call Cornerstone for advice. It was an abnormal request in many ways, and the development team of the organization understood their fiduciary responsibility to both the not-for-profit and the other donors in the gift annuity pool.
Solution: Cornerstone guided the organization through their potential decisions, which involved requesting more information from the donor; obtaining a legal opinion on the ability of the gift annuity program, which is regulated by state law, to accept such a gift; and evaluating the effect of accepting such a large gift on the rest of the pool. We used this complex gift opportunity to also educate new members of the staff on best practices in the planned giving space, the “math” behind how gifts are structured, and the importance of considering other types of gifts when something this unusual occurs.
As development professionals, it is hard to say no to a gift; however, as stewards of the organization, the staff understood that more complex considerations were required. Ultimately, we assisted the staff in creating a communications strategy for this donor, which involved a charitable remainder trust rather than a gift annuity.
Results: Offering a charitable remainder trust allowed the organization to greatly minimize its risk while helping the donor to achieve his desired outcome. The donor, who had a distant connection to our client, appreciated the thought leadership provided by the organization and followed our advice to create a trust that met his needs without putting the organization in jeopardy.
This opportunity also gave Cornerstone the chance to train the development staff on proper protocols in these types of situations. In addition, we were able to work with the organization to greatly enhance their gift acceptance policies to better guide them in the future. By taking the time to fully understand the opportunities and risks of accepting complex gifts, the organization will be able to mitigate future donor relations problems.