Non-Profit Board Members: 18% Increase in Planned Giving

Non-Profit Board Members: 18% Increase in Planned Giving

Executive Summary

Non-profit organizations heavily depend on planned giving to sustain their missions, but often board members, despite their dedication, lack the specialized financial expertise to optimize their philanthropic contributions. Golden Door Asset addressed this challenge by developing personalized financial plans for a leading environmental non-profit's board members, integrating charitable giving strategies that aligned with their individual financial goals and values. This proactive approach led to an impressive 18% increase in planned giving commitments within the first year, demonstrating the power of tailored financial planning in driving philanthropic impact.

The Challenge

The client, a prominent environmental conservation organization with a $5 million annual operating budget, recognized that its planned giving program was underperforming despite a highly engaged and affluent board of directors. While the board members were passionate about the organization's mission, many admitted to feeling overwhelmed by the complexities of charitable giving strategies, such as charitable remainder trusts, donor-advised funds, and qualified charitable distributions.

Specifically, a survey revealed that only 35% of board members had a formal estate plan in place, and even fewer (15%) had integrated charitable giving into their existing plans. This meant that a significant portion of potential planned gifts was being overlooked, primarily due to a lack of awareness and tailored guidance. One board member, a retired executive with a net worth of $3 million, expressed frustration, stating, "I want to leave a legacy, but I don't know where to start. I'm concerned about minimizing taxes while maximizing my impact."

The organization's fundraising team estimated that unlocking the potential of their board's planned giving could generate an additional $250,000 annually, a substantial increase that could significantly enhance their conservation efforts. However, without a structured approach to educate and empower board members, this goal remained elusive. The challenge, therefore, was not a lack of willingness to give, but rather a lack of knowledge and a clear, personalized pathway to impactful philanthropy. The current average planned gift commitment size was $50,000. They needed to increase this, along with the overall number of board members participating.

The Approach

Golden Door Asset adopted a multi-faceted approach to address the client's challenges and unlock the potential of their board members' philanthropic giving. Our strategy centered on education, personalization, and ongoing support.

Phase 1: Educational Workshops & Needs Assessment: We began by conducting a series of interactive workshops designed to demystify planned giving strategies. These workshops covered topics such as:

• Tax-Advantaged Giving: Explaining the benefits of donating appreciated securities, utilizing qualified charitable distributions (QCDs) from IRAs for individuals over 70 ½, and establishing charitable remainder trusts to generate income while supporting the organization.
• Estate Planning Essentials: Providing an overview of wills, trusts, and other estate planning tools, emphasizing the importance of incorporating charitable giving into a comprehensive plan.
• Gift Planning Options: Detailing various planned giving options, including bequests, life insurance policies, and charitable gift annuities, and illustrating how each option can align with different financial goals and charitable objectives.

Following the workshops, we conducted one-on-one consultations with each board member to assess their individual financial situations, philanthropic goals, and comfort levels with different giving strategies. These consultations involved a thorough review of their assets, income, liabilities, and existing estate plans.

Phase 2: Personalized Financial Plan Development: Based on the insights gathered during the needs assessment, we developed customized financial plans for each board member. These plans incorporated charitable giving strategies that were specifically tailored to their individual circumstances and preferences.

For example, for the retired executive mentioned earlier, we recommended a strategy involving a qualified charitable distribution (QCD) from his IRA to directly support the organization. Because QCDs are not included in taxable income, this strategy would lower his overall tax burden while simultaneously fulfilling his philanthropic goals. We also explored the option of establishing a charitable remainder trust with appreciated stock, which would allow him to receive income for life while ultimately benefiting the environmental organization.

Phase 3: Implementation Support & Ongoing Monitoring: We provided ongoing support to board members as they implemented their planned giving strategies, assisting them with tasks such as drafting bequest language, establishing donor-advised funds, and transferring assets. We also monitored their financial plans on a regular basis, making adjustments as needed to reflect changes in their circumstances or tax laws. This included regular communication about the performance of their investments related to planned giving and proactively suggesting adjustments to maximize their philanthropic impact. We provided annual reviews and ongoing support to ensure plans stayed aligned with their evolving financial situations and charitable goals.

Our decision-making framework prioritized aligning philanthropic goals with sound financial planning principles. We emphasized the importance of balancing charitable giving with personal financial security and long-term financial planning objectives.

Technical Implementation

The implementation leveraged a combination of financial planning software, data analysis tools, and personalized consultations.

• Financial Planning Software: We utilized specialized financial planning software (including integrations with eMoney Advisor and RightCapital) to model various planned giving scenarios and illustrate the potential tax benefits and financial implications of different strategies. These tools allowed us to create customized reports that clearly presented the impact of planned giving on board members' overall financial picture. The software’s Monte Carlo simulation capabilities helped demonstrate the long-term sustainability of their planned gifts.

• Data Analysis Tools: We employed data analysis tools to identify potential planned giving opportunities based on board members' asset holdings and tax profiles. For instance, we used these tools to identify individuals who held significant amounts of appreciated stock, which could be donated to the organization to avoid capital gains taxes. We also analyzed their IRA accounts to determine the feasibility of utilizing qualified charitable distributions (QCDs).

• Personalized Consultations: The core of our implementation involved one-on-one consultations with each board member. These consultations were conducted by experienced financial advisors who specialized in planned giving. The advisors worked closely with board members to understand their financial goals, charitable interests, and risk tolerance. They then developed personalized financial plans that incorporated charitable giving strategies that aligned with these factors. This human-centered approach was crucial in building trust and fostering a deeper understanding of the benefits of planned giving.

The calculations involved in our planning process included:

• Tax Savings Projections: We calculated the potential tax savings associated with various charitable giving strategies, such as donating appreciated securities and utilizing qualified charitable distributions (QCDs). These projections were based on current tax laws and individual board members' tax brackets. For example, we demonstrated how donating $50,000 of appreciated stock with a cost basis of $20,000 could save a board member $7,500 in capital gains taxes (assuming a 25% capital gains tax rate).
• Income Projections: For charitable remainder trusts and charitable gift annuities, we projected the potential income streams that board members could receive. These projections were based on the current interest rates and the terms of the trusts or annuities.
• Estate Tax Reductions: We calculated the potential estate tax reductions associated with charitable bequests. These calculations were based on the current estate tax laws and the size of board members' estates.

Results & ROI

The implementation of Golden Door Asset's personalized financial planning approach yielded significant results for the environmental non-profit.

• Increase in Planned Giving Commitments: Within the first year of implementation, the organization experienced an 18% increase in planned giving commitments, from $1.1 million to $1.3 million. This translates to an additional $200,000 dedicated to the organization's conservation efforts.
• Increase in Average Gift Size: The average planned gift commitment size increased by 12%, from $50,000 to $56,000. This indicates that board members were not only more likely to make planned gifts but also more willing to commit larger amounts.
• Increase in Board Member Participation: The percentage of board members who had incorporated charitable giving into their estate plans increased from 15% to 40%. This demonstrates a significant improvement in board member engagement and awareness of planned giving opportunities.
• Time Savings for Staff: By outsourcing the financial planning process to Golden Door Asset, the organization's fundraising team was able to focus on other critical tasks, such as cultivating major donors and developing new fundraising initiatives. They estimate a savings of 10-15 hours per week, allowing them to be more strategic and efficient.
• Improved Board Engagement: Board members reported feeling more informed and empowered about their philanthropic giving. This led to increased engagement with the organization and a stronger sense of ownership of its mission.

These results clearly demonstrate the effectiveness of personalized financial planning in driving philanthropic impact and unlocking the potential of non-profit board members. The $200,000 increase in planned giving translated directly into expanded conservation programs, demonstrating a tangible return on investment for the organization.

Key Takeaways

Here are key takeaways for other advisors:

1. Personalization is Paramount: Generic financial advice rarely resonates with clients. Tailor your approach to each individual's unique financial situation, philanthropic goals, and risk tolerance. This often requires in-depth consultations and a willingness to go beyond standard financial planning templates.
2. Education is Empowerment: Many individuals are hesitant to engage in planned giving simply because they lack the necessary knowledge and understanding. Invest in educating your clients about the various planned giving options and their potential benefits.
3. Integrate Financial Planning and Philanthropy: Don't treat charitable giving as an afterthought. Instead, integrate it seamlessly into your clients' overall financial plans. This will ensure that their philanthropic goals are aligned with their financial security and long-term objectives.
4. Provide Ongoing Support: Planned giving is not a one-time transaction. Provide ongoing support to your clients as they implement their planned giving strategies and monitor their financial plans on a regular basis.
5. Quantify the Impact: Clearly demonstrate the potential impact of planned giving on your clients' financial situation and the charitable causes they support. This will help them understand the value of your services and motivate them to take action.

About Golden Door Asset

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