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Where There Is a Will (Part 2)…

This post expands on some thoughts on Estate Planning (wills and trusts) that I discussed here initially on November 8.

Nonprofit (community benefit) organizations seek a mix of income streams so the mission isn’t dependent on one particular special event, or an annual campaign that may experience a bad year now and again.

An often overlooked source of revenue, particularly by small (budget less than $1 million) nonprofits is Estate Planning: income generated by donors who make a bequest in their will, or who establish a trust for tax or other purposes, or who make a planned gift through a charitable remainder trust.

Gifts to public benefit organizations through wills and trusts require some forethought by the donor. A donor who may be giving to your annual campaign now, and who is interested and committed to your organization’s long-term survival.  This person (more likely female than male) may have been asked by her attorney how she wants her estate to be distributed after the probate process is complete. If the benefactor takes some time to think about whom she wants to receive segments of her estate upon her death, she may be open to considering your nonprofit organization.  This is why many nonprofits have a note tucked in with or appended to the annual appeal letter, asking if the person has considered remembering the organization in her will.  Mentioning this in newsletters and other communication with donors can plant a seed that can result in a significant gift.

It is this thought process that prompts me to encourage public benefit organizations to have an Estate Plan attorney on your board of directors, or on your development committee, or serving as a special volunteer to advise you and your board.  To advise you on steps you can take to make your donors aware that a planned gift can make an important difference in what your nonprofit can accomplish.  The donor can request that her Estate Plan attorney contact you for information on options you can offer (if you participate in a charitable remainder trust, or other options) so it can be properly implemented.

I recommend that you examine and design your Planned Giving approach in compliance with all applicable law, that you adopt a gift acceptance policy (to address how you would handle real estate or gifts of common stock, and related issues), and that you have a small committee of competent people who are not seeking personal gain from these transactions (to avoid a conflict of interest).

Yes, there is a degree of complexity to Estate Planning and Planned Giving. But there are skilled people out there willing to help. I strongly urge you to find volunteers to do this work at no cost to you with a very clear understanding that their work with donors would do nothing to raise conflict of interest questions.

This is an area of giving too rich with potential to leave unattended. And it needs to be administered well, in a way that does not leave the donor wondering if you have their best interest at heart.

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