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NEWS FEATURE: Memorial Gifts Ripe for Planned Giving

c. 2000 Religion News Service UNDATED _ When Steven Cooper’s mother died, he gave a $1,000 donation in her memory to the American Society for the Prevention of Cruelty to Animals. Not a sad story, he said recently. She was 93, she loved animals, and she was tired of living. Cooper’s relatively small, impulsive donation […]

c. 2000 Religion News Service

UNDATED _ When Steven Cooper’s mother died, he gave a $1,000 donation in her memory to the American Society for the Prevention of Cruelty to Animals. Not a sad story, he said recently. She was 93, she loved animals, and she was tired of living.

Cooper’s relatively small, impulsive donation led him to make a much larger, very carefully planned gift that benefited him as well as the ASPCA.

Both Cooper and the charity took advantage of a newly popular financial deal _ a charitable remainder trust. Using this trust, he was able to give a donation in the mid-six figures, while providing himself with a new source of income.

Charity fund-raisers are increasingly hip to a dozen or so sophisticated financial tools; the charitable remainder trust is the most commonly used. Charity fund-raisers used to be, by and large, content to put a hand out for a check or cash. Now when they approach a potential donor, they sound like financial managers.

Planned giving through a trust is especially hot now because the booming economy means large numbers of people, including some with relatively low incomes, find themselves with stocks or real estate that has grown in value in ways they didn’t expect.

Donors can transfer their stock bonanzas or real estate windfalls to an irrevocable trust that holds the assets for a charity. The donor not only gets a tax deduction for his gift but, because the assets are destined for charity, pays no capital gains tax on their increase in value. And the donor gets the interest as extra income; Cooper will receive checks for 6 percent of the fair market value of the trust’s assets every year for the rest of his life.

The ASPCA gets what’s left when he dies _ that’s the remainder part of the charitable remainder trust. Or, as Cooper, 52, put it, “In the event that I die, which I have no intention of doing, the ASPCA gets the balance.”

Cooper, a retired law school professor who lives in Dallas, did some Internet research on his own and then consulted with ASPCA planned giving director Mari Ellen Reynolds. Together they worked out the deal where Cooper gave a lot more to charity than he ever imagined he could.

Cooper got an immediate tax deduction for his gift of his mother’s home to the charitable trust.

The president of the National Society of Fund Raising Executives (NSFRE), Paulette V. Maehara, called the ASPCA’s approach to Cooper “a perfect example of continued cultivation.”

“This man made a modest gift,” Maehara observed. “Then someone was astute enough to recognize the potential for a larger gift in this situation. Memorial gifts are ripe for planned giving.”

Up until 10 years ago, for many charities “planned giving” meant simply getting supporters to plan to leave the charity a bequest. Colleges and universities, though, with their large development staffs and captive alumni audience, were ahead of the pack.

For decades, universities have been offering variations on the simple bequest; there probably isn’t a college graduate in the country who hasn’t gotten a letter suggesting three or four new ways of giving. Charitable remainder trusts in their current form aren’t brand new (they were created by Congress in 1969), but many nonprofit groups are playing catch-up in the planned giving field.

Charities wouldn’t mind having a check in hand this minute, or an uncomplicated bequest, but the charitable remainder trust usually provides more money in the long run along with a certain added stability.

“If people are wondering whether we’ll be here in 50 years, I can say, `Yes, we will, because of people like Steven Cooper,”’ Reynolds said.

Still, fund-raising leaders like the NSFRE’s Maehara are afraid someone could poison the well. Fund-raisers, she stressed, have to take great pains not to seem to be exercising undue influence. The NSFRE ethics code emphasizes that the donor’s interest must come first.

But the most notable recent shady deals occurred on the donor end. This past fall, the Internal Revenue Service shut down a form of charitable remainder trust nicknamed the”chutzpah trust.”By this deal, marketed by for-profit financial planners rather than by the charities, donors could get back most of their trust largely tax-free by manipulating the timing of the pay-out. The charities ended up with little or nothing.

Increasingly the biggest financial companies are folding charitable giving advice into their financial packages for customers, according to Nelson Aldrich, who writes about philanthropy for Worth magazine.

The financial service-charity complex is “a huge and growing business,” Aldrich said. “The mosquitoes come out in the spring when there’s a lot of water lying around. There’s an awful lot of liquid money lying around these days.”

“The charitable institutions, the great cultural and scientific and medical institutions of this country, are bound and determined to get their lifeblood while they can,” he said.

The competition among fund-raisers is growing, but they have to be careful not to push a hard sell. Cooper and Reynolds joke good-naturedly about the death part of the trust, but the sensitivity of the topic is inescapable. The essential message fund-raisers have to deliver is really pretty stark _ “You’re going to die. Give me your money.”

The masters of the new forms know how to soften the blow. James Gillespie, a former minister with an extraordinarily soothing voice, teaches planned giving at the Indiana Center on Philanthropy, is on the board of the National Committee for Planned Giving, and runs a company that manages fund raising for clients including the Indianapolis Symphony and the Baptist Bible College of Indiana.

“They sure freak out when you say `when you die,”’ Gillespie said. “I use that euphemism `When you’re gone.”’

“You have to ease them into it,” he continued. “When I talk to donors, I want to talk to them first about their love for these four or five charities.”

His first obligation is to the charities he represents, though, and this is a moment full of tremendous opportunities.

“Take a look at the stock market and real estate values. We’re just surrounded by appreciated assets,” Gillespie said.

Back at the ASPCA, Reynolds sets the stage and then brings in the specialists. “First it’s me and the donor, just chatting,” she said. “If it’s an annuity or a charitable trust or a lead trust, then we get the lawyers involved.”

The ASPCA gives her a unique edge. Among the financial plans outlined in its brochures is a Pet Trust that “allows you to leave your companion animal in trust to the ASPCA. By bequeathing a gift to the ASPCA, the society will use its experienced resources to find your pet a loving home after your death.”

Cooper wasn’t primarily moved by sentiment; his take on his charitable remainder trust donation is practical and very much of this world.

“Like everyone, I can’t imagine the possibility of my own death,” Cooper said. “Basically this is a nice tax savings and the other part is almost irrelevant.”

Irrelevant? Reynolds laughed, “He’s a baby boomer; baby boomers think they will never die.”


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