What is Strategic Planned Giving?

Summary:

A noted practitioner distinguishes between 'estate planning' -- what individuals do -- and the need for organizations to think strategically about how to connect with people who might include charitable gifts in their estates.

In a message dated 96-02-19 16:00:08 EST, Charles K. Alexander II wrote:
Dear Dr. Nill:

I am a graduate student in the Public Policy program at the University
at Albany. I recently made a copy of your posting on the ARNOVA list
serve of Jan. 24 called "The Wealth Release: A Primer", and discussed it
with the E.D. of the Albany Girls Club, Inc., where I am serving an
internship in development. I've found your postings on the Great Wealth
Release very interesting, and have raised the issue in both of my
classes on non-profits.

I'd appreciate it if you could clarify one point for me, however. What
exactly is the difference between traditional and strategic (planned
giving)? You are clearly an advocate of the latter, but did not explain
what makes it either strategic or more effective than the former in
tapping this coming wave of wealth. Strategic (planned giving) also
sounds like it is a fairly recent development, and I was wondering if
you could refer me to any literature on the topic?

CKA

Steven J. Nill replied:
Excellent question. Here goes:

Planned giving is the discipline of structuring a gift to a nonprofit
institution in such a way as to address the financial and tax needs of
the donor and the donor's family. It is, in my view at least, a subset
of estate planning, though it borrows heavily from financial planning
and asset management disciplines. Though it presupposes some element of
charitable intent, in my experience as an estate planning attorney and
in running several major nonprofit fund development programs, such
intent results from, rather than precedes, the gift-planning dialog.
Planned giving can be as much art as science; in the hands of a skillful
gift planner, a donor can often eliminate most if not all shrinkage to
his or her estate due to estate taxes, increase income, avoid capital
gains taxes on the sale of appreciated assets, reduce income taxes,
diversify assets, and eliminate the burdens of asset management. Planned
giving, then, is the view of the individual donor's particular financial
needs and wants, rather than the institution's.

The term "strategic planned giving" describes the institution's
perspective. In a nutshell, it applies to any program conducted by a
nonprofit institution which seeks to substantially enhance its fund
raising effectiveness by competing for the enormous wealth that is
released by a senior generation to a junior generation (i.e. the parents
of baby boomers to the baby boomers). It particularly seeks to project
the problem-solving power inherent in the charitable planned giving
provisions of the tax code (and which are the basic tools of the
discipline we call planned giving) to today's senior generation, i.e.,
the parents of baby boomers. Thus, strategic planned giving is the
"strategic view," that is, the view of an institution which seeks to
compete, say, for a share of the estimated $10.4 trillion in wealth that
is projected to be released by parents of baby boomers in the next 45
years or so.

Another way of viewing this is to consider the generational wealth
release as a giant wave of wealth. It addresses the question: How can a
nonprofit institution compete for it more effectively? I was pleased to
learn that the Canadian Association of Gift Planners is dedicating its
April national convention to the concept. It's called, "Catch the Wave,"
meaning, catch the wave of wealth release. The upcoming CASE convention
in San Francisco will also feature this topic at a plenary session.

Acceptance of the term has been remarkable, given that it was introduced
only in March, 1995. The fact that the term has only been in our lexicon
for less than a year suggests why we haven't seen more literature on the
subject, to date. The term was first introduced publicly in the March,
1995 issue of PLANNED GIVING TODAY, and was amplified in the August,
1995 issue. You may PLANNED GIVING TODAY via Internet at pgt@scn.org.

Stephen C. Nill, J.D.

(Steven C. Nill is the founder of Charity Channel where many discussion groups connected to nonprofits and their work are hosted. See http://www.charitychannel.com. -- Ed.)