NOW IS THE TIME TO START YOUR BEQUEST PROGRAM!

Could your organization use more money?

For most nonprofits, churches and synagogues, bequests are the most undervalued and under-accessed revenue stream. These end-of-life gifts can be used to enhance the quality of your programs and services, and in more and more cases they can serve as a financial safety net in the toughest of times. Established organizations with a significant number of prospects have the best chance for bequest success. If your organization, church or synagogue has 10 years or more of history and a market of at least 300 prospects, it is always the right time to start a Bequest Development Program. Here are some of the reasons why:

• It is estimated that bequests comprise upwards of 80% of all end-of-life charitable gifts.
• In 2011 charitable bequests totaled $24.5 billion, a 12.2% increase from the previous year.
• Various studies have indicated that 8-18% of decedents leave charitable bequests.
• Studies have also indicated that many more people would be willing to leave charitable bequests if asked.
• Like other major gifts, the relative development costs are low.
• In most instances, the majority of the prospect cultivation has already been done.
• Bequest prospects are easily identified and prioritized.
• Bequests do not compete with lifetime gifts and have been shown to positively impact lifetime giving.
• Bequests can mean millions of dollars in new, untapped revenue.

While the general case for bequest development is ongoing, evident and strong; there are several factors that make right now the opportune time to start. These include:

• The greatest generation of US philanthropists are aging. From our schools, to our churches, to our community agencies, they have built the institutions that provide essential programs and services to our communities and they care about what they’ve built. We have relied on them for support year in and year out and they have responded. What happens when they are gone?
• The Great Recession has negatively impacted the charitable giving of many of our donors. Particularly our older ones; those who are on fixed incomes. They are frightened that they might “outlive” their money and be left without resources. They want to help, but are reluctant to give at past levels or even at all. Gifts from their estates, particularly residuary and contingent ones, are less threatening to their sense of security than lifetime gifts. It gives them an opportunity to make a difference to the causes they are passionate about, forever.
• The Boomers, our largest generation, are at or approaching retirement age. As a result, many of them will be reviewing their financial and estate plans, and rewriting their wills and trusts. This is a great time for them to consider a charitable bequest.
• Estate and Gift Tax laws are in flux. While we do not know exactly what the changes will be, we do know that any changes will necessitate the review of financial and estate plans for many of our donors. These reviews offer the perfect time for them to consider and integrate a charitable bequest in their plans.
• The bequest development field is still not crowded. The competition for bequests is not nearly as intense as the competition for annual, capital and other lifetime gifts.

Can you imagine if your predecessors started a Bequest Development Program 5, 10 or 15 years ago? Think of how much easier it would be to manage the finances of your organization, church or synagogue today...

There is an old aphorism that goes something like this… the best time to plant a tree is 20 years ago. The next best time is now. As volunteers and professionals we have accepted the responsibility of leadership. Those of us with the wisdom to understand the positive and even existential impact a Bequest Development Program can have must find the courage to muster the resources to begin now.

By Irv Geffen, CoreStrategies Strategic Partner

Legacy Now Program

Is a Strong Conflict of Interest Policy Enough? A Morality Play, Act I

The University of Miami and its president Donna Shalala got an early but ugly Valentine on February 13 when the community woke up to a front-page article in the Miami Herald entitled, "Shalala’s side job stirs up concerns." It turns out that Dr. Shalala has been sitting on two corporate boards with her trustees’ blessing. The fact that she is making for her board service more than $360,000 each year – on top of her greater than $1 million annual salary from the university – in a time of upset with the One Percent wasn’t the biggest shock. It was that the corporations are owned by university trustees.

First, I must say that I have always held Dr. Shalala in the highest regard and I trust that her ethical standards and those of her trustees Roger Medel (Mednax) and Stuart Miller (Lennar) are above reproach. I’m confident, too, that all three organizations involved here have strict conflict of interest policies to which they adhere. But that doesn’t mean that those who care about the University of Miami shouldn’t be apprehensive.

When working with clients I always suggest that the litmus test for any decision is how you will feel if you wake up one morning to find the resulting situation on the front page of the newspaper. Tuesday the 13th, it was. And the response wasn’t pretty, if the Herald’s Flashpoint comments on the Opinion page were indicative. This is a private university that relies on big donations, a number of which Dr. Shalala has personally influenced. The university is just kicking-off a $1.6 billion – yes, with a “b” – campaign. I have to wonder if this publicity won’t, at least in the short term, negatively affect charitable giving and consequently what the university can offer.

I worry about the independence of a board where there is so much overlap of leadership. The university and the community are not well served if, even at a subconscious level, trustees and/or the university president hold back from sharing their most creative ideas or raising challenges and critical issues – responsibilities inherent in good governance – because they are afraid that showing vulnerability in one setting will impact their role in another. Moreover, any other trustee who hesitates to speak his/her mind because s/he isn’t part of a perceived inner circle ultimately cheats the university of his/her best efforts.

A related concern is that by going back to the same small group of community leaders to sit on so many of our boards, we are getting only one, relatively homogeneous view of what the community needs. While presumably an intelligent view, it is still an insular one. More diversity on our boards could only benefit the university and the community as a whole.

I can appreciate why any CEO would want someone of Dr. Shalala’s caliber on his/her board. But she doesn’t have to sit on a board to offer insights. If she is going to sit on a board, she’d be wise to steer clear of the boards of her own trustees. The University of Miami Board of Trustees should insist on this. After all, that group is responsible for ensuring the health of the university. It can’t risk the loss of independence, diverse thought or potential donations.

The university has been rather quiet about this flap. Time will tell what the fallout might be. But in my mind the situation serves as a morality play for other organizations. Having a conflict of interest statement is an important first step. But in scientific terms, while necessary it is not sufficient.

What are your thoughts? Is this a lesson other organizations should learn from? Or, is it much ado about nothing? Perhaps Dr. Shalala, with a lens already on her football team, is just too big a target and others don’t have to worry. Are there situations where it is appropriate for the CEO of a nonprofit to sit on the corporate boards of his/her own trustees?