Author: SP Consulting

SP Consulting, a division of The Scott Practice, LLC provides consulting services to assist NPOs in expanding their capacity while remaining in compliance with federal and state grant requirements. We work with midsized and small nonprofits on major gift fundraising, grant compliance and nonprofit start-up formations. For more information about our services please visit www.scottpractice.com

HOW TO ENCOURAGE DONORS TO MAKE ENDOWMENT GIFTS

Senior Woman Writing Letter

Despite today’s technologically inclined society, many clients of our estate planning practice do not use e-mail or even a computer. This is why it is ideal to mail, from time to time, a compelling handwritten letter to faithful and consistent donors. These less technologically savvy individuals are possibly more receptive to the development of an endowment and the prospects of leaving a legacy. Hence, a customized message that addresses key aspects of your endowment program may generate interest from those who consistently give, but have never been personally approached by the nonprofit organization. The more you can customize the letter with information unique to the prospective endowment donor, the more effective the letter will be. An example of a customizable letter is as follows:

Dear Donor Name:

We received your last contribution of $_________, which has helped us tremendously. We gratefully appreciate your generosity and consistent support of our programs. The steadfast support we receive from donors like you has enabled us to reach important milestones such as …(list a few examples).  But, so much more needs to be done to not only meet dynamic challenges which lie ahead, but also achieve sustainable organizational growth over the next ten to twenty years.

The future foundation of our organization rests upon how well we plan for tomorrow. Despite the temptation to solely focus our efforts on immediate programing needs, we know that financial stability and viability of our organization rests upon future planning. One way we address the future is though our special endowment program. If you have ever dreamed about leaving a family legacy, our endowment program may be a perfect way to fulfil this desire. We encourage you to talk with our planned giving advisor about the possibility of making an endowment gift through your will or other estate planning device.

Sincerely,

President of …

To learn about how we help nonprofit organizations with their major gift programs go to www.scottpractice.com.

Who is a Disqualified Person in a Nonprofit Organization?

Business Pressure  It is vitally important for leaders managing nonprofit organizations to understand who may be a “disqualified person” within the nonprofit organization to avoid engaging in transactions that may jeopardize the organization’s tax-exempt status. A disqualified person generally is a person who has a close relationship to the nonprofit organization such that they perceivably can exert substantial influence over the affairs of the organization. When identifying persons who may substantially influence the operations of the nonprofit, titles are not as important as actual responsibility. For instance, if an influential volunteer is given wide discretion, control and responsibility over a defined segment of the organization, he or she may be deemed to be a “disqualified person” despite the fact that he or she is a volunteer with segmental responsibility. Substantial contributors may also be classified as “disqualified persons” depending on the amount of influence the contributor holds over the organization. Determining who is a “disqualified person” is vital if the organization engages in any transaction involving persons involved with the organization. This is because there are certain IRS rules that penalize transactions with disqualified persons, especially if such transaction confers an excess benefit on the disqualified person. If the organization anticipates entering into a major financial transaction such as a loan with a potential disqualified person, the organization should seek the guidance of a lawyer or nonprofit tax advisor.

Starting a Planned Giving Program? Avoid These Common Mistakes

educational training

1. Poor Donor Cultivation

Planned Giving provides a unique opportunity for the organization to build a foundation of support from donors who share a connection with the organization’s mission. However, leadership must develop a clear strategy concerning how they will build and sustain donor relationships. Planned gifts generally materialize when there are concentrated efforts to cultivate existing and new relationships.

2. Not Investing in Donor Research

In the long run, the dividends an organization receives from its planned giving efforts can make a significant impact. The planned giving program can also be the difference that keeps the doors open when other funding sources fall short. However, planned giving is an investment of time, and donor research is one of the necessary time commitments. The organization must take the time to research and educate a large pool of prospects.

3. Lack of Program Visibility

Everyone in the nonprofit organization must be on board with promoting planned giving opportunities. The nonprofit’s planned giving program should be mentioned to existing and prospective donors at every function, on the organization’s website, in every donor newsletter, and during every donor visit.  If the nonprofit organization does not champion its planned giving program, no one else will.

4. Lack of Technical Knowledge

Planned gifts are generally substantial and formulated through complex estate planning arrangements. It is important that staff members receive proper training and development or hire outside consultants to assist with the technical aspect of the planned giving program.   Planned giving staff members should receive training on estate planning, financial planning and federal income taxation in order to present themselves confidently before prospective donors.

5. Unreasonable Expectations

Planned giving is a means to achieve a better financial future for the organization. Planned giving is about the future, not the present. Leadership must approach planned giving from a different mindset. Leadership must accept the reality of not seeing a payoff from its efforts for a long time, possibly years. However, because of the expected longevity in receiving a planned gift, the organization can set higher acceptance thresholds. For instance, the organization may require a certain dollar minimum or value before it accepts a certain type of gift. The longer the horizon before the charity receives the gift, the higher the minimum donation requirement.

For more information on establishing a planned giving program, contact us at info@scottpractice.com.

The Hallmark of a Great Gift Planner

Gift Planner

A great gift planner will:

  1. Honor Donor Confidences.  Making a gift out of estate assets may touch sensitive concerns regarding personal wealth and family expectations for some donors.  A great gift planner recognizes this and is sensitive to a donor’s concerns.
  2. Provide Information.  The gift planner should be knowledgeable about various gift vehicles and opportunities that best match a donor’s goals and desires.
  3. Meet With Advisors.  Sometimes a gift plan can be confusing and difficult to explain.  A great gift planner is able to discuss the plan in detail with a donor’s advisors so they have a good grasp of what the donor desires.
  4. Coordinate the Gift Plan.  A great gift planner is good at fitting all the puzzle pieces together.  She will help orchestrate the gift process with a checklist of steps and will move the process along so that the donor’s gift giving experience is stress free and enjoyable.
  5. Provide Ongoing Contact.  Once a donor has made a gift, a great gift planner will maintain contact with the donor to ensure that the donor remains connected with the organization throughout the donor’s gift giving cycle.

To request a brochure on our planned giving services call 1-888-206-0066.

REACHING DONORS WHO WANT TO MAKE AN IMPACT

Impact

There are various perceived motives that form the basis of charitable intent. Three prominent economic models that explore altruism include 1) the public goods model, 2) the warm-glow model and 3) impact philanthropy. Many of our strategies focus on theories discussed in Brian Duncan’s “A theory of impact philanthropy”. The impact philanthropy model states that donors who give primarily to make a difference receive utility when their gift causes a direct change or impact on a social condition. These donors enjoy knowing how their gift directly benefited the cause of their concern. A nonprofit organization can increase its level of contributions by focusing its attention to impact donors. Although there are varying motives for giving, impact donors greatly enjoy the opportunity to target their donation because they appreciate seeing the impact of their giving. Conversely, these same donors do not like funding general operations because the use of their donation does not achieve a “direct” impact. For similar reasons, direct impact donors also prefer donating to smaller nonprofit organizations versus larger organizations because they perceive their donation can make a stronger impact. Nonprofit organizations who wish to target impact donors can create sponsoring agreements that showcase specific areas of need, but at the same time reinforce the general needs of the organization. The time and resources spent on attracting impact donors can be extremely beneficial for a nonprofit. Satisfied impact donors are more likely to remain involved with the organization. With the right approach, a nonprofit can also optimize the relationship, generating a charitable lifecycle of giving. For more information on our donor cultivation strategies, contact info@scottpractice.com.