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At the threshold of the gift-planning process, it’s important that someone communicate to the donor/client the benefits of gift-planning arrangements. Through increased sources of communication, the donor/client may learn of charitable-gift planning opportunities from a number of sources, including a charitable interest, or a legal, accounting or other financial advisor.
Though charities have traditionally assumed a greater role in the communication process, as a much larger portion of their constituency are considered potential planned-gift donors than those of a typical for-profit advisor, when for-profit advisors communicate with their constituencies, their messages may understandably focus on plans that prominently feature their particular specialty. Professional fiduciaries, for example, may communicate the benefits of a particular type of trust arrangement. An attorney may lead a client through a series of questions to determine whether there’s donative intent and, if so, how it might best be fulfilled. Those involved in the marketing of insurance products may present charitable-gift vehicles as a means of providing funds necessary to purchase insurance or promote insurance as a way to replace donated funds.
After a donor has learned of the possibility of more-effective ways of making gifts, the next step is for someone to open a discussion about the best ways to plan gifts in light of the donor’s situation. In my experience, this process often begins with a response to a marketing effort by either a charity or a for-profit planner. The donor/client may respond directly to the party offering the information or, in the context of our discussion, may “cross-respond.”
For example, a financial-services provider may, in some cases, engage in communication about a gift-planning concept, with the client subsequently approaching a favorite charity to discuss further, or vice versa.
The reasons individuals make charitable gifts are many and varied. Among the prime motivators for gifts are religious beliefs, social commitment, political orientation, emotional considerations, and tax and economic benefits. In fact, the motivations for any two gifts will almost never be the same, as they typically involve a unique interaction of one or more of the motivators mentioned above. As such, the best communications tend to bring proper balance to the equation by giving equal time to various motivators in an attempt to interest as broad a range of individuals as possible.
On the for-profit side, attempts to communicate with clients about the advantages of planned gifts will typically focus more heavily on tax and other economic benefits. Communications from a particular for-profit services provider will naturally tend to emphasize solutions that involve the benefits of the products or services he or she provides. Clients will over time piece together the full picture as they receive multiple communications from various charities and for-profit service providers.
Eventually, someone must propose a particular solution tailored to the donor’s needs. In most cases, the party who initiated contact and opened the discussion with the donor/client will take the lead in making this proposal. He or she will often involve one or more other parties who are required to facilitate the funding and/or administration of a gift.
In some cases, however, one party will take a gift up to the point of proposing a solution and will then recommend another party take the lead. Consider the case of an advisor who’s been asked the best ways to help transfer assets to loved ones while reducing or eliminating the impact of gift and/or estate taxes. The advisor may have a vague recollection that gifts, such as charitable lead trusts, exist but isn’t confident in explaining the plan or proposing its use to the client. The advisor may suggest that the donor contact his or her preferred charitable organizations to see if they can provide additional information or suggest resources to help clarify the picture.
Many donor/clients will seek the counsel of their attorneys before completing a planned gift. While not typically required under regulatory provisions, it’s wise for charities and others involved in making planned-gift proposals to encourage their donor/clients to seek legal or other independent counsel before completing their gifts.
The next step in the process of “completing” a gift is to actually execute the plan. As an analogy, consider the situation in which an individual has spent months with architects designing a new home, and the time has come to choose one or more parties to build it. The architect isn’t typically engaged in the construction business. The same is often true in the case of gift planning.
The individual who works with the donor in discussions of goals and objectives and designs the gift may not be the one who actually “executes” it.
When more-sophisticated gift plans are involved, the services of a number of “contractors” may be required to execute the plan. In very few cases will a charity be able to execute fully a gift plan without the participation of other advisors. And even in those rare cases, the donor should be advised to seek legal and/or accounting advice prior to completing a gift.
Often gifting vehicles require the naming of a trustee or other manager or administrator of funds—one who may serve for a long period of time. Some nonprofit institutions will serve as trustees of charitable trusts. In most cases, however, donor/clients will rely on professional fiduciaries to act as trustees of such trusts.
Even in cases in which a fiduciary isn’t required, however, many charities still contract out the asset-management and gift-administration duties to the very same entities that frequently serve as the fiduciaries of charitable trusts.
Finally, one or more individuals should be involved on an ongoing basis to assure donor/client satisfaction. This will often, but not necessarily, be the same parties who initially communicated and proposed the gift, who then step back in after a detour by the donor/client to others to design and implement the technical aspects of the plan.
In other cases, the nonprofit or for-profit entity that received the “hand-off" from the party that originally suggested the gift will also take responsibility for long-term stewardship of the relationship with the donor/client. In any event, this is an area that doesn’t always receive the attention it deserves. At a time of increasing job mobility, it’s important to take steps to ensure that the donor/client receives the ongoing support and attention he or she requires.
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