FundSvcs Community

I have what I hope is an outlier as far as unusual bequests go, and I am stumped. We have a donor who documented a generous bequest with us three years ago, when we were in a campaign. The campaign just finished in June, 2024. Since then, the donor has completely redone her estate plans, creating a revocable trust with the original assets she was leaving to us, as well as adding additional assets, including all her real estate, etc, greatly increasing the value. We are the only beneficiaries. 

The problem is that she received some questionable legal advice when setting up her new revocable trust. Instead of liquidating the trust and having the proceeds come to us upon her passing, the new trust sets up a non-profit foundation that will distribute the net income of the foundation, minus operating expenses, to us annually. How should I be "booking" this, if at all? Book the difference/increase as a revocable bequest pledge? Not book anything new now, and just process the annual income as new activity when it comes in? Should I do anything with the existing pledge from 2021?

A good problem to have, but I am at a loss as to how to proceed. Thanks in advance, everyone!
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I would not say she received questionable advice. Setting up a separate foundation is not that uncommon!

Actually, the CASE Standards have discussed these scenarios for several decades in their "wholly charitable assets administered by others" writings. Please take a look at pages 33 & 34 for the latest standards.

Provided you are named as the irrevocable beneficiary of the entire trust/foundation, you may count the entire corpus as a gift to you when the trust is established. Think of it as you would a permanent endowment you create. The only difference is that someone else is managing it.

These are booked as gifts in the endowment category.

The complicating factor I see here is that you already "counted" part of this in 2021. However, as the campaign only ended a few months ago, you could still be counting! If so, I'd be inclined to remove that amount from your final campaign numbers. However, if that horse has already left the barn, your executive leadership team should determine whether you should only "count" the "new" amount above what was already counted.

John