Your planned giving staff is pushing things a bit.
There's no reason why these various actions can't count toward their productivity goals. But you have a donor who wants to change their will in favor of a current pledge to be paid during their life. That is not a planned gift. You cannot have it both ways.
I get that the PG team wants to get credit-and they can-but not by manufacturing planned gifts that don't exist.
A bequest is a provision found in a will to leave a legacy to you upon their death. An outright pledge is a binding commitment to make payments within a specified period. They are not the same.
You can give the PG team productivity credit for both the pledge and the remaining bequest. Have them create an opportunity and link the new pledge to that. But please don't go calling a current pledge a planned gift. It is not.
John
John H. Taylor, PrincipalJohn H. Taylor Consulting, LLC
2604 Sevier Street
Durham, NC 27705
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
Original Message:
Sent: 9/6/2024 8:33:00 AM
From: Jeff Baynham
Subject: RE: Early payments on Bequest Expectancies
#3 records it as a current outright gift, whereas #2 records it as a realized bequest. My PG team wants these "accelerated bequest gifts" to count as realized bequests, taking the approach that the donor is choosing to pay early on a bequest -- thus should be in planned gifts totals.
To add to this situation, we currently have a situation where the donor wants to make a current pledge (say $500K) and reduce it from their documented planned gift (John, to fund the same purpose, a professorship.) My planned giving office wants to still count this $500K in their totals. But I can't use a pledge to pay a bequest, of course. But if I reduce the bequest by the $500k to record a new current pledge, 1) it won't count in PG totals, 2) the new pledge will look like new money when it is not.
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Jeff Baynham
NC State University
jtbaynha@ncsu.edu
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Original Message:
Sent: 09-05-2024 04:45 PM
From: John Taylor
Subject: Early payments on Bequest Expectancies
Isaac, you did not include Jeff's original email, but you may recall that his option 2 treated the "payment" as a realized bequest - which, of course, it is not, as the donor hasn't died.
I know it's a matter of semantics, but some CRMs allow you to have a different payment type for realized bequests than "pledge payments."
John
John H. Taylor, PrincipalJohn H. Taylor Consulting, LLC
2604 Sevier Street
Durham, NC 27705
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
Original Message:
Sent: 9/5/2024 5:31:00 PM
From: Isaac Shalev
Subject: RE: Early payments on Bequest Expectancies
Jeff, my approach to these issues starts from the incentives. We know that planned gifts generally lead to increased giving throughout the donor's life. We also know that the mechanics of tax and estate planning drive the choices of gift vehicles and timing quite strongly. We don't want to disincentive our planned giving folks by taking credit away from them simply because the timing of the gift changed. That team still did their work to land the gift, and the changes in vehicles and timing really don't reflect on their performance in any way and are mostly out of their control. In this specific case, it's actually a win -- you're getting the same nominal dollars, but you're exchanging a non-binding promise of $100k later for $100k now. It seems perverse for the planned giving team to lose credit for this outcome.
I think both your option 2 and John's option 3 achieve this -- I'm not entirely sure how they're different, to be honest, but they both successfully address this issue.
Thank you,
Isaac Shalev
Data Strategy Expert
Sage70, Inc.
(917) 859-0151
isaac@sage70.com
Schedule a 30-minute consultation now:
Original Message:
Sent: 9/5/2024 2:25:00 PM
From: John Taylor
Subject: RE: Early payments on Bequest Expectancies
Yes. Essentially it is an outright gift being applied to a revocable pledge instrument. I have no problem with that as it honors the donor's intent.
The $100,000 is NOT and "early" planned gift. It is a gift being made during the donor's life.
Again, though, this provision must be referenced in the will to begin with (or subsequently amended).
John
John H. Taylor
919.816.5903 (Cell/Text)
Big Ideas; Small Keyboard
Original Message:
Sent: 9/5/2024 2:11:00 PM
From: Jeff Baynham
Subject: RE: Early payments on Bequest Expectancies
John, to be clear, you're suggesting record it as a "Pledge Payment" but still pay it against the Bequest Expectancy? The donor is telling us that this current gift reduces the amount we will receive at death.
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Jeff Baynham
NC State University
jtbaynha@ncsu.edu
Original Message:
Sent: 09-05-2024 01:07 PM
From: John Taylor
Subject: Early payments on Bequest Expectancies
Jeff, I would only do something if the reduction during life reference is included in the will. Otherwise, when the individual dies, there will be many differences of opinion regarding what gifts count toward the bequest reduction.
Assuming that these plans are codified in the will, I vote for option number 3! That option is to treat the payment exactly like you would a pledge payment. This is NOT a planned gift - it is a current gift meant to relieve the estate of a future burden.
John
John H. Taylor, PrincipalJohn H. Taylor Consulting, LLC
2604 Sevier Street
Durham, NC 27705
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
Original Message:
Sent: 9/5/2024 1:52:00 PM
From: Jeff Baynham
Subject: Early payments on Bequest Expectancies
Curious how you all are recording and reporting on gifts made by a donor while living to reduce their bequest expectancy. Essentially, a donor has a $1,000,000 bequest expectancy. The donor wants to give us $100,000 now while living. You have two options,
- Reduce the bequest expectancy by $100K and record a straight gift for $100K. Issue here is you don't want to count the $100K as new money, as you've previously counted the $100K as a bequest expectancy.
- Record the $100K as a "realized bequest" against the bequest expectancy. Essentially, a pledge payment.
Our Gift Planning Office would like to count the $100k in planned giving numbers, though I am not sure I agree with that. Is this person making an "early" planned gift, or are they deciding to change their gift vehicle to a current gift? But, either way, we need to reduce the bequest expectancy.
Curious how others are handling these.
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Jeff Baynham
NC State University
jtbaynha@ncsu.edu
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