It's been hard for me to interpret CASE's Global Reporting Standards on life insurance policies. On one hand, in Section 3.3.5 it lays out the "booking" procedures (or how the gift is recorded on the organization's general ledger), which syncs with what John states above about only booking cash surrender value if the policy is transferred to the organization as owner and sole beneficiary. There are other nuances in Section 3.3.5 about booking the gift, depending upon where the policy is in its life cycle when donated.
Separately, in Section 3.6.1, CASE states:
"A donor of any age can make an institution a beneficiary of a retirement account or group or term life insurance policy, in full or in part. Most retirement plan holders and life insurers make available a beneficiary designation form, which when completed is a legally enforceable document for an asset transfer. This would be counted in VSE as a bequest/legacy intention, if the donor is at least age 65 and makes the institution aware of the intent."
Is that confusing, or am I just confused? Does this come down to the old "booking" (what Finance records on the general ledger) vs. "counting" (what Advancement records toward campaign totals) thing? One ongoing issue of course is that 98.5% of donor-facing fundraisers use the colloquial term "book" when discussing whether something can be "counted" toward campaign totals/their own individual performance measures.
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Tom Yates
Temple University
Executive Director of Gift Planning
215-926-2545
tyates@temple.edu------------------------------
Original Message:
Sent: 07-07-2022 12:14 PM
From: John Taylor
Subject: Life insurance pledges
Yes, I agree that nothing should be "booked." You are not the owner of a life insurance policy. If you were, you could have booked the interpolated terminal reserve (cash surrender) value (basically the amount of the premiums paid).
However, you are only a beneficiary of a revocable life insurance policy. You cannot "book" that, either. And it does not qualify as a testamentary commitment CASE might allow you to count "below the line" in campaign totals.
John
John H. Taylor
Principal
John H. Taylor Consulting, LLC
2604 Sevier St.
Durham, NC 27705
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
Original Message:
Sent: 7/7/2022 12:07:00 PM
From: Annie Wilkins
Subject: RE: Life insurance pledges
Hi John, the gift agreement states that "the donors pledge to secure a fully-paid, joint and survivor life insurance policy acknowledging [us] as the last beneficiary to receive all benefits on the lives of the donors. The deferred gift insurance policy in the amount of $150,000 will be paid in full by 12/31/21." My gut is that the pledges should not have been booked, but I'm not sure. I hope this is enough info to answer your questions.
Thanks,
Annie
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Annie Wilkins
Development Operations Administrator
John Tyler Community College Foundation
awilkins01@jtcc.edu
Original Message:
Sent: 06-21-2022 10:59 AM
From: John Taylor
Subject: Life insurance pledges
I need more information on the pledge. What did the donor mean by pledging the life insurance? Were they planning on dying? :-). Or were they pledging to give you a PAID UP policy with a cash surrender value of that amount?
If they were pledging only to take out a policy, then there is no bonafide pledge. It would be treated more as a bequest expectancy. But, even then, CASE would not recognize the amount, nor would there be a payment due date or pledge schedule.
It is highly unusual to book a life insurance pledge unless the donor intended to give you a fully or partially paid whole life policy with that value built up. Can you get us more details?
John
John H. Taylor
Principal
John H. Taylor Consulting, LLC
2604 Sevier St.
Durham, NC 27705
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
Original Message:
Sent: 6/21/2022 9:57:00 AM
From: Annie Wilkins
Subject: Life insurance pledges
Back in 2015, a donor signed a pledge agreement for $250,000. $150,000 of that is supposed to come from a life insurance policy - this was entered as 2 pledges for $75,000 each, each going to a different fund. Our question is should this life insurance portion have even been booked as pledges in RE? My understanding is our Finance team did not record it in their records.