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  • 1.  Planned Gift - remaining balance of Charitable Giving Fund

    Posted 03-18-2024 09:13 AM

    I have received a letter of intent from a constituent who has made a provision to leave us the remaining balance of their Charitable Giving Fund at Schwab.   We are currently in a campaign, and obviously the gift officer wants to count this towards the total.  They have indicated a current balance in the fund, and for us it is significant.

    I've looked but can't find guidance on this specific situation.  I'm unsure whether I can book this or not. I'm definitely not booking it in the financials, but I'm not sure about the campaign. 

    Can anyone advise me on the correct way to handle this? Thanks!



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    Jackie Wright
    St. Mary's College of Maryland Foundation, Inc
    jawright1@smcm.edu
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  • 2.  RE: Planned Gift - remaining balance of Charitable Giving Fund

    Posted 03-18-2024 10:06 AM
    The "ownership" of the fund is with Schwab. Schwab is under no legal obligation to honor this commitment as a DAF. They most certainly likely will if they want to see future donations! However, unless you receive something from Schwab in writing indicating their intent to honor this plan, there is nothing to book.

    And even if Schwab goes along with a written statement, the commitment does not pass the bequest test as bequests are revocable to begin with - and Schwab's intent is also revocable - making this "double" revocable.

    I would not book/count anything under these circumstances. However, if the DO pushes back, I would take the circumstances, estimated value, and life expectancy information to the Gift Acceptance Committee for an opinion.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message


  • 3.  RE: Planned Gift - remaining balance of Charitable Giving Fund

    Posted 03-18-2024 10:12 AM

    Thank you John. That is pretty much what I was thinking, but I wanted to be sure. I will follow  your advice and see if I can get anything from Schwab.

    Thank you for your prompt (as always) response!



    ------------------------------
    Jackie Wright
    St. Mary's College of Maryland Foundation, Inc
    jawright1@smcm.edu
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    Original Message


  • 4.  RE: Planned Gift - remaining balance of Charitable Giving Fund

    Posted 03-29-2024 12:54 PM
    From an accounting perspective there is nothing to count. From a campaign perspective, this is a category C gift, a revocable gift. It is probably most similar to a life insurance gift where the institution is the beneficiary, but not the policy owner. Typically, institutions will report out those gifts at face value (in category C) so long as the donor is 65+ by the end of the campaign, and the donor provides documentation like a letter of intent. In the case of a charitable successor designation to a DAF, there is greater uncertainty over the value of the gift. Not only is it quite easy to remove the successor designation entirely, or to add other successors with whom the funds will be shared, it's also quite easy to empty out the funds from the DAF entirely, by making contributions during one's lifetime. These elements speak to nominal or very conservative valuation. 

    While we should not assume malfeasance by our donors, if a successor designation were to be counted and recognized more substantially, it creates some very bad incentives in the marketplace for both the donor and the MGO. A donor could name one school as successor this year, and then another next year, and another the following year, and reap the recognition rewards from each institution, even though none will receive any contributions in the end. MGOs might encourage these sorts of gifts too, because they are deferred and revocable and don't even require a lawyer. A simple designation form on the DAF website is all it takes. 

    More broadly, money in a DAF is very easy money to give. If the donor has already decided that the charity will be a substantial recipient of the funds in the account, they can make such a gift today. If they want the corpus of the funds to continue to grow through investment, they can give from that DAF into an endowment. As an institution, we want to incentivize and direct the MGO to go further with the donor. A commitment to charitable successorship should be the sound of a door opening, an opportunity to concretize a countable gift alongside this more ethereal promise. Counting a revocable DAF successorship lets the donor and the MGO off the hook, and potentially leaves the charity holding the bag.  


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:





    Original Message


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