Karen Ciegler Hansen, JD, Felhaber Larson Fenlon & Vogt Holly McDonough, MA, Minnesota Medical...

Karen Ciegler Hansen, JD, Felhaber Larson Fenlon & Vogt

Holly McDonough, MA, Minnesota Medical Foundation

GOOD Individual giving has great resiliency during difficult times 59% of nonprofits experience increased giving in poor

economic times Organizations with diversified fundraising programs are in a

much stronger position to weather an economic crisis

BAD 60 of the leading US foundations reported a 28% decline in

assets in 2008 33 of the 80 largest donors in the U.S. derived their wealth

from finance and investment banking.

UGLY Economic uncertainty is one of the chief enemies of

philanthropy

Fund Raising Services – Strategic Consulting “A Current Overview of Philanthropy and the Economy” March 2009

Case StudyNancy and Ed: 65 years oldTwo Children: Betsy - 42 years old

Bob - 40 years old

Assets: Home $ 500,000IRA’s 1,000,000Stocks and bonds

500,000Lake home 400,000Life insurance 600,000

Total $3,000,000

Federal and State Exemptions from Estate Tax

Calendar Year Federal Estate Tax Exemption

MN Estate Tax Exemption

WI Estate Tax Exemption

2002 $675,000 $675,000 $675,000

2003 $1,000,000 $700,000 $675,000

2004 $1,500,000 $850,000 $675,000

2005 $1,500,000 $950,000 $675,000

2006/2007 $2,000,000 $1,000,000 $675,000

2008 $2,000,000 $1,000,000 No estate taxes

2009 $3,500,000 $1,000,000 No estate taxes

2010 No estate taxes $1,000,000 No estate taxes

2011 $1,000,000 $1,000,000 $1,000,000

The table above summarizes the current tax laws. Congress and the state legislatures continue to revisit these amounts.

If you are a non-Minnesota resident or if you own real estate in another state, that state’s exemption may also be different.

Case Study Nancy and Ed: 65 years old Two Children: Betsy- 42 years old; Divorced; 2

children, 10&12

Bob - 40 years old; Has lost job; 2 children, 3&5

Assets: Home $ 500,000

IRA’s 1,000,000

Stocks and bonds 500,000

Lake home 400,000

Life insurance 600,000 Total $3,000,000

Concerns Betsy can’t keep up with cost of living Bob may lose his home Their assets have decreased by 30% in

last year Estate Taxes

Planning Options:Depends upon their goalsHow much do they want/need to leave to their

children? To their grandchildren?How much do they want to leave to their favorite

non-profits?

Donor ClimateEstate Tax considerations are not of the

greatest concernGeneration differences in philosophiesFamily situations are changing

How That Effects Giving to Non-ProfitsCurrent GiftsFuture GiftsDonor ConcernsHow to Acknowledge and Address Concerns

Case Study Nancy and Ed: 65 years old Two Children: Betsy- 42 years old; Divorced; 2

children, 10&12

Bob - 40 years old; Has lost job; 2 children, 3&5

Assets: Home $ 500,000

IRA’s 1,000,000

Stocks and bonds 500,000

Lake home 400,000

Life insurance 600,000 Total $3,000,000

Possible Solutions If all beneficiaries are equal priority: Betsy, Bob, non-

profits If Betsy and Bob are their highest priority If grandchildren are their highest priority If want to guaranty a certain dollar amount to family:

e.g., 10% to non-profit as long as children each receive $1,000,000; or $1,000,000 to each child and then excess to charity (but charity won’t exceed 1/3 of estate) or all IRA to charity and balance to family

If want to guarantee a certain percent to charity: 1/3 to charity, funded first with IRA; or ?

CRT

Non-Profit Organization Response and Impact Upon Professional Advisors and

Donors Back to Basics Be Confident Consider More Planned Gifts Be Open to Possibilities Be Creative Be Realistic Collaborate Communication Is Critical Proactive With Own Budget and Programs Messages Communicated to Donors and Professional

Advisors Future of Fundraising and Communication

1. Keep your donors close2. Provide quality stewardship3. Make a compelling case4. Communicate consistently and

persistently5. Ask!

Be honest and transparentBe flexible Engage them without their wallets

Enhanced acknowledgementEnhanced engagement

Why this cause?Why your organization?Who benefits?

Ongoing impactMultiple optionsTarget your efforts

Mission remains criticalOpportunities for givingFocus your effortsDo the hard work!

Karen Ciegler Hansen, J.D.Felhaber, Larson, Fenlon & Vogt444 Cedar St., Ste. 2100St. Paul, MN 55102-2136khansen@felhaber.com

Holly McDonough, M.A.Director of Development, Gift PlanningMinnesota Medical FoundationUniversity of Minnesota200 Oak St. SE, Ste. 300Minneapolis, MN 55455-2030h.mcdonough@mmf.umn.edu