Building Your JCC Endowment: A Recipe for Success · 2014. 3. 26. · JCCA Biennial San Diego Building Your JCC Endowment: A Recipe for Success Endowment An Endowment is a fund created

Building Your JCC

Endowment:

A Recipe for Success

Irv Geffen

Marjory Kaplan

Introduction by David Wax

JCCA Biennial San Diego Building Your JCC Endowment: A Recipe for Success Irv Geffen and Marjory Kaplan

JCCA Biennial San Diego

Building Your JCC Endowment: A Recipe for Success

Marjory Kaplan

President and Chief Executive Officer

Miriam and Jerome Katzin Presidential Chair

Jewish Community Foundation of San Diego

[email protected]

Marjory currently holds the Miriam and Jerome Katzin Presidential Chair and has served as the chief professional of the Jewish Community Foundation since 1994. During her tenure,

the Foundation’s assets have grown from $14 million to more than $300 million. More importantly, The Foundation has awarded over $900 million in grants since inception – including nearly $100 million last year. With deep relationships in the community – donors, Jewish organizations, and San Diego nonprofits – the Foundation focuses on increasing philanthropy in the region. At the forefront of new initiatives, the Foundation pioneered programs in youth philanthropy and legacy giving. The Create a Jewish Legacy program has been replicated in Jewish communities throughout the United States. Before serving in her current role, Marjory was a director of development at the Scripps Foundation for Medicine and Science in La Jolla. Her early career centered in the corporate world where she held vice president positions in banking, both in the human resources and investments areas.

Irv Geffen

Director, Major Gifts and Planned Giving

Scripps Research Institute

[email protected]

Irv joined Scripps Research Institute as Director, Major Gifts & Planned Giving in 2013. He was executive vice president and then CEO of the Jewish Federation of South Palm Beach County from 2008 to 2011, directing the organization’s financial resource

development, including annual campaign, foundation grants and planned giving. Geffen also served as vice president of development for Albert Einstein Healthcare Network in Philadelphia from 1995 to 2001. He later worked in the field of high-net-worth wealth management with Alliance Bernstein and Prudent Management. Irv received a Master’s degree in community health administration from Temple University. In the past, he served in a number of senior fundraising and management positions for the Jewish Federations of South Palm Beach County, Greater Philadelphia and Richmond, Virginia. Irv has conducted numerous lectures, seminars and workshops for development and financial professionals on topics ranging from gift planning, donor and customer relations to major gift and endowment development.

mailto:[email protected]

mailto:[email protected]

JCCA Biennial San Diego Building Your JCC Endowment: A Recipe for Success

Irv Geffen and Marjory Kaplan 1

JCCA Biennial San Diego


Irv Geffen, Director of Major Gifts and Planned Giving, Scripps Florida

Marjory Kaplan, President and CEO, Jewish Community Foundation of San Diego

Introduction by David Wax, Board Member, JCCA;

Past President and Current Board Member, Lawrence Family JCC;

Leadership Council Member, Jewish Community Foundation of San Diego

March 31, 2014 – 4:15 to 5:45

______________________________________________________________________

Overview: What Are Endowments and Why Are They Important?

1. Flow of funding for budget – providing “nourishment” for your financial health

2. Seed money for new initiatives

3. Meaningful, permanent way for a donor to support the JCC

4. Transfer of wealth from Greatest Generation and others

Ingredient #1: Create the Case and Get Everyone in the Kitchen

1. Board and staff commitment

2. Why Endowments? The Case

3. Creating an early “taste of success”

Ingredient #2: Educate and Motivate Lay Leaders and Professionals

1. Many resources to “mix in”

2. Keep it simple

3. Importance of lay/CEO/staff partnership

4. Enlist the help of some local professional advisors (estate attorneys, CPAs and

other financial advisors)



Ingredient #3: Develop a Simple but Effective Plan

1. How to easily “blend” endowment and bequest with other fundraising and

marketing plans for your JCC

2. Setting goals for the first year

3. Monitoring schedule

Ingredient #4: Asking for a Bequest

1. Easier than direct fundraising

2. Focus on donors with long histories with a “zest” for the JCC

3. Documentation

Ingredient #5: Adding Flavor with Opportunistic Giving

1. Opportunistic Giving enhances current and deferred giving by maximizing the gift

potential of donors

2. Planned giving opportunities can be found in the context of everyday financial,

tax and philanthropic planning objectives

3. Examples

Ingredient #6: Keep Thanking and Connecting

1. Celebrate the gift!

2. “Whip up” meaningful ways to thank and steward

3. Legacy societies

Objective of Session:

1. Attendees will leave the session with a basic understanding that it’s not difficult to

begin and implement a simple endowment development program that will lead to

financial stability at their organizations.

2. They will see that they already have the basic ingredients for success.

3. They will appreciate their own role in cultivation and solicitation.

4. They will consider becoming a champion in their JCC planned giving/endowment

program.

Building Your JCC

Endowment:

A Recipe for Success

Dedicated to the Memory of

Joel Breitstein

Objective of Session:

Attendees will:

• Have a basic understanding of how to begin

• Realize you already have the basic ingredients for success

• Appreciate your role in cultivation and solicitation

• Consider becoming a champion

Why Are Endowments Important?

• Revenue source for budget

• Seed money

• Meaningful gifts

• Transfer of wealth

Ingredient #1: Create the Case and Get

Everyone in the Kitchen

• Board and staff commitment

• Endowment case

• Create an early “taste of success”

Ingredient #2: Educate and Motivate Lay

Leaders and Professionals

• Keep it simple

• Lay / staff partnership

• Professional advisors

Ingredient #3: Develop a Simple but

Effective Plan

• Blending with fundraising

and marketing

• Setting goals

• Monitoring schedule

Ingredient #4: Asking for a Bequest

• Easier than direct

fundraising

• Focus on donors with “zest”

• Documentation

Ingredient #5: Adding Flavor with

Opportunistic Giving

• Maximizing gift potential

• Planned giving opportunities

• Examples

Ingredient #6: Keep Thanking and

Connecting

• Celebrate the gift!

• “Whip up” meaningful ways to

thank and steward

• Legacy societies

Next steps



Glossary of Terms

Bequest

A bequest is a provision in a will or living trust that transfers property to a named beneficiary. It can be stated as a fixed amount or a percentage of the estate. The estate is entitled to a charitable estate tax deduction for the value of the property passing to the charitable organization. A bequest provision is NOT irrevocable until the testator (the person who made the will) passes away. Sample bequest language: “I devise and bequeath the sum of $__________ (or a fixed percentage of my estate) to the (name of JCC)_______________ located at (address). It is my desire that this bequest be held as a perpetual (or term of years) endowment and that annually a fixed percentage as determined by the JCC board of directors, but never more than 5%, shall be used to benefit (name of the program, project or unrestricted use).”

Donor Advised Fund (DAF)

A Donor Advised Fund (DAF), sometimes called a philanthropic fund by Federations and Community Foundations, is a fund created by a donor with a public charity such as a Jewish Federation, Community Foundation, or charitable entity established by a financial service company, i.e. Fidelity Charitable Gift Fund. The donor and his/her designees reserve the right to advise the charity on how the funds should be used. Charitable distributions can be made to any 501(c)(3) organization as long as it fits the guidelines of the host charity. A DAF can serve as a cost-effective alternative to a private foundation. The donor receives a charitable income tax deduction for gifts of cash, appreciated securities or other property that will be accepted by the host charity. (This can be an important source of funds for the JCC from donors that have created DAFs, regardless of the host charity).


Endowment

An Endowment is a fund created by a donor where, by agreement, either the actual income earned from investment or a fixed percentage of the fund as valued annually is used for the intended purpose. Usually the fixed percent payout is 5% or less. An endowment can be unrestricted as to use, designated for a particular program, project or a field of charitable interest. It can be designed to last in perpetuity or for a term of years.

Life Income Plan

A Charitable Gift Annuity (CGA) is an easy and convenient way to make a charitable gift. A CGA is a simple contract between the donor and a public charity such as the Jewish Federation or Jewish Community Foundation. The donor makes an irrevocable gift of cash, securities or other property that will be accepted by the host charity, in exchange for guaranteed payments for life. The donor can choose a one or two-life annuity or designate a third party, such as a friend or family member, to receive the gift annuity payments. A portion of the payments are tax-free. After the donor’s lifetime, the remainder is directed to one or more charitable organizations. A Charitable Remainder Trust is an irrevocable trust created by a donor that either pays a fixed amount annually to one or more income beneficiaries (Charitable Remainder Annuity Trust – CRAT); or pays a fixed percentage of the trust assets as valued annually to one or more income beneficiaries (Charitable Remainder Unitrust – CRUT). At the end of the trust term, which can be either for the life/lives of the income beneficiaries or for a term of years not to exceed 20, the remainder (whatever is left in the trust) is paid to one or more charitable organizations as directed in the trust agreement. The donor is entitled to a charitable income tax deduction at the time he or she funds the trust based on the present value of what ultimately will be paid to the charitable organization. Either the CRAT or CRUT can be funded with cash, appreciated securities or other appreciated property.


Assets Commonly Used to Make a Planned Gift

Appreciated Securities – stocks, bonds, mutual funds, etc. The advantage of giving appreciated property that has been owned by the donor for at least one year and a day is that the charitable income tax deduction is based on the value of the asset on the day it is given. If the donor would sell the asset, he or she would have to pay capital gains tax, which is avoided if the asset is used to make a charitable gift.

IRA and Other Retirement Plan Assets – IRAs and other retirement plan assets make excellent testamentary (at death) charitable gifts. Usually these assets are not only subject to estate tax but also income tax. Using these assets for philanthropy generates an estate tax charitable deduction and will avoid any estate, inheritance and income tax. However, donors must name the charity as a beneficiary in the plan document in order to make it effective at the time of death.

Real Estate – A gift of appreciated real estate with a low basis (cost) can make an excellent planned gift, but it does have its risks. The donor must have an independent appraisal made before the gift is made and make sure there are no encumbrances, such as a mortgage. The charity must make sure it is marketable, does not have any environmental problems and either the donor or the charity will take care of administrative costs pending a sale.

Art and Collectibles – This is a special class of appreciated property that has specific rules related to how much of a charitable income tax deduction the donor may take. If the JCC agrees to hold the piece for at least two years and will display it in some fashion that will enhance its mission, the donor may take a charitable income tax deduction for the full appraised value of the gift. If, on the other hand, the JCC plans to sell the piece and use the proceeds to further its mission, the donor may only deduct his or her original cost or basis of the piece of property that has been donated.

Life Insurance Policy – Life insurance makes an excellent planned gift for the younger donor and the older donor. For the younger donor, it is an inexpensive way to participate in a legacy program, because insurance premiums are low, and one can make a significant gift for a low net cost. If the charitable organization is the owner and the beneficiary of the policy, the premiums paid by the insured donor qualify for a charitable income tax deduction. Older donors may have life insurance policies that are not needed anymore. If the policy is gifted to the charity and the charitable organization is the owner and beneficiary, any cash value already built into the policy will qualify for the charitable income tax deduction as will any premiums that must still be paid.



Charitable Gift Planning Clues For

Opportunistic Giving

Many of the largest gifts, whether current or deferred, come as a result of timing and opportunity. However, these opportunities might be missed unless we recognize the clues along the way that lead us to the opportunity. The following are some clues that indicate a donor might be in a position to have a philanthropic conversation about making a truly transformative gift.

Donor planning the sale of a business or real estate or owns a large position in one company. (This suggests that the donor may need a large charitable income tax deduction to offset the capital gains tax from the sale.)

Donor has a portfolio of appreciated securities. (This suggests that the donor could benefit from making a gift of appreciated securities, since it will avoid capital gains tax and the charitable deduction is for the full value of the stock or other security on the date of the gift.)

Donor expresses interest in a particular field of charitable interest and/or perpetuating an annual gift to the JCC. (This indicates that the prospect may be ready to have a conversation about making a significant endowment or other special fund gift in an area where he/she has expressed an interest.)

Donor wants to pass on family values through philanthropy. (This clue is important because it opens up the opportunity to have a conversation with the donor and his or her family about how a permanent endowment gift to the JCC can be a lasting testament of the importance of Jewish values.)

Donor is concerned his/her children do not share same feelings regarding Jewish community. (In a situation where the next generation in a family does not hold the same Jewish values as the donor, a gift to the JCC endowment will perpetuate what is important to the donor and may even have some influence on the children.)



Donor wants to involve family members in his/her charitable giving. (This clue gives the development professional the opportunity to involve the next generation in the discussion, opening up the chance to involve them as donors in the future.)

Donor has concerns about ongoing or short term need for income for self and/or others. (This is a great clue because a planned gift can help a donor to meet short term as well as long term needs for income for him or others while making a gift to the JCC to meet its long term needs.)

Donor has come into a large amount of money (i.e. inheritance, large fee or commission, etc.). (This clue is pretty obvious, since it puts the donor in a position to make a large gift that will help offset income tax on a large fee or commission in a particular year. If the donor received a large inheritance, he or she can use the opportunity to memorialize the benefactor.)

Donor does not have children or grandchildren. (This is an important clue, since childless couples may be the most likely to leave a bequest of all or a substantial part of their estate to philanthropy.)

Donor wants to create some form of permanent Jewish legacy. (What better place to do this than with his or her local JCC?) NOTE: All of these clues are discoverable by meeting with prospective donors and asking the right questions. Volunteer leadership who are trained to look for these clues may uncover them in their daily business and social interactions with their peers. These clues can then be passed along to JCC professional staff and can be helpful to further cultivation and solicitation of the donor.

Joel M. Breitstein, J.D. z”l

WHAT DOES A $1 MILLION GIFT REALLY COST?

Getting the Most from Your Charitable Dollar

Irv Geffen

Director, Major Gifts and Planned Giving

The Scripps Research Institute

Jupiter, Florida

WHAT DOES A $1MILLION GIFT REALLY COST?

• Gift of Cash During Lifetime $604,000

• Appreciated Asset Gift During Lifetime $504,000

• Cash or Appreciated Asset Gift Through Bequest $600,000

• IRD Cash or Appreciated Asset Gift Through Bequest $300,000

• Charitable Gift Annuity $203,000

CHARITABLE GIFT ANNUITY

Transfer to Charitable Gift Annuity @ age 80 $1,000,000

Federal Income Tax Savings at 39.6% <197,000>

Net cost after tax savings 803,000

After tax value of payments to donor <600,000>

Net Cost of Gift $ 203,000

GLOSSARY

• Tax Basis- The dollar amount above which any value is subject to taxation.

• Capital Gains Tax- Tax on assets that have grown in value.

• Ordinary Income Tax- Tax on earnings from work performed.

• Estate Tax- Tax on assets transferred to an individual(s) at one’s death.

• Gift Tax- Tax on assets transferred to an individual(s) during one’s life.

• Tax Rates- Percentage applied to assets subject to taxation.

• Applicable Federal Rate (AFR)-Monthly percentage, provided by the IRS, used in computing tax deductions of non-current charitable gifts.

• IRD Property- Assets subject to both estate and ordinary income tax.

• Annuity Trust- Trust that pays a fixed dollar amount.

• Unitrust- Trust that pays a percentage of the value of the trust, usually calculated annually.

PROVISOS & ASSUMPTIONS

• All $ values are approximates and have been rounded.

• Each gift strategy illustrates one of many possible variations available.

• Federal income tax rate- 39.6%

• Federal capital gains rate- 20%

• Federal gift/estate tax rate- 40%

• No state or local taxes included.

• AFR as of November 2013

Documents

Building Your JCC Endowment: A Recipe for Success · 2014. 3. 26. · JCCA Biennial San Diego Building Your JCC Endowment: A Recipe for Success Endowment An Endowment is a fund created