Partnering with Advisors for Inspired Outcomes

Phil Cubeta, CLU, ChFC, MSFS, CAP

Sallie B. and William B. Wallace Chair in PhilanthropyThe American Collegephil.cubeta@theamericancollege.edu

Agenda

• Negative Trends for Philanthropy• Positive Mega-Trends• Recent Research• Marketing Opportunity: Philanthropy for the Affluent

Y S t t th T bl• Your Seat at the Table

Some Negative TrendsSome Negative Trends

Markets Continue to Fluctuate

Harvard Takes $12 B. Hit

• Harvard University's endowment has lost 22 per cent, or roughly $12.2 billion…P id F “Th h l ill d d• President Faust: “The school will need to reduce expenses.”

Madoff

• Picower Foundation, America’s 7th largest foundation closed.

• Noble Laureate Elie Weisel’s Foundation lost almost all its funds.

• WSJ: Madoff: “The Atomic Bomb of Jewish Philanthropy.”

National Debt

Tax Changes?

• Higher top brackets for high income earners?• Charitable deduction equivalent to what could be q

taken in a 28% bracket.• Will estate disappear in 2010, only to return at

2002 levels?

Charities Struggling to Survive

• Giving consultant Tracy Gary suggests that we will lose 200,000-300,000 nonprofits in the ne tnonprofits in the next four years, out of the one million totalone million total.

Positive MegatrendsPositive Megatrends

Megatrend: Boom in Babies, when?

Swimming against the currentSwimming against the current

The Crossroads

Great Generation and Boomer LegacyGreat Generation and Boomer Legacy Yearnings

• Values not Valuables: uncomfortable talking about inheritance out of context; more interested in discussing family traditions and history sharing stories valuesfamily traditions and history, sharing stories, values, wishes.

• Legacy Gap: talking about inheritance but not in a g y p gmeaningful or productive way.

• Ideal Legacy Advisor: The top qualities both generations look for in a legacy advisor are honesty trustworthinesslook for in a legacy advisor are honesty, trustworthiness, compassion, a good listener, and strong communicator.

2,267 boomers and their elders surveyed by Allianz with Ken Dychtwald

Eudaemonia….

F J it Hi h S h l T hFrom a Jesuit High School Teacher

• What kind of person do you want to be?• In what kind of world?

“Th P Y ”“The Power Years”

Gospels of WealthGospels of Wealth

The Grandparent Legacy ProjectThe Grandparent Legacy Project• “The Grandparent Legacy Project includes

d i i i h 15 ll kexcerpted interviews with 15 well-known philanthropic grandparents, an audio CD to hear their stories and a workbook to help you conveytheir stories, and a workbook to help you convey your own legacy. It is a resource to help you communicate your story - your legacy - across y y y g ygenerations.” Created by Association of Small Foundations and 21/64, a nonprofit consulting division of The Andrea and Charles Bronfman Foundation specializing in next generation and multigenerational philanthropies.

“Lif i h hi h b ”“Life is that which one remembers”“At Storyzon we ensure that stories and histories willAt Storyzon we ensure that stories and histories will

not be forgotten. We turn your personal memories or company histories into books to share and p ycherish – heirlooms that will keep the connection of generations alive.”

B d SBeyond Success

Wealth in FamiliesWealth in Families

Charles Collier, Senior Philanthropic Advisor, Harvard

“Aligning soul and role”Aligning soul and role

Parker Palmer, educator

The World We WantThe World We Want

Peter’s QuestionsPeter s Questions

• What is your vision of a better world?• What conditions needed to realize it?What conditions needed to realize it?• What are the obstacles?• What parts of the vision are realistic and what ideasWhat parts of the vision are realistic and what ideas,

strategies and plans can make it so?

Megatrend: Opportunity on Main Streetg pp y

• 90% of US Firms are family owned• 64% of GNP• 64% of GNP• 33% make it to next generation• 15% to third generationg• 25% will transfer control over next 5 years• 40% over 10 years

71% h t l t d i l• 71% have not completed succession plans• 93% have little income outside business• 80% want business to stay in family80% wa bus ess o s ay a y

Source: David Leibell and Dan Daniels of Wiggin and Dana 

What is on Their Minds?• How much do we need for ourselves?• How much do we need for ourselves?• If we exit business what will we do with our time?• How much is enough for children?How much is enough for children?• How much is too much?• How can we have an impact on society?• How can we reduce taxes in favor of children or

philanthropy?“I h ll h i ?” P L• “Is that all there is….?” Peggy Lee

Business Owners Civic Re-payers• Business owners are rooted in local community.• Often devout.• Pass on values with valuables. • Don’t see themselves as philanthropic.

D ’t h t th C t l Ch it B ll• Don’t show up at the Crystal Charity Ball.• Seldom solicited for major gifts.• But they are giversBut they are givers.

Overlooked and Under-Cultivated• Business owners are busy and may not yet be engaged• 90% of net worth or more is in the business• May take out little in income• May wear jeans to work, have mud on their boots

Th t ld t h th li id• That one golden moment when they are liquid

Megatrend: Women’s PhilanthropyMegatrend: Women s Philanthropy

A Movement

• “Women Moving Millions”Tracy Gary

• “Resourceful Women”• “Women Donor’s Network”

Y W ’• Your Women’s Philanthropy Network?

Helen LaKelly Hunt

The King is in his counting houseCounting out his money.The Queen is in the parlorEating bread and honey.

“Will Women Fund their Own Revolution?”

http://www.enlightennext.org/magazine/j39/voices-hunt.asp

Megatend: Next Gen Philanthropy

• Wealthy parents (average age 67) are increasingly involving their children (average age 34) in philanthropic decisionsdecisions.

• They rely on themselves (96%) and their religious organizations (81%) to instill these values.g ( )

Bank of America Study, 2008

Philanthropic Planning Today

Recent ResearchPhilanthropic Planning Today

Recent Research

Boston College Social Welfare Institute

• Intergenerational transfer of wealth from 1998-2052• $41-$136 trillion in total dollars• $6-$25 trillion in gifts to charity• So, where is all that money?

More Nonprofits Competing for Funds

Important Motivations for Givingp g

Motivation % CitingMotivation % CitingGive back to community 81%

i i llSupport organizations annually 71%

Social Beliefs 70%

Gift can make a Difference 67%

Feel Financially Secure 65%

Bank of America Survey of High Net Worth Households 2008

“The Future of Charitable Gift Planning”The Future of Charitable Gift Planning 2008 NCPG Taskforce

• Donors who first learned about planned gifts from their financial or legal advisor increased from 4% in 1992 to 28% in 200028% in 2000.

• Yet, only 21% of the wealthy (in a 2006 study) are satisfied with the philanthropic advice that their advisor p pprovides.

NCPG Report• Planned Giving is “eroding” within charities as a

specialization. N b f Pl d Gi i S i li i “d i dli ”• Number of Planned Giving Specialists is “dwindling.”

• PGOs have less control of the process.• Information on giving tools is widely available• Information on giving tools is widely available.• Many gifts are being structured by advisors with no

nonprofit involvement.

A Major Shift• “One of the most striking differences between the 2006

and 2008 study is the dramatic increase in donors use of legal and financial professionals to help them makelegal and financial professionals to help them make charitable decisions.”

• Nonprofit personnel’s involvement dropped from 41% of p p ppcases to 29%.

2008 Bank of America Study, of Affluent Families

Donors Rebut Advisor’s Self Perception

• Advisors (90%) say they raise the philanthropic questions.• Donors want advisors to go beyond technical competence

h li i l ito holistic planning• Want to be guided to achieve impact. • Some said that assistance with vision mission values early• Some said that assistance with vision, mission, values early

in the process was the most valuable service they received.

TPI Study

NCPG – Desired Future• “In the future, sophisticated planned giving officers have

changed their focus from structure of the gift to impact, becoming more donor centered and holistic in theirbecoming more donor centered and holistic in their approach.”

• “Planned giving officers are viewed as part of the support g g p ppteam for serving the donor.”

• Changing NCPG name to “Partners in Philanthropic Planning ”Planning.”

Marketing and Planning Opportunity

Philanthropy For the AffluentPhilanthropy For the Affluent

Th D P idThe Donor Pyramid

Top 10%Top 10% give 90%

Core DonorsTop 10% give 90%Source: William Sturtevant, The ArtfulJourney: Cultivating and Soliciting the Major Gift

Basic DonorsBasic Donors

The Ultimate Gift

Ultimate Gift $1,000,000• More time to

cultivateMajor Gift

$10,000

cultivate• Requires advisorengagementM ti l

Annual Gift $1,000

• More rational• And moreemotional $1,000

The Planning Horizon

Why?y______________________

How?How?

Scott and Todd Fithian, The Right Side of the Table

Inspired Planning

• Prudent– Enough for self

• Inspired– Prudent Plan plus

– Enough for family – Social impact

For more, see Tracy Gary, Inspired Legacies: “Your Step by Step Guide To Creating a Giving Plan and Leaving a Legacy”

Your Seat at the Planning Table

PLANC

SE

ONFE

ADVIZE 

LL

ERE

Scott and Todd Fithian, The Right Side of the Table

Maieutic Method (Socrates)

Conversation Starters• If your family had a crest what would be the motto?• What keeps you awake at night?• What in the world would you like to change or preserve?

Conversation Starters

• When you were younger were there things you wanted to accomplish in life you have not yet done?H i h b k h hil ill h i ?• How might you get back to that while you still have time?

Conversation Starter

• Beyond self and family is there anything else in the world on which you would like to have a positive impact?

Legacy Would you enjoy your legacy more, if youSoon we shall breathe

l M hil legacy more, if you started while you are alive?

our last. Meanwhile, while we live, while we are among human alive? gbeings, let us cultivate our humanity. –SenecaSeneca

Conversation Starters

• Would you if you could? • Would you be more generous to the organizations you love

if ld d h i h i i h l ?if you could do that without impacting your other goals?

Are you Your Seat the Planning Table

yinvited?

FinancialAdvisor

Will you convene? s

Advisor

With h Clients

With whom will you partner?

C Attorney

pYou

? CPA

What Do You Bring to the Table?What Do You Bring to the Table? Discuss Meaning, PurposeReview Balance SheetReview Income StatementReview Legal DocumentsCreate Financial PlanC t E t t PlCreate Estate PlanRecommend Charitable Tools within a PlanCreate a Plan to achieve specific Social ImpactCreate a Plan to achieve specific Social ImpactSelect Nonprofit to Achieve Social Impact