Planned Giving in the Big Picture
Talking About Your Numbers to the People Who Count
William D. Samers and Steven L. Meyers
As gift planners, we live in a world where numbers matter. Every day we work with
tax deductions, payout rates, tax rates, Applicable Federal Rates, life expectancies,
market values, cost bases, exclusion ratios, investment returns and more…we’re
swimming in numbers. Our challenge is to make sense of those numbers and
communicate them as needed in ways that are appropriate to our particular
audience, while not losing sight of the donor intent that drives each gift.
At times our audience may be comfortable with numbers, but have limited
knowledge of gift planning strategies, as in the case of a charity’s chief financial
officer or auditors. At other times, we may be communicating with donors or a
charity’s senior management who have limited tolerance for numbers and simply
want to see the big picture.
How to report total planned giving dollars is one of the most common dilemmas
facing many charities. In any given year, a charity may receive a broad spectrum
of planned gifts including bequest distributions and life income terminations that
reflect prior gift planning efforts, current gifts of appreciated assets, and gifts that
will help fund the future such as new life income gifts and bequest commitments.
Common reporting methods, however, generally omit one or more of these
dimensions of planned giving.
In this article, authors William Samers and Steven Meyers describe a reporting tool
that they have used successfully to make sense of the numbers for their donors,
board members and senior level management. Their emphasis is on communicating the big picture, reporting planned gifts and other types of gifts in a way that
reflects the combined impact of past, present and future fundraising efforts.
While Meyers and Samers report planned gifts solely based on their face value,
they also include recommendations for reconciling with FASB accounting
standards. When a discussion of present value is called for, a similar approach
could be used to reconcile Total FRD reports with NCPG’s Valuation Standards for
Charitable Planned Gifts. Each of these tools—like a swimmer’s strokes—can
prevent us from drowning in numbers. Choosing the proper tool for the job at
hand, whether counting, accounting or valuing, and then communicating well
about the resulting numbers, is an important part of our work as gift planners.—
Scott Lumpkin, NCPG Task Force on Valuing Planned Gifts
Journal of Gift Planning
11
12
Lately, we’ve observed a great many organizations discussing
new planned gift programs, ramping up their existing
planned giving program or struggling to integrate their traditionally separate planned and major gift programs. This seems
like a logical reaction to a new reality: fundraising is much
tougher than it used to be, for fundraisers AND for donors.
We are living in a more dangerous world, with a more
uncertain economy and with new and more confusing tax
laws. Especially in the post-September 11 world, where
intense scrutiny of public institutions (including charities) is
the norm, who can blame donors for being much more
thoughtful and donor-centered about their philanthropy and
about what, when, how, where and why they give? Against
this backdrop of dramatic change, donor-centered gift
planning offers the best possibility for growth in stagnant
fund raising programs, and therefore, planned giving is
getting more attention than ever. Perhaps there has never been
a better time for charitable organizations to seriously face the
impediments to integrating major and planned gifts programs
and finally bring planned giving into the mainstream.
The concept of Total Financial Resource Development
(Total FRD) provides a new framework for talking about our
numbers to the CEO, CFO, trustees and other people who
count. Total FRD is based on the idea that a fundraising
program is a complex system, consisting of many types of
gifts that fit together in a big picture, but that are not always
visible in conventional fundraising models for reporting,
counting or valuation of gifts. The Total FRD multidimensional fundraising model, along with a series of specific
structured reports (we call Total FRD Profiles), offers a more
realistic picture of fundraising achievement than traditional
contribution reports inspired by the Financial Accounting
Standards Board (FASB). It is important to note that the
tools we suggest will complement (and reconcile with), but
not replace, traditional fundraising reports. As you will see
later, our reports “reconcile” with FASB, because that is our
organization’s reference standard, however they could just as
easily have been compared with another standard or
compared with the valuation methodology set forth by
NCPG’s valuation taskforce.
One of the toughest challenges facing charitable organizations
today is living up to the ideal of being accountable. What do
we count and how do we count it? One of the most vexing
issues for those seeking to energize their fundraising programs
is that traditional “contribution income” reports, following
the rules for “accounting income,” simply do not recognize
the fundraising achievements that lead to the largest gifts.
They do not allow gift officers, especially major and planned
giving officers, to convey the full impact of their work. The
problem is compounded by outdated fundraising software
which does not allow CEOs or their boards to see how
planned gifts actually being received affect the big picture of
their gift revenues. Because of these challenges, the impact
that planned gifts actually have on annual results may be
underestimated, while their potential for future support
remains largely invisible. The unfortunate consequence is that
fundraising professionals who are particularly adept with gift
planning techniques may not obtain sufficient program
support, recognition or compensation. These are just some of
the many signs that it’s time for a change.
An Organizational Imaging Technique – We’ve tried to offer
a multidimensional approach to fundraising management.
Although we employ planned giving as a technology, our
approach is about fundraising, not just about planned giving.
The profiles are best understood as an imaging technique you
can use to view the inner workings and dynamics of your
entire fundraising program and provide a larger context for all
the gifts you receive, not just those you may classify as
planned or non-planned gifts. We hope that professional gift
planners will find this strategy valuable for advocating more
effectively for budgetary resources, more friendly organizational policies on gift acceptance and improved recognition
for donors, and for compensation practices that better reflect
their own impact. Finally, we hope CEOs will benefit from
this pragmatic perspective on planned giving, and that it
provides better tools for advancing organizational missions.
It’s a tall order.
Journal of Gift Planning
ACCOUNTING VS. FUNDRAISING
MANAGEMENT
We would like to be able to tell you that the “people who
count” (key stakeholders like the board of directors and our
internal financial managers) really understand how planned
giving works and how it fits into the larger fundraising picture.
But the truth is, sometimes the people who should be in the
know, just don’t know.
We see this when a major bequest comes in, and the boss or the
committee chair says that this was “just money over the
transom” and “it shouldn’t even count in your figures.” Further,
in many organizations, not much thought is given to
recognition of bequest commitments; where much thought is
given, bequest recognition is often problematic.
Translating Financials into Fundraising Reports
Stockholders versus Stakeholders
Counting planned gifts is difficult at least in part because many
of the most significant fundraising achievements are just not
visible in our conventional fundraising reports. Today’s
fundraising reports were not designed so much as they were
borrowed from the business world. They were made to track
business results, not fundraising management. While contribution income reports and audited financial statements are
essential for translating fundraising into financials, they are
one-dimensional and woefully inadequate to be the sole
management tool to measure performance of a fundraising
program. Contribution income, under FASB requirements,
provides a useful annual accounting snapshot of the cash value
of gifts; however, it does not allow you to measure long term
effectiveness of your fundraising.
The contribution income report as a sole measure of success
would be more appropriate if we had stockholders who were only
interested in the company as long as they held shares.
Stockholders tend to buy and trade stocks frequently, relying on
the latest information and moving on. However, our organizations’ goals are more akin to those of stakeholders, like long term
employees or founders, who are more interested in the enduring
success of the company. In the not-for-profit environment, it is
more appropriate to approach our work as it relates to stakeholders rather than stockholders, since institutions and organizations are more interested in long term solutions. Donors, of
course, are the ultimate stakeholders, and the ideal system would
provide an institutional record of their donative intent (i.e.,
what they transferred or committed to transfer) as well as the
financial valuation of their gift.
We observe many organizations where performance is measured
solely by this contribution income standard. While it is logical in
one sense for an annual campaign to utilize quarterly reports to
track performance, to favor these results over sustainable success
in a multi-year campaign seems counterproductive.
Furthermore, having a quarterly report mentality and a short
term focus is inconsistent with donor-centered gift planning—
the type of gift planning that takes into account donors’
timing, interests and assets. Planned giving officers, whose job
Journal of Gift Planning
13
descriptions call for them to concentrate on future gifts, find
their successes and achievements are often overlooked, because
such gifts and commitments are largely invisible to the
campaign measurement system or seem at odds with the results
most often “tested.”
The Consequences of our Systems
In summary, having borrowed the tools of business without
developing our own fundraising standards, we pay a price every
day. You could say we are “living on borrowed tools.” As a
consequence:
•
Planned giving becomes mysterious—and in truth, we seem
to take some pride in keeping it that way.
•
Most important, the donors (and their charitable intent)
often get lost in the shuffle of valuation procedures,
counting guidelines and calculations.
Given all of the issues outlined above, and the fact that modern
fundraising campaigns are increasingly complex multidimensional systems, organizations need to develop more effective
management tools. Ideally, these tools will reflect and promote
true fundraising achievements and recognize the way donors give
and fundraisers really work in today’s philanthropic and
economic environment.
•
Planned giving and gift planning professionals receive less
institutional support than they deserve, in light of the
impact they may have on the future of their organizations.
•
Fundraising programs and campaigns raise less, since
planned giving is devalued (charitable dollars left on the
table).
•
There is little qualitative analysis of big picture or of value
added by planned gifts.
PLANNED GIVING IN ITS OWN
RIGHT—THE MICROSCALE VIEW
•
Our leadership is less educated about planned giving.
Two Key Concepts
•
Recognition of planned gift donors is often grudging and
limited.
•
Major gift fundraisers have limited incentive to promote or
become educated about planned giving because the
immediate results of planned gifts may not impact the
bottom line.
•
Planned giving results that are counted are often reduced to
keeping score of mass quantities—how much contribution
income from how many gifts closed, how many people we
talked to, how many seminars held and productive visits, etc.
•
14
understood by the institutions we serve. (This is ironic for a
profession dominated by individuals who are technically
inclined, on the one hand, but who are very peopleoriented, on the other.)
Generally speaking, we lack a shared vocabulary or common
language for measuring results that is respected or
Journal of Gift Planning
Before we explore the impact of planned giving in the big
picture—that is, on your organization’s overall campaign—we
must establish two concepts that help leadership and staff have
a better grasp on what planned giving IS in its own right. The
first concept is a system for classifying and counting ways
donors can structure their gifts: Three Dimensions of Planned
Giving. The second concept is a simple and reliable method for
gauging the potential cumulative impact of all the planned gifts
received by your organization that have yet to “mature” or be
realized fully: Planned Giving Inventory.
Each concept uses planned giving terms we are all familiar
with, though our “people who count” may not be. But in this
format, we gain a better perspective on the importance of
planned giving in its own right, as a solitary component
within the larger fundraising system. This is a microscale
view of just planned giving. Later, we will illustrate a similar
concept on the macroscale of how planned gifts fit into the
overall campaign picture.
Three Dimensions of Planned Giving (Fig. 1)
When talking about numbers to the people who count, we
find it helpful to classify and report all planned gifts in three
categories: outright gifts, irrevocable gifts and revocable gifts.
Figure 1 illustrates this concept as three dimensions of equal
size to illustrate their importance. In reality, however, the
‘bequests received’ segment tends to be the largest by far. To
keep our stakeholders informed about progress, we also report
each segment separately and track its history over time in
separate charts.
When talking about numbers to the people who count, we
find it helpful to classify and report all planned gifts in three
categories: outright gifts, irrevocable gifts and revocable gifts.
We report each annually and track each category separately
over time.
A. Outright Planned Gifts – all cash received from bequest
revenues along with testamentary pledges and liquidations of
trusts; includes gifts of unusual or non-cash assets, such as
those requiring appraisals.
B. Irrevocable Gifts – split interest gifts such as gift annuities
and charitable trusts in which the beneficiary designation is
irrevocable.
C. Bequest Commitments – gifts such as bequests, living trusts,
and IRAs in which the charitable beneficiary’s interest remains
revocable by the donor.
The dimension of outright planned gifts would include cash
received from a matured bequest commitment, as well as the
cash “equivalent” from a binding testamentary pledge.
Outright planned gifts, such as bequests received, are quite
Fig. 1 Three Dimensions of Planned Giving
commonly reported. However, testamentary pledges, which
some organizations may refer to as a contract to make a will,
are not as commonly classified as planned gifts, and you
would not find them separately included under FASB rules.
However, we think it is appropriate to classify testamentary
pledges separately here. There is a difference between a
regular pledge, which is meant to be paid during the donor’s
lifetime—say, in one to five years—and a pledge acquired
from an older donor, which is specifically structured to only
be payable on death. In acquiring such pledges, the
approaches and strategies are different and more akin to
planned giving. Thus, in talking about our numbers to the
people who count, the distinction is meaningful and real. A
more mundane and operational distinction between the two
is that an organization may choose not to send an annual bill
to a donor for a pledge payable on death, as they would for a
typical three-year pledge.
Moreover, there is a clear distinction between what we are
calling a testamentary pledge and a known expectancy.
Because testamentary pledges are gifts intended by the donor
and regarded by the institution and FASB as legally binding
and enforceable, they are clearly different than what we
normally refer to as known expectancies, which are revocable.
The distinction is valid, regardless of whether an organization
would ever choose to enforce a testamentary pledge.
Journal of Gift Planning
15
Three Dimensions as the Building Blocks for
Total Financial Resource Development
Adopting these three dimensions of planned giving specifically,
rather than three other dimensions, is important—not only
when looking at planned giving in its own right, but also when
considering the big picture of your overall fundraising
campaign. By using these categories consistently, it is possible to
move smoothly from the microscale planned giving world to the
macroscale view of the organization’s overall fundraising efforts.
Having a common language helps our leaders better understand
how donors actually structure their gifts—planned and
otherwise—and provides them with the education they need to
consider their own gifts. Reporting consistently in terms of these
three dimensions has enabled us to be accountable for our
results and performance when requesting new or increased
funding or advocating for more focused institutional efforts on
planned giving. Finally, it will enable us to maintain consistency
when the time comes to reconcile our new reports with the
more conventional FASB-based contribution income reports
and audited financial statements.
Value of Planned Giving Program –
Creating a Planned Giving Inventory (Fig.2)
In addition to showing the impact of planned gifts on an annual
basis, it is vitally important to be able to convey and estimate the
impact of planned giving on the future of the organization, since
that is where planned giving plays an even more significant role.
The Planned Giving Inventory helps you convey to your
leadership the potential impact of planned giving over time. In
the years since we’ve employed this tool, it has provided
impressive evidence of our progress. Presenting a planned giving
inventory was an essential step in helping us to obtain the
support we needed from both our professional and lay
leadership for new planned giving initiatives.
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Journal of Gift Planning
Fig. 2 Planned Giving Inventory
June 30, 2000 Total: $208,676,000
Planned Giving Inventory Defined
Here, the term “inventory” serves a fundraising management
purpose, rather than a financial purpose. The inventory provides
a comprehensive listing and measure of the value of your known
stock of future gifts that will benefit your organization.
A planned giving inventory is a straightforward compilation and
report of all completed planned gifts from which revenues have
not yet been received. It is the answer to the question of how to
keep track of planned gifts and commitments, both irrevocable
and revocable, after donors make them, but before you receive
the final proceeds. These future gifts include: charitable
remainder trusts, gift annuities, known expectancies, open
estates (estates in probate), testamentary pledges, virtual
endowments and life insurance policies.
The results of a planned giving inventory can seem quite
dramatic to those who realize for the first time the extraordinary
impact planned gifts are bound to have on the future of their
organizations. More than one fundraising executive has
remarked that—as impressive as this inventory of future gifts
is—it represents only a relatively small percentage of the
planned gifts they are likely to actually receive.
Benefits of a Planned Giving Inventory for
Your Organization
Where are your future major gifts coming from? While it may
seem like a great deal of work to prepare, there is a significant
payoff for completing this inventory. The inventory reveals the
total value of your overall planned giving program, not so much
as a financial statement, but in a fundraising sense and in terms
donors can understand. This can be a very large number,
especially with long-standing programs, but even for a small
program or a new program that has yet to produce significant
revenues from bequests and other planned gifts.
A planned giving inventory can help the staff and leadership of
your organization realize the importance of planned giving,
while emphasizing and highlighting important future campaign
achievements of your organization. For instance, the inventory
can help you identify individuals who are prospects for future
major gifts. You can use the inventory to determine if you had
prior knowledge of bequests, when they are received, and to
begin developing an understanding of how effective your
bequest marketing is over a period of time. In addition, for
strategic planning purposes, you can question what level of
inventory is needed to reach a certain level of annual revenues.
It can also provide evidence that might be needed in your organization to support developing better donor recognition practices
for revocable gifts. Finally, if at some point you find that you
need to calculate present values for your gift expectancies, the
inventory can act as a source listing to do so.
Below, we will discuss the methods we used to create and
calculate a planned giving inventory. It is important to note in
advance that we have chosen not to “present value” the gifts, but
rather to report them at face value. Each type of planned gift
stands on its own and is listed in a way that illustrates its
standing relative to other gifts and to the whole. The purpose of
this exercise is plainly not to create a statement for financial
purposes—that is already available through your organization’s
audited statements—or to show the financial value the gifts have
to the organization. Instead, the purpose is to highlight the way
donors have structured their gifts and illustrate the importance of
planned giving in the overall future fundraising program of the
organization. If you create a planned giving inventory, we
believe you will find it an essential new tool for talking about
your numbers to the people who count in your organization.
Creating and Calculating the Inventory
Calculating the inventory is a technical procedure we perform
annually. It is somewhat complicated the first time you attempt
it, because it requires first that you review all your planned
giving files and have certain information in either a database or
Excel spreadsheet. Simply put, you need to keep accurate
records so that each year you can recalculate your inventory
based upon the prior year’s inventory and what occurred during
the year. At the end of the year, we add new gifts and subtract
gifts that have matured or those we know will not be fulfilled.
Each organization may want to define certain rules when
creating an inventory.
Following are some of the rules we developed to ensure
consistency and accuracy:
• When given a range of numbers for a value of a future gift,
be conservative and always use the lowest number in the
range for a value.
continued on page 42
Journal of Gift Planning
17
Samers, Meyers, continued from page 17
• If we are named as a contingent beneficiary, the gift is
assigned a value of $0.
• Fully anonymous donors, as well as ‘client of’ donors, are not
counted in the inventory.
• Estates and revocable expectancies with unknown specific
amounts (including a percentage bequest) are assigned a
value each year which represents the average bequest received
from the past three fiscal years. In order to calculate the
average bequest, use the sum of all distributions from every
estate that has closed within the past three years (once all
funds have been distributed) and divide it by the number of
closed estates from the past three years. The average bequest
is different than the average distribution size.
• Charitable remainder trusts in which we are irrevocably
named but in which the value of the trust is unknown are
assigned the average value of all known trusts.
• Estates in probate (open estates) are assigned only the
unrealized portion of the bequest if the distributions have
already begun.
• Life insurance policies are assigned the face value of the
policy.
• Virtual endowments are assigned the multiple of the annual
distribution times 50 years. Virtual endowments are
endowments which provide us with annual stream of income
but which are held and invested by an outside organization
or commercial trustee. (They would not be considered as
irrevocable or “bookable” gifts.)
• Testamentary CRTs created by wills or living trusts in which
the CRT has been funded after the death of the donor are
recorded as open estates rather than CRTs.
• CRTs with revocable charitable beneficiary, i.e., where donor
reserves the right to substitute a different charity, are included
as known expectancies. If we are provided with an updated
value of the CRT, we assign that current value each year.
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Journal of Gift Planning
• For lifetime pledges (when donor pledges a certain annual
amount for his lifetime), we assign the multiple of the annual
amount times the donor’s life expectancy.
• Charitable lead annuity trusts are assigned the multiple of the
annual distribution times the expected number of years.
Charitable lead unitrusts do not have an exact annual distribution, so we use the future value of the charitable estate tax
deduction (based upon the expected term of the trust).
PLANNED GIVING IN THE BIG
PICTURE — THE MACROSCALE
VIEW
Building Total FRD Profiles of Your Campaign
Now that we have illustrated a method for visualizing the impact
of planned giving in its own right, we can offer an analogous
approach for viewing the larger campaign as a system consisting
of gifts of many types and structures. Our model of the big
picture should reflect the impact of planned gifts in the broad
context of all other gifts received—that is, as part of the organization’s Total Financial Resource Development. We call this a
Total FRD Profile. Without a method for appraising and
measuring the impact of planned giving in the big picture, many
important fundraising achievements will continue to go unrecognized and unrecorded.
In order to apply the Total FRD approach to an organization’s
overall fundraising program, we have adopted a system for
classifying and counting all charitable gifts that corresponds to
the way donors actually structure those gifts. The model we use
for viewing the big picture is in many ways parallel to that
illustrated previously in reference to the Three Dimensions of
Planned Giving, only more broadly defined. The categories we
use also have the advantage of illustrating which types of gifts
create contribution income for FASB purposes, and which are
commitments that will be realized as income only in the future.
Three Dimensions of
Total Financial Resource
Development
1. Cash
or
Equivalent
Contributions — all cash or
equivalent contributions. This
has been further classified into
the following five subcategories: outright gifts or cash
(but not contribution income
from CRTs or CGA or
payments on pledges); legacies
and bequests (including liquidations of trusts and bequests
received); pledges (including
lead trusts given FASB
standards);
testamentary
pledges and gifts of unusual or
non-cash assets, such as those
requiring appraisals, (real
estate, art, closely held stock,
partnership interests, etc).
2. Irrevocable Life Income Gifts
— all split interest gifts in
which the charity designation
is not revocable, including:
charitable trusts, charitable
gift annuities and other
irrevocable gifts (retained life
estates).
3. Documented Commitments—
all revocable gifts such as
documented
bequest
commitments, IRA designations and revocable trust
beneficiary designations. We
have sub-divided this into
specified and unspecified
amounts. We have set specific
Journal of Gift Planning
43
standards that need to be met in order to characterize a gift as a documented commitment. Our standard is that we must have
received something in writing from the donor indicating that they have executed a commitment in their will, living trust or on
a beneficiary form. We do not require the official document. We recommend that you determine what standard works best for
your organization. We use face value for the gift in part to allow for both the donor and the fundraiser to see their gift reflected
in the report. Another reason to use the face value is that you can track long term fundraising trends better than with a “relative”
number provided by a present value calculation — especially if your objective is to increase giving from year-to-year on gross
number basis. (For more on this, see Figure 4.)
The following chart enables us to account for gifts across the three dimensions of Total FRD in our entire campaign. Note how the
footnotes fully disclose the sources of information and serve to reconcile this report with other contribution income financial reports.
Fig 3. TOTAL FINANCIAL RESOURCE DEVELOPMENT SUMMARY
Campaign Report for Fiscal Year 2000 (July 1, 1999-June 30, 2000)
Type of Gift
Fiscal 2001
Total
Year To Date
Fiscal 2000
1 Cash or Equivalent Contributions (note 1)
A) Outright Gifts or Cash (Does not include income received from CRTs and CGAs,
reported in category II, or payments on pledges)
17,278,000
24,666,000
B) Legacies and Bequests (cash received from planned gifts) (note 2)
10,663,000
14,350,000
C) Pledges (except testamentary) (note 3)
28,633,000
11,329,000
D) Testamentary Pledges (planned estate gifts)
10,850,000
50,000
67,424,000
50,395,000
E) Non-cash Assets (types requiring appraisals, such as real estate, art, closely held stock)
Total Outright gifts Gifts and Pledges
2 Irrevocable Life Income Gifts (note 4)
A) Charitable Trusts (CRTs)
3,606,000
3,778,000
B) Charitable Gift Annuities (CGAs)
1,159,000
1,445,000
4,765,000
5,223,000
C) Other Irrevocable Gifts
Total Life Income Gifts
3 Documented Commitments (note 5)
A) Gifts with specified amounts
2,850,000
3,790,000
B) Estimated value of gifts with amounts not specified (note 6)
1,286,000
2,315,000
Total Commitments Estimated
4,136,000
6,105,000
76,325,000
61,723,000
4 Total Financial Resource Development
Notes
1. Total contribution income of $58.2 million, as reflected on the financial reports, is composed of $67,424,000 (Total Outright gifts and Pledges, category #1)
minus end of year adjustments for the present value of pledges and testamentary pledges of $11,038,000, plus the contribution income portion of Irrevocable
Life Income Gifts (category #2) of $1,793,000.
2. Legacies and Bequests include liquidations from previously recorded Life Income Gifts shown in category #2 and proceeds received from previously recorded
documented commitments in category #3.
3. Pledges include binding gifts to be made over a 1-5 year period as well as binding gifts over donors’ lifetimes.
4. Irrevocable Gifts in category #2 are charitable remainder trusts (CRTs) and charitable gift annuities (CGAs) reported at their face value.
5. Commitments are documented commitments including executed wills, living trusts, beneficiary designations, etc.
6. Estimated value of unspecified commitments is based on a three-year average of 252 bequests received (Average gift: $128,600).
44
Journal of Gift Planning
Full Disclosure
The footnotes found in the chart are critical to the acceptance
of the Total FRD report. Without these footnotes, this tool
would never have gone beyond a draft stage. While every
institution may be different, if you attempt to use this table, we
strongly recommend that you include the footnotes. A simple
footnote may make the difference between acceptance and
rejection by other individuals with different agendas. This is
especially true because you need acceptance from your CFO or
others in the financial/accounting side of your organization
before this chart can be used by your organization. Your
financial officer and your CEO need to trust that your Total
FRD report and their contribution income report describe the
same financial reality. If they do not, this report will likely not
be accepted in your organization.
1. Reconciliation with Contribution Income Financial Reports
This note proves the “apples to apples” comparison between
the Total FRD Report and your organization’s more
traditional contribution income report. It allows for coordination with FASB rules and official audited financial
statements. It is calculated by taking the sum total of all cash
and pledges from Part 1 minus adjustments for the present
value of pledges plus the contribution income portion
(present value) of life income gifts found in Part 2. Although
preparing the documentation for this note may be timeconsuming, it is essential for the credibility of the Total FRD
report. [Author’s note: Although we have reconciled Total FRD
with FASB, in the future, we hope the valuation standardds used
with will be those provided by NCPG.]
2. Legacies and Bequests
These include liquidations (cash received) from matured,
previously recorded life-income gifts and proceeds from
previously recorded documented commitments. As part of
our disclosure, this footnote anticipates the issue of
potentially double counting some gifts. This can occur
because a gift may be counted more than once in different
years. For example, a bequest commitment may be first
recorded as a known expectancy and then be recorded again
(this time as cash received from bequest) a few years later
when the donor has passed away. If a donor makes a
commitment and then dies and cash is received in the same
year, we only show the gift once.
Compared to a contribution income report, a Total FRD
Report is much more valuable as an annual snapshot of giving
because it allows us to examine and analyze several types of
gifts that would otherwise be invisible, most importantly
revocable bequest commitments and actual bequests received.
In the case of a bequest commitment, this important
fundraising achievement would not be visible at all in a contribution income report. In the case of an actual bequest
received, this would be identified as cash received on a contribution income report. In both cases, the Total FRD Report
is able to identify a gift for what it is—either a revocable
commitment or a completed bequest. Thus, the FRD Report
provides a much better snapshot of a single year, identifying
the immediate contribution value and/or long term benefit of
each type of gift acquired. However, if you want to examine
fundraising results over a longer period of time, you would
probably benefit from looking exclusively at contribution
income as reported on audited financial statements.
3. Pledges
These include binding gifts over a five-year period or over a
donor’s lifetime. This allows you to distinguish between testamentary and regular pledges.
4. Life Income Gifts
This makes it clear that you are reporting life income gifts at
face value.
5. Commitments
This footnote allows you to explain to readers what exactly are
the commitments acquired, (executed wills, living trusts,
beneficiary designations.)
6. Estimated value of unspecified commitments
For bequests with no specified amount, we project a value
using an average bequest, based on the three year rolling
average of actual bequests received. For calculation purposes,
bequests are complete only after all distributions have been
received.
Journal of Gift Planning
45
USING TOTAL FINANCIAL RESOURCE
DEVELOPMENT PROFILES TO VIEW
THE BIG PICTURE
The illustrations below depict the same information as the
numerical chart. Each one presents a different profile of your
organization’s fundraising system. We think it is better for
purposes of educating leadership, and it makes a greater impact,
if results are shown in the form of graphs. While a visual
learning style appeals to more people, it is still important to link
this information to the Total FRD chart described above for
those who expect financial information to be shown in a more
number-oriented format.
Using Total FRD Profiles for Evaluating Your
Overall Campaign (Fig. 4)
Total FRD Profile of the Big Picture — This is an Excel
graphical version of the numbers in the chart showing overall
fundraising along the three dimensions of Total FRD. In this
view, you can see things that cannot be seen any other way: for
Fig 4. Total Financial Resource Development
Fiscal Year 2000 = $76,325,000
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Journal of Gift Planning
example, the almost cyclical relationship that becomes visible
between new known expectancies and completed bequests. This
provides an easy way of looking at trends without having to read
a technical chart. (Note: this chart could also have a column for
non-cash assets.)
If your commitments remain substantially lower than your
received bequests, your organization may have a difficult time of
raising funds in the future. However, given that there are some
donors who make bequests of which you may be unaware, your
organization does not have to raise a similar amount of
expectancies to realize them later as bequests received. This
profile can also help you get a much better sense of the role each
type of gift plays in your fundraising program in a given year, so
you can begin to ask what happened and why.
Total FRD Profile— Segmented by Region or
Department (Fig. 5)
This graph illustrates a profile of regional performance. You
could also use a similar graph to show departmental or
individual performance. Even at a glance, you can begin to see
Fig 5. Total FRD By Region
Fiscal Year 2000 total FRD = $76 Million
the inner workings of your fundraising program and obtain
valuable information for planning and management on the
regional, departmental and national level.
When you first view this profile, you may be surprised, as we
were, to see dramatic differences from one region to the other.
The “diversity” of giving patterns, or the lack of it, stands out in
stark contrast. If contribution income alone were used to
measure performance, many fundraising achievements would
not be visible at all and none of diversity of gift vehicles would
be discernable. You could call this an organizational imaging
technique—drawing the analogy to magnetic resonance
imaging (MRI).
This snapshot of annual giving shows that some regions acquired
more types of gifts than others—for instance, pledges versus
bequests. You can also easily judge the relatively lesser importance
of outright cash as a gift vehicle utilized in your fundraising
program, compared with pledges. In addition, you can begin to
gauge how results reflect your marketing effectiveness or the gift
planning skills of your fundraisers, or even how the regional
demographics may affect the types of gifts donors
have chosen to make or fundraisers to solicit.
A chart like this measures performance AND helps you to
determine where to focus your planned giving educational efforts.
It also allows you to observe where certain efforts or relationships
have paid off.
Profiling Total FRD Gifts by Size — New Pyramid
Graph (Fig. 6)
The general rule in major gift fundraising is that just a few gifts
represent a disproportionately large percentage of your overall
program. It is also the case that many of the largest gifts are
planned gifts. However, even the impact of these gifts may be
underestimated because they are often not visible as a part of
the program.
You can convey your program in greater dimension and more
effectively by utilizing a Total FRD approach. Using the same
information in the previous graphs, here we have characterized
fundraising achievements as lead gifts, major gifts and all others.
By including the full impact of life income gifts and known
expectancies, this chart readily shows how planned and major
gifts together shape the whole annual program.
These Total FRD Profiles provide a threedimensional view of your overall program—a new
kind of intelligence about your fundraising which
you can use both to plan and to adjust your plans.
For instance, it is clear how the whole program is
affected when a region acquires a very significant
pledge. Looking at several of these annual
snapshots, you can also observe how, when regions
consistently acquire no new known expectancies
or revocable commitments, they may have to live
from year to year on outright gifts or pledges. In
certain regions, you might be able to clearly detect
a pipeline effect, or correlation, between new
known expectancies received over time and
revenues actually received from estates.
Fig 6 Total FRD Pyramid
Distribution of Gifts by Amount
Journal of Gift Planning
47
IMPLICATIONS FOR CORPORATE
CHANGE — FUNDRAISING
SOFTWARE
Ultimately, even if the CEO of your organization adopts a Total
FRD approach in concept, there will still need to be system
changes for this approach to be fully institutionalized and
carried forward beyond a few staff members who personally
endorse it. This is a simple fact of organizational life. One way
of institutionalizing change in this case would be to modify your
database and fundraising software so that it incorporates the
new model. Until the Total FRD multidimensional approach is
built-in, it is unlikely that planned giving will ever really become
a central part of a fundraising organization.
Fundraising software should inform those who need to be in the
know if they are dealing with a $350,000 donor or a $35,000
donor, and it should reveal how their support is actually
structured. (See Fig. 7 for a glimpse of how this might be done.)
However, most fundraising software has not been designed for
the Total FRD approach. Most fundraising databases display
only contribution income, and thus many planned giving
donors are not represented properly, if at all.
Fig 7. Tomorrow’s Fundraising Software —
Institutionalizing Total FRD
Donor Profile Screen for ___________________________________
Total FRD Profile
1. Cash/pledges (outright)
$5,000
2. Life income gifts (irrevocable)
$50,000
3. Bequests (revocable gifts)
$250,000
Total
$305,000
fundraisers need knowledge and information about donors and
how they give. Total FRD profiling would ensure a threedimensional view of donors’ support, including outright gifts,
life income gifts and bequest commitments, alongside their contribution income history.
SUMMARY — PROFILE OF AN
ORGANIZATION WITH PEOPLE
IN THE KNOW
It seems clear that the instinct to ramp up planned giving during
this time of change can be a good one. Donor-centered planned
giving can play a meaningful role in reviving major gift
fundraising. However, in order to succeed in this process, your
organization will need to move beyond the conventional
measure of fundraising achievement as contribution income,
and toward a three-dimensional view of fundraising as a system
of many types of gifts.
If the people who count in your organization are in the know, it
follows that they will have a much better sense of the impact of
planned gifts on your campaign. Without this sense, in many
institutions, planned giving will remain either in left field or in
a dim corner of the organization, rather than integrated into the
overall development program.
The concepts we have presented of the three dimensions of
planned giving and Total FRD Profiles offer a common
language to talk about the real work of fundraising and how to
measure fundraising achievement. Extending these simple
concepts from planned giving to the larger picture will enable
you to view the strengths and weaknesses, as well as the depth
and breadth of your campaign, and help you fine-tune your
plans to move your program forward.
Contribution Income Profle
Total FASB Contributions
$35,000
For the Total FRD approach to really have a persistent or
permanent impact, and be integrated into your organization,
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Journal of Gift Planning
Most importantly, when the people who count adopt this new
Total FRD approach, the following may occur:
1. Organizations will raise more money since individual
fundraisers will be more focused on donor-centered gift
planning than on quarterly “numbers.”
2. CEOs will have greater success at integrating planned and
major giving in the organization, since fundraisers and
donors will be recognized for gifts of all types.
3. Organizations will do what it takes to be better equipped to
acquire more planned gifts, which is critical to their organization’s success in this newer, tougher fundraising
environment.
4. Planned giving professionals will benefit from having more
resources available to them.
5. CFOs, utilizing the Total FRD approach, will be able to
consider better management information on a greater
range of fundraising achievements. Because they are no
longer relying strictly on contribution income as the sole
measure of accountability and performance, financial
officers will be viewed as more supportive of the
fundraising activities of the organization and thus, more
engaged with the CEO and leadership.
6. Leadership will have a better understanding of the organization and more information from which to make decisions,
not only about compensation for gift planners, but about the
future of the organization.
7. Leaders in the know are more likely to consider establishing
their own planned gifts and legacies once they realize the
impact such gifts have on the organization.
8. Organizations will have a new technique to encourage jobhopping fundraisers to concentrate on acquiring larger, more
significant planned gifts, instead of focusing exclusively on
gifts that hit the bottom line immediately.
9. Supporters of your organization will better understand and
appreciate your fundraising efforts since your reports will
clearly reflect their donative intentions and the gifts they
have made.
If the gift planning profession adopts the Total FRD perspective,
then real integration of planned giving with major gifts can
proceed. This would mean that gift planning professionals will be
able to maximize their involvement in other areas of the organization because the work they have been doing will receive its
recognition—and planned giving will finally get out of the box.
POSTSCRIPT AND
ACKNOWLEDGMENTS
This article on “talking about your numbers to people who count”
was first presented in 2001, at the National Conference on
Planned Giving. The idea that planned giving could actually be
part of the big picture began years before, as a kind of expanded
gift activity report that needed to reflect “reality” for both the
fundraising and the finance professionals, as well as the board of
directors. When we presented at the NCPG conference, we were
surprised by the frustration reported by many gift planners, who
felt that significant fundraising achievements were often marginalized because of their organization’s counting and valuation
systems. Since then, we have been gratified to hear that the
concepts of Total FRD profiles and planned giving inventory have
enabled many gift planners to demonstrate the impact and worth
of their planned giving programs, first to themselves and then to
their organizations, sometimes for the first time. We want to
thank them and acknowledge that we have greatly benefited
from their experience in adapting the original slide presentation
into this article for The Journal of Gift Planning.
Since we originally wrote this article, CASE has released revised
Management Reporting Standards, which include recommendations for counting deferred gifts in campaigns. Even more
recently, NCPG released its own Valuation Standards for
Charitable Planned Gifts, and has established a brand new task
force to develop related guidelines for counting planned gifts.
NCPG should be applauded for developing valuation standards
that are separate from the counting process. We hope this article
makes the case for keeping counting and valuation separate.
Steven L. Meyers, PhD, has been involved in charitable gift planning and program design for thirteen years. He is
the vice president for planned giving at the American Committee for the Weizmann Institute of Science (ACWIS).
Previously, Steven established the planned giving program at the Jewish Home for the Elderly of Fairfield County
(CT). He holds a Masters in Organization and Management from Antioch and a PhD from the University of
Buffalo. He is also a member of the Planned Giving Group of Greater New York and the Planned Giving Group of
Connecticut, where he was a member of the board of directors. Steven has presented to the National Conference on
Planned Giving and councils in Connecticut, New York and New England, as well as to the Association of Fund
Raising Professionals (AFP). He speaks frequently on planned giving at fundraising organizations and at Weizmann
regional offices throughout the country.
William D. Samers, Esq., is the director of gift planning and member of the management team for the American
Committee for the Weizmann Institute of Science (ACWIS). Bill is the vice president of the Planned Giving Group
of Greater New York (PGGGNY) and a member of the faculty of New York University Center for Philanthropy and
Fundraising. Bill has presented to the National Conference on Planned Giving and the Planned Giving Councils of
New York, New England and Connecticut, as well as to the Association of Fund Raising Professionals (AFP) and the
New York State Society of Certified Public Accountants. Before joining ACWIS, Bill was affiliated with the American
Society for the Technion. Previously he was an associate at Heidell, Pittoni, Murphy & Bach, P.C. He is a graduate
of University of Pennsylvania and received his J.D. degree from Boston University Law School.
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Journal of Gift Planning