Week 4 Flashcards
In gift planning, what is meant by the term “linkages”?
A) links between a donor and a fundraiser, such as shared hobbies
B) links between the past and present in a donor’s life
C) links connecting the donor with the organization
D) links among the donor, the advisor, and the fundraiser
C) links connecting the donor with the organization
The correct answer is C. The more ties the donor has to the organization, the more likely he or she will make a gift to that organization. Hence, fundraisers look for linkages and opportunities to create more linkages.
What is the best definition of the term “blended gift”?
A) a gift that consists of both money and volunteering
B) a gift that comes from two or more people who pool their gift
C) a gift that blends a return to the donor with a return to the charity
D) a gift that combines a major gift with a planned gift
D) a gift that combines a major gift with a planned gift
The correct answer is D. Traditionally, major gifts and planned gifts are solicited by different fundraisers at different times. In a blended gift, or “double ask,” the fundraiser asks for both the major gift and a planned gift, such as a bequest, at the same time.
What is the primary source of prospects for a planned gift officer at a large, stable nonprofit, such as a hospital, college, or large social service organization?
A) donors the fundraiser has known and cultivated from work at other nonprofits
B) referrals from existing donors
C) centers of influence that the fundraiser cultivates for consistent donor referrals
D) the “loyals” found in the organization’s database
D) the “loyals” found in the organization’s database
The correct answer is D. This is a point of differentiation between many financial advisors and gift planners. A financial advisor will very often cite prospecting as the number one focus of his or her activity. Referrals, centers of influence, and personal observation all are used to find appropriate new clients. But with nonprofit gift planners, the prospects are generally found in the pipeline of donors who have been giving to the organization for many years (an exception to this rule may be community foundations, whose prospects often come from advisor referrals). For a fundraiser to draw on leads from prior charities at which he or she has worked is an ethical violation. The donor “belongs” to the charity, not the fundraiser.
Which of these would be considered a “principal gift”?
I. $100,000 from the donor’s money market account
II. $1,000,000 in a closely held business interest
A) I only
B) II only
C) Both I and II
D) Neither I nor II
B) II only
The correct answer is B. The terminology is sometimes a bit hazy, and not all nonprofits use it the exactly the same way, but “principal gifts” are sometimes treated as a separate department or as part of the planned gift function in large nonprofits. They are generally large and tricky. That is, they are often large gifts of something other than cash or public securities. A large gift of cash is not likely to require special handling. A gift of land, a working business interest, an odd asset such as a collection, patents, royalties, or timber might be broken out, treated as a principal gift, and get pushed onto a specialist on staff. Generally, such gifts are larger than the traditional annual gift. You might think of them as a major gift, ultimate gift, or leadership gift (in a capital campaign) of a noncash asset. Such gifts may represent a significant opportunity for CAPs® to collaborate across the disciplines. Many advisor CAPs® work with clients who hold assets, and few charities can successfully garner such assets without the active participation of the client’s advisors.
Which statement(s) below is (are) true of planned gifts?
I. Planned gifts are often contingent gifts.
II. Planned gifts are often deferred gifts.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
C) Both I and II
The correct answer is C. Both these statements are true of what are termed “planned gifts” in the jargon of this field. A planned gift is generally a bequest, a split-interest gift, a life insurance policy, or a qualified plan designation. Bequests are often contingent because the will, or the arrangement, is subject to change. They are deferred. Life insurance and annuity beneficiary designations are contingent, and the money comes in later (deferred). Even a life policy owned by the charity is subject to the contingency that it might lapse, if the donor ceases donating the premium amount. A CRT’s charitable beneficiary designation is also often contingent. If the document comes from the client’s attorney, then he or she will suggest that the beneficiary be left subject to change. With a CRT, the charity gets the money later. With a gift annuity, it may irrevocably go to the charity that wrote it, but the money does come in later. The point overall is that planned gift money is generally deferred and often contingent. This, in today’s world of organizations needing money now, makes it hard to sell boards on keeping or growing a planned giving program. Deferred and contingent gifts seem less attractive to cash-strapped organizations than “now money” or irrevocable pledges.
With respect to “leadership gifts,” which statement(s) below is (are) true?
I. These are solicited during the silent phase of a capital campaign.
II. These gifts, which are few and large, set the pace for the campaign.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
C) Both I and II
The correct answer is C. Both are true.
With respect to planned gifts, all of these statements are true, EXCEPT
A) They are often made towards the final third of life, either as bequests or as a split-interest gift from which the donor gets an income back.
B) They are often the ultimate gift made by the donor.
C) Planned gifts can be made as part of a “blended gift,” with credit given to the donor and the fundraiser towards campaign goals.
D) Planned gifts are those planned by the client’s own advisory team.
D) Planned gifts are those planned by the client’s own advisory team.
The correct answer is D. A donor may choose to involve his or her advisors in planning a gift, but the term “planned giving” refers to a specific kind of gift solicited by the nonprofit. A planned gift is a bequest or charitable tool benefiting the charity. These can be solicited by planned gift officers who specialize in such tool-driven gifts, or they can be made by a major gift officer who has a conversational understanding of the tool and who brings in the planned gift officer to help explain and close the gift.
Increasingly, planned gifts are being rolled into a capital campaign by way of a “blended gift.” The donor to the campaign is asked for a major gift towards the campaign but is also asked to add a planned gift. The two are counted, within the campaign rules, for recognition for the donor and credit for the fundraiser towards the fundraiser’s own quota.
A gift chart is used to plan a fundraising campaign. What elements go into setting up such a chart?
A) the gift level today for each donor, the gift level expected in 5 years, the highest gift level expected over a lifetime, and the total gifts expected over the donor’s lifetime and at death
B) the gift level, the number of gifts, the number of years the gift is expected, and the total gifts from all givers at that level over their lifetime
C) the gift anticipated by each person, the number of givers, and the expected total gifts per person per year
D) the gift level, number of prospects for such a gift, the number of gifts anticipated to be made at that level, the subtotal of gifts from that level, and the cumulative total from gifts at that level and above
D) the gift level, number of prospects for such a gift, the number of gifts anticipated to be made at that level, the subtotal of gifts from that level, and the cumulative total from gifts at that level and above
The correct answer is D. The columns in the gift chart are the gift level, the number of gifts at that level, the expected total gifts from that level, and the cumulative total from gifts at that level and above. The chart shows how top-heavy giving is. The highest levels, say the top 5–10% of givers, may be giving a disproportionate percentage of the total to be raised in a campaign. A handful of major relationships make a major difference in the success or failure of the campaign to reach its total goal.
With respect to a “comprehensive campaign,” what statement(s) below is (are) true?
I. Such a campaign serves many purposes, rather than just one (such as building a building).
II. In such a campaign, planned gifts are often allowed to count towards overall campaign totals.
A) I only
B) II only
C) Both I and II
D) Neither I or II
C) Both I and II
The correct answer is C. Both are true. In a comprehensive campaign many aspects of the organization may be funded, and many kinds of gifts, including those that are planned gifts, are counted. Counting planned gifts is a bit of a challenge, though, because they are often contingent and deferred. How does the charity count such a gift towards the campaign thermometer, and how much credit should the donor get towards donor recognition, such as listing on the honor wall or recognition at an event or in a publication. In setting up the campaign, such issues are discussed and policies laid down.
Bella gives her university $1,000,000 through her will. Which statement(s) below is (are) true of her gift?
I. It is deferred.
II. It is an outright gift.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
A) I only
The correct answer is A. Only the first option is true. This is a vocabulary question. Planned gifts are generally contingent and deferred. Planned gifts contrast with outright gifts, which are made and received right now.
With respect to cultivating and soliciting planned gifts, all of the following statements are true, EXCEPT
A) The best prospects tend to be older (65–95).
B) The interviews tend to be longer than are major gift interviews.
C) The gifts solicited are often deferred, with respect to when the charity gets to spend the money.
D) Planned gifts are, by definition, irrevocable arrangements.
D) Planned gifts are, by definition, irrevocable arrangements.
The correct answer is D. Some planned gift arrangements are irrevocable; for example, the donor may give to get a gift annuity, and the charity will eventually have access to the residuum. The donor might gift a house but retain a life estate. That arrangement is irrevocable. A CRT might have an irrevocable charitable beneficiary. But most planned gifts are bequests, and they can be changed. Many CRTs have revocable charitable beneficiaries. Likewise, an IRA to charity via a beneficiary arrangement can be changed, and a life policy owned by a donor with a charity as the revocable beneficiary is subject to change.
The gifts are also generally deferred as to their creating spendable cash for the charity. The CRT, bequest, or beneficiary designation may go into place today, but it may be many years before the gift matures. At the same time, to get a client to act may well take more time than with a simple major gift ask. Planned gift donors are older, often retired, and happy to give generously. The gifts are more complex and may require multiple interviews.
All of these points add up to a challenge for someone who hopes to be paid to specialize in planned gifts: their employer may prefer that they just go out and ask for the major gift, and then slide into a planned gift conversation as an additional commitment. This is why blended gifts are so topical today.
A gift officer trained in blended gifts could execute which of the following process(es)?
I. Ask a donor for an outright gift.
II. Open a discussion of a planned gift in service of a campaign.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
C) Both I and II
The correct answer is C. Both are true. A gift officer should be able to make an ask for a major gift. But a gift officer who solicits blended gifts should also be able to “blend in” a planned gift – say, a bequest – to increase the total gift. Generally, this is done in service of a campaign. For example, a donor gifts $10,000 outright and sets up a bequest of $90,000. Campaign rules at a particular charity may allow this to be counted as $100,000 towards the campaign goal.
According to Dr. Russell James, who among the following would be an ideal planned giving prospect?
A) Tara: wealthy, single, age 54, regular annual donor
B) Juan: age 71, widowed, childless, educated, long-term donor to the nonprofit, with several major and campaign gifts. Has a high wealth rating.
C) Petra: age 80, married, with children and grandchildren, retired teacher, steady annual donor
D) Mara: gives through her family foundation
B) Juan: age 71, widowed, childless, educated, long-term donor to the nonprofit, with several major and campaign gifts. Has a high wealth rating.
The answer is B. Juan hits all the marks. Having neither a spouse nor children, he has fewer calls on his legacy dollars. Being a long-term loyal donor is wonderful, and, even better, he has given major and campaign gifts, indicating his ongoing willingness to give big to this organization. Plus, he has money.
All of these are indicators of “institutional readiness” for a successful planned giving program, EXCEPT
A) Financial stability
B) Strong annual gift program
C) Strong major gift program
D) Robust earned revenue
D) Robust earned revenue
The answer is D. Robust earned revenue may contribute to financial stability but is not directly relevant to cultivating a good pipeline of planned giving donors. Typically, success requires stability, longevity, an endowment, the ability to wait for results, and a strong pipeline of older donors with proven capacity and the propensity to give to that organization.
