When I use the term professional counsel, I'm referring to attorneys, accountants, tax advisers, and financial advisers. These professionals should be part of the donor's team and should be used to provide counsel. You will come across donors that don't have professional counsel or don't know when to consult their professional counsel. You should always adhere to your policy to advise your donor to consult their professional counsel in all matters related to planned gift instruments. I guarantee, you will experience donors who want to take a short cut. They have various reasons why they don't want to consult counsel, it might be cost or it could be inconvenience. Whatever the reason, you should always encourage the donor to seek advice from counsel. A good reason to have this component in your gift acceptance policy, is that you can inform your donor that it is in their best interest to reveal all matters with their professional counsel and that it is your policy. When I use the term acceptance and administration of planned gifts, I mean the part of the gift acceptance policy that provides authority to certain positions within the charity to negotiate, accept, and administer planned gifts. This will generally be the leadership or administrators of the charity as well as the planned giving development officers. You don't want every employee of the charity to have this authority, the policy will detail who has responsibility for various tasks. It's common for the planned giving development officers to negotiate and administer planned gifts. The officers of the charity, the president, treasurer, and secretary have authority to accept, approve, and set policies. Here is an example to illustrate how the acceptance and administration of a planned gifts component of the gift acceptance policy works. In a typical planned giving discussion with a donor, the planned giving development officer would meet with a donor to present, solicit, and negotiate the planned gift. The document used to detail the planned gift would be reviewed, approved, and signed by the president, treasurer, or secretary of the charity. Then, the administration of the planned gift will be led by the planned giving office. When I use the term approved planned gifts, I mean a detailed list of planned giving options that your charity has defined as approved options. This section of the gift acceptance policy lists each planned giving option your charity will accept. This is the nucleus of the policy. It provides direction for each development officer to follow when working with a donor. When following the approved planned gifts in your policy, you don't need to get special approval as long as a gift is structured based on the details and specific criteria listed for each planned gift option. Let me provide an example of how this would work. Say you're meeting with a donor for whom you've determined a charitable remainder trust is the best fit. This determination is based on their family, financial, and philanthropic goals. The donor has requested that the annual payout rate for the charitable remainder trust be nine percent. First as a development professional, you should know that creating a charitable remainder trust that pays the donor nine percent is not a good idea because it virtually is impossible to generate annual investment returns at that level. This means that charitable remainder trust will be paying out more each year than it was earning which will result in a decreasing charitable remainder trust and ultimately, less for the charity. Therefore, in such a situation, you would have a discussion with your donor about the benefits of a lower payout rate, that would start with paraphrasing your gift acceptance policy. As you'll see in the gift acceptance policy in the resource packet, the approved range of payout rates is five to eight percent. Even though the policy allows you to go up to eight percent, there are reasons why you would encourage your donor to create a charitable remainder trust with a lower payout rate. I generally start at five percent and negotiate up. You want to find a balance between meeting the donor's financial need and keeping their philanthropic goals in mind, it is very likely a lower payout rate would be better for the donor. When I use the term charity as trustee, a trustee is best defined by Mirriam-Webster, a person or organization that has been given the responsibility for managing someone else's property or money through a trust, or a legal person to whom property is legally committed to be administered for the benefits of a beneficiary. You generally choose someone or an organization to be trustee because they possess expertise that adds value to the property or money the beneficiary is entrusted to them. With an organization like a large charity, the expertise is vast because of the number of experts employed as well as the connections and resources available to expand their knowledge base further. Staying with the same example of the donor wanting a charitable remainder trust, the donor has agreed to create a charitable remainder trust with a five percent payout rate. Because it's a charitable remainder trust, they can name multiple charitable beneficiaries. Your charity is going to be one of those charities. The donor wants your charity to serve as trustee because you're the best equipped to handle the responsibility. Advantage to your charity serving as trustee is expertise in managing the trust and investing the assets. He wants to divide the charitable remainder equally between three charities. Your share would be 33.33 percent. As you consult your policy, it states that you will only serve as trustee if you are an irrevocable beneficiary of 51 percent. This is standard in the industry and a best practice. If your donor wants to take advantage of your charity serving as trustee, they will have to modify the percentage your charity is receiving to meet the 51 percent threshold and make it irrevocable. If they don't agree to those terms, then they will have to select someone outside your charity to serve as trustee. This could be someone they hire like a private fiduciary or they can serve as their own trustee. However, there are downsides to both, but those details are aside from this example helping you understand the term charity as trustee and how that works.
