Welcome back. In the last lesson, you learned how to train staff and volunteers working in planned giving. In this lesson, we will focus on providing donors clear disclosures and letters of understanding. After this lesson you will be able to describe the hallmarks of clear disclosure to a donor. Explain what a letter of understanding or letter of intent includes, and what it doe. Identify the component parts of most letters of understanding. Distinguish between poor and a good letter of intent. And discuss why transparency is essential in providing disclosures to donors. Let's get started. Anyone working in planned giving will encounter this terminology: disclosures, letter of intent, and statement of intent or letter of understanding. This is vital that you provide donors clear disclosures and letters of intent. Let's start by defining these terms. We will also cover what they describe in the context of planned giving. Disclosures and letters of intent, or letters of understanding, play an important role in the context of planned giving. These terms may be used interchangeably. Let me explain their function. When a donor has arranged to make an estate gift to your charity, it is imperative that you have the clearest understanding of their intentions, and the donor has a purest understanding of the disclosures mandated by your charity. You want to understand the donor's intentions so that you can properly administer their designation when they pass away. You want the donor to understand the disclosures, so there aren't any surprises that could jeopardize the impact they intended to make. This carries out good legacy management. You may sometimes hear the terms "letter of intent" or "statement of intent" used interchangeably. These are both documents that detail the terms of the donor's estate gift and the charity's disclosures. These documents can be in the form of a letter, a one-page form, or an agreement. The main things you need to know about letter of intent is the more details you can include, the better. The letter of intent is a historical document that will forever be associated with the donor's estate gift. The letter of intent should be signed by the donor and the charity. This document not only provides direction for the charity, but the donor should include it with their important legal estate documents. In order to provide donors a clear letter of intent, you should have a complete understanding of the donor's estate gift. This should document how they've included your organization in their estate plan. The easiest way to accomplish this is to get a copy of the document that names your charity. This will inform you if your organization is included in their will, living trust, beneficiary of a retirement account, or life insurance policy. It will also tell you if you're getting a specific amount or a percentage of the estate. You also want to know the details of their designation. This information may be included in their estate documents, so it needs to be consistent with the letter of intent. Most of the time it is not in the estate documents, so you'll need to interview the donor to gain the information to include in the letter of intent. You're basically documenting their instructions to you on how to use their gift when it is received. Enclosed in your resources is a sample letter of intent and statement of intent. Please review these to become sufficiently familiar with each. I'd like to show you an example of an unclear letter of intent so that you can see how it should be clarified. The letter shown here is also in your resources. Please, pause this, print the letter from your resources, and read it before you proceed. This letter is nowhere near sufficient. Take a moment to see if you can detect what may be missing or unclear before we dive into it. There are some good points about this letter. Let's look at them before we dive into the not-so-good parts. The name of the organization is accurately reflected. He describes how he is making the estate gift through his living trust, and he provides some details on the purpose of the gift. That is all good and essential information. Now, let's examine why it doesn't meet an acceptable standard. The biggest issue with the letter is a lack of details surrounding the purpose or designation of the gift, and the lack of disclosures. Here is a list of missing pieces of information that the letter of intent should answer. What should the name of the endowed chair be? How should the individuals be selected for the chair? Does the donor have a preference on the individual coming from inside the university, or could they be external? Should the chair holder have a term of years? Can the same individual receive the chair for additional terms? Does the donor want to restrict how the chair holder can utilize the annual expenditures? For example, some donors prefer not to use any of the money to supplement the chair holder's salary. No dollar amount is provided, therefore, we don't know if the gift value matches the level needed to accomplish the gift designation. There are no disclosures. What happens if the charity doesn't receive enough to create the endowed chair? And lastly, there are no signatures by the charity confirming they agree with the letter or support the gift purpose. As a donor, I would want this confirmation from the charity so that I can rest assured that the charity understands my intent. As you can see, there is a lot of missing information and details. This lack would make it more difficult to ensure the donor's charitable impact is achievable. In the absence of sufficient details from the donor, the charity will be left to make these decisions. There is no way to know if the decisions of the charity would match those intended by the donor. So this poor example of a letter of intent can help you learn what makes a good one. Here is an excellent example of a good letter of intent. The letter shown here is also in your resources. Please pause this, print the letter from your resources, and read it before you proceed. Several key components of valuable information make this example very helpful. The name of the organization is accurately reflected. The donor's designation is specific and describes the purpose of the gift. They included an estimated value so you can make sure the gift level is adequate to accomplish the gift purpose. They describe how they are making the estate gift through a beneficiary designation in their living trust. There are proper disclosures to let the donor know important information including that the endowed chair must be approved as required by policy, that the gift will be charged a gift fee, information from the endowment expenditure policy, and a clause that, should it become impractical or impossible to maintain, the chancellor can redesignate to make sure the endowment can be used. Most donors want their endowment to be used even if the designation needs to be modified. Some donors may even provide other options for the designation, so there is a built in plan B or plan C for the use of the endowment. Now, compare the poor letter of intent you printed alongside the good letter of intent. What else can you see that was done well in the good example? What kind of a checklist could you make to help guide you in evaluating the sufficiency of a letter of intent? Such a checklist should become part of an internal standard you can use to examine such important documents. Transparency is essential to establishing open dialogue and complete understanding between the donor and the charity. The goal of the letter of intent and disclosures is to establish transparency. It doesn't serve either side to hide details about the specifics of the estate gift. The more details the donor and the charity have, the better. Ultimately, transparency allows you to have the structure in place to make the impact the donor envisions, and create the legacy the donor deserves. Let's recap what we have covered. After this lesson, you should now be able to describe the hallmarks of a clear disclosure to a donor, explain what a letter of understanding or letter of intent includes, and what it does, identify the component parts of most letters of intent, distinguish between poor and good letters of intent, and discuss why transparency is essential in providing disclosures to donors. In our next lesson, we will cover marketing fundamentals that drive a successful planned giving effort.
