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Planned Giving leads peers, sets records

Winter 2016

Development Update

As momentum continues with The Student Imperative, CMC’s Office of Planned Giving reports a record-setting year in Life Income Gifts (LIG) as well as topping a list of peer institutions from across the country, including Pomona College.

For the past two years, in fact, according to Ray Rotolo ’76 P ’14, Planned Giving’s Director, his Office has generated the largest dollar value of LIGS and ranked near the top in number of LIGs. 

“We also have one of the largest gift annuity reserve pools in the group and one of the largest number of gift annuities in force,” he said. “Because of our youth and small size, particularly the number of graduates over age 65, we rank well down in gifts from estates. Our combined gift totals place us in the top half of the Middlebury Group.”

The Middlebury Group includes Amherst, Bowdoin, Bryn Mawr, Haverford, Middlebury, Oberlin, Pomona, Wesleyan (President Chodosh’s alma mater), Williams, and Vassar. In addition to leading this distinguished group, CMC also ranked 4th in the PG Pacific (which includes the PAC 12) for life income gifts.

“In 2015 we brought in 61 LIGs for a total of $7.928 million,” Rotolo said. “What was interesting was that three of our gifts were in the form of charitable trusts rather than gift annuities, which are our calling card, so to speak. These gifts totaled about $3.1 million.”

The term “planned giving,” generally defined, means any gift made by a donor after considering various tax ramifications and family considerations. Planned gifts are commonly viewed as gifts made currently that provide tax and income benefits to the donor/beneficiary during their lifetime and that, upon their death, come to the College to be used as the donor designated at the time that the gift was made.

The fact that for each of the last two years CMC’s Office of Planned Giving has generated the greatest dollar value of LIGs in this group of leading national liberal arts colleges has led some to refer to the Office as No. 1 among planned giving offices. 

“My personal goal,” Rotolo adds, laughing, “is to always raise at least one dollar more than Pomona. This year, we’re going for a three-peat over Pomona.”

Unlike annual fund gifts or capital fund gifts, which are generally outright gifts of cash or stock, planned gifts comprise several categories, which can be measured. These include the aforementioned LIGs, which are primarily charitable gift annuities (CGA) and charitable remainder trusts (CRT) that may be funded with cash, stock, real estate or other appreciated assets. These gift plans pay income to the donor/beneficiary for life (typically) with the remaining account balance coming to the College once the final income payment has been made. 

Another category is a Realized Estate Gift, which is commonly known as a bequest, although Rotolo said “we are attempting to move away from that terminology.” Estate gifts are gifts that donors and friends make through their estate plans. A realized estate gift is one that has “matured” (i.e., the donor has passed away and the estate has distributed the gift to the College). 

Rotolo said that his office encourages alumni and friends to include a gift for the College in their estate plan or, if they have already done so, to tell the office about existing plans.

“We can even show potential clients a simple estate-leveraging idea that will enable them to make a large estate gift without reducing their children’s inheritance,” Rotolo added. “We want them to ask us about it.” 

Giving where it didn’t seem possible

Planned gifts often enable donors to make gifts that they want to make but don’t think they can afford to make.

Besides having an impact on the College’s future with their gift, some of the primary financial and tax benefits derived from a CGA or CRT include: avoidance of capital gain, increased income, a current charitable deduction, and tax-favored payments. Other benefits include the reduction or elimination of market risk, elimination of management responsibilities, professional management of gift assets, and elimination of estate taxes on donated assets (if any).

“For many years, charities believed that if a donor completed a ‘planned gift,’ that their future annual giving would decline because they had now made their ‘significant’ gift,” Rotolo said. “As a result, many institutions limited access to the alumni for fear of negatively impacting annual fund gifts.” 

This turns out not to be the case, however. Subsequent research has revealed that Planned Giving donors often are even more committed to the organization after a planned gift.

Pomona College, an early leader in planned giving, held this view and their solution was “to market the planned gifts to non-alumni,” Rotolo explained. “Our program is modeled after the Pomona College program.” 

Ahead of our peers 

Despite the often staggering numbers involved, there are no official rankings of planned giving programs. That, however, doesn’t mean that the success of planned giving offices can’t be measured. 

Rotolo said that CMC belongs to two informal groups that meet annually to talk strategy and trends as well as report results. 

“As part of our meetings, each completes a survey of our program’s gift activities and results for the fiscal year,” Rotolo said. “All in all, we do a very good job and are clearly one of the more successful planned giving programs.”

Mentioned earlier in this article, the Middlebury Group has been meeting for 21 years and is comprised of the planned giving officers from 27 leading national liberal arts colleges. 

“ The last time I checked, 24 of these institutions were in the top 30 of the U.S. News & World Report rankings for national liberal arts colleges,” Rotolo said. (More than half of the institutions were founded before the end of the Civil War, and several before 1800.)

The second group – PG Pacific – is comprised of the Pac 12 universities and CMC, Pomona, Santa Clara, Univ. of San Francisco, Cal Tech and Idaho. This past year, CMC ranked behind only Stanford, USC and Santa Clara in the dollar value of LIGs. 

Who is planned giving for?

Generally speaking, planned gifts are most appropriate for those in their 60s or above. The use of CRTs is more common for the younger portion of this age band, while CGAs are more popular for those in their 70s.

According to national data, the average donor age for a gift annuity—CMC’s bread and butter—is 79. In the CMC community, there are only about 300 solicitable living alumni who are age 75 and above—a very small pool of natural prospects for such gifts. “As a result,” Rotolo said, “more than 95% of our planned giving donors are currently non-alumni.”

This age dynamic is what prompted CMC to follow Pomona’s lead in marketing to non-alumni. The College has advertised in the Wall Street Journal since at least 1980 and has been an innovator in sponsored Google search ads for gift annuities and charitable trusts.

In order to be more attractive to non-alumni prospective donors, CMC has offered “CGA rates that significantly exceed the rates offered by most charities,” Rotolo said. “For example, at age 75, most charities offer a rate of 5.8%, while CMC offers a rate of 8.8%. That gives us a significant competitive advantage.” 

While historically looking to non-alumni, the Office of Planned Giving is increasing efforts to reach out to alumni, particularly those in their 60s for whom a CRT may be a very appealing exit strategy when divesting an appreciated asset and looking to simplify their life and also establish a secure financial future. 

Though the use of CRTs slowed significantly with the 2009 downturn, the rebound in the stock market and in real estate values has returned the CRT to prominence in planning. 

And, of course, CMC’s attractive CGA rates are available to our alumni as well. While most often thought of as a source of personal income, they can be used to provide for parents one may be supporting or a sibling. Further, these plans may be included in one’s estate plan as a way of providing for a surviving spouse, children, or other heirs

For information about planned giving options with CMC, please call 888-311-4717 or visit the planned giving website at www.cmcpg.com 

Johnson is a frequent contributor to CMC Magazine.