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Life Health > Running Your Business > Marketing and Lead Generation

Nonprofits and the Financial Advisor

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What You Need to Know

  • Nonprofits may not understand the donors’ financial objectives.
  • Donors may not know much about charitable lead trust math.
  • Federal estate tax updates could soon change everything.
A graphic showing that a donor puts assets in a charitable gift annuity, has some money flow into income tax deductions and fixed payments, and has the remainder of the assets flow to the charity. A detail from a Dave Mello charitable giving graphic. (Image: Dave Mello)

Agents and advisors are looking for new ways to recharge their financial practices. One way we did this was to offer estate planning through charitable giving.

How do you start?

We suggest you contact a couple of nonprofits in your community and schedule a meeting. Ask them what they feel their weaknesses and strengths are in securing donors.

Many nonprofits do not understand the motivations of a charitable giving donor. The donor’s objective may be to create a one-year tax deduction or a tax-efficient legacy for the heirs.

As an estate planner, it is your objective to share with the nonprofit all the excellent strategies that you can provide to entice the single-time donor or the philanthropic donor to give on an annual basis.

How to Prepare

Here are steps for establishing yourself as an expert in the field of charitable giving:

  • Build a relationship with an experienced estate attorney. Also, have a relationship with a notable CPA.
  • Learn about the different types of trusts that provide tax-efficient strategies for the donor. There are several that create different outcomes.
  • Understand how life insurance and irrevocable life insurance trusts integrated with fixed annuities and indexed annuities are the components of the safe, secure investment within a trust.

Your Goals

Here’s a basic outline of what you will want to create and structure your presentation with the nonprofit.

We started with a mission statement for the nonprofit to explain our objective. Ours is:

Mission Statement

To educate, assemble and implement tax-efficient estate planning services tailored to a donor’s values, family legacy, and the charitable organizations they wish to support.

There are many forms of giving. An estate plan review will provide direction for the donor

We explain to the nonprofit that encouraging a donor to share the donor’s wealth with a favorite cause and charitable organization, instead of with the IRS, is legal and benevolent. We explain that we devise a plan based on the donor’s input, which provides a customized estate plan in conjunction with tax-efficient charitable giving.

The Donor’s Goals

An individual or family donor decides who will ultimately benefit from the donor’s benevolence.

Multiple organizations can benefit from a donor’s estate plan. The donor is not limited to donating to only to the nonprofit sponsoring a charitable giving planning program.

Donors are transferring wealth to their beneficiaries, upon death, through financial estate planning strategies arranged in a tax-efficient manner. Transferring wealth in a tax-efficient manner should be the first objective for the donor.

An estate plan will transform the financial future of the donor’s family.

The donor can also use the estate plan to project values and goodwill into the future.

Controlling the donor’s wealth transfer requires education, planning and implementation.

The Nonprofit’s Objectives

Managers and board members at a nonprofit should understand that the organization needs both immediate donations to cover business operating expenses and future donations.

Show the nonprofit’s leaders how a well-designed charitable giving arrangement can provide both immediate and future donations, creating a constant flow of income.

This approach can provide donors with multi-year tax savings, and a strategy for reducing estate taxes.

Today’s estate tax exemption for a couple is $11.7 million. That will sunset in five years to $5 million. Our new president wants to roll back the estate tax exemption to somewhere in the $3.6 million range. The exemption rollback will create a vast need for new and refreshed donor estate plans.

Your Rules

Create your own set of rules to follow when you’re working with the donor and nonprofit. Live by these rules when you’re implementing a charitable giving estate plan.

Below are some examples:

  1. Complimentary estate planning services are provided free to help donors with their nonprofit organizations’ support.
  2. Confidentiality is vital in the information gathering process.
  3. Legal documentation is provided by an independent attorney.
  4. 100% of donations are applied to a donor’s chosen charity; no commissions or fees are removed from the contribution to the organization.
  5. The nonprofit is charged a flat fee for the estate plan. No fees are charged to the donor.
  6. All meetings are held at the nonprofit’s headquarters.

Your Strategy

Create a graph to convey your message. Graphs are powerful and persuasive.

Your solution for the nonprofit should include these types of provisions:

  • Nonprofits offer our planning process to their supporters with absolutely no obligation. An estate planning attorney provides the necessary documentation based on the donor’s wishes.
  • The Plan is confidential between our organization and the donor. The complimentary Estate Plan created accomplishes a merger of the donor’s principles and planning objectives for tax efficiency and charitable giving.
  • The sponsoring nonprofit organization does not obligate the donor. Re-directing tax dollars to a specific charity is up to the donor.

However, suppose the donor requests that the sponsoring nonprofit organization pay for the donor’s estate plan or amend a current plan. In that case, the donor is required to include the sponsoring organization.

Here are ways the nonprofit can tell donors about the program:

1. Have the nonprofit add a charitable lead trust calculator to a new page on its website. Include an application a donor can fill out before you meet with the donor.

2. Have the nonprofit send a letter introducing you to its donors. The nonprofit can explain that your services are free, and that donors who meet with you are under no obligation to give to the nonprofit.

3. Ask the nonprofit to invite donors to wine and cheese seminars. At a seminar, you will provide examples of tax-efficient giving strategies for the donors. You will find that many donors are not aware of the advantages of working with a nonprofit.

Creating a partnership with a nonprofit will give you tremendous satisfaction with your work.

You will learn there are many creative ways to benefit the donor. The donor can give to the nonprofit while alive and receive a tax-free income for the remainder of donor’s life. The options for benefiting a donor while the donor is still alive or after the donor’s death, to help the estate or beneficiaries, are boundless.

I encourage you to attend charitable estate planning seminars to learn about these strategies, so you can be the most efficient charitable giving advisor in your community.

Dave Mello Dave Mello is an elder planning advisor and mature asset specialist at Horizon Retirement Advisors.



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