Educating the Donor to Make the Most of Charitable Giving

It is also important that donor education courses lead donors to ask the right questions, and that fundraisers are prepared to answer them. “It almost comes with the territory that ‘If I have the money, then I have the knowledge’,” says Cole Wilbur, former president of the Packard Foundation. “Most of the questions in the philanthropic field are questions that people don’t know to ask. They are not obvious.” ( (9)

Wilbur goes on to say, “It should also be noted that in some cases donor education can be harmful if it makePerson holding a hoop in front of a mans so-called ‘strategic giving’ seem too complicated, time consuming and overwhelming. It can make a would-be donor jump through too many hoops to master the craft of giving. Donor educators need to acknowledge up front the vital role that personal passion, deep values, and gut-level instincts play in any good giving. The notion and role of craft should not trump good intentions and natural inspiration. Donors do have the option to add varying degrees of planning, strategy and focus to their giving, but the presentation of those options should not create barriers to taking the initial steps forward.” ( (10-ibid.)

Donors who are passionate and well informed about the organization’s mission are valuable ambassadors in the community. It’s important to determine what donors know and don’t know about an organization by conducting focus groups with donors to find out what they want to know. As Michele Minter points out in CASECURRENTS, April, 2011: “Even when they feel empowered and know how to give efficiently, donors can still find themselves stymied by their lack of subject-specific knowledge. Once donors have identified their philanthropic focus, they face the challenge of sifting through large amounts of information to choose how best to give. With so many nonprofits and media outlets competing for attention, where will a passionate donor find relevant, trustworthy information? “

Here, then, are some key questions for donors to consider when considering making a charitable gift:

Which charities do they want to benefit?

Donors should know the goals, objectives and mission of an organization and if they match their values and giving goals. They should explore the “why” questions of philanthropy based upon their personal history, values, passions, relationship with money, and planned legacy.

What kind of property do they wish to donate?

Do they want to donate money, items, property, stocks, etc? This will affect the type of gift set up and giving process as well as who is involved.

Gifts of significance come in many forms. They may be substantial cash contributions, gifts of appreciated securities, or in-kind gifts such as contributions of valuable art or tangible personal property. Often major gifts are in the form of multiyear pledges given outright or through planned giving vehicles such as bequests, charitable trusts, or gift annuities. Regardless of the form they take, gifts of significance usually come from donors who have contributed several smaller “gifts” over a period of time. (

How important are the income tax effects of the gift?

Depending on the size, the donation will be effected by tax policy which will be applied accordingly.

How important are the gift/estate tax effects of the gift?

This will again depend on the size/type of gift. If a donor makes a planned gift, (CRT, CRUT etc.) it will be affected differently by tax policy and how much the donor gets back from the school regarding their CRT/planned gift policies. For example, a CRUT is the most versatile of planned giving instruments, but it must meet strict IRS code requirements in order to be tax exempt and receive a charitable deduction. (Sargeant, Adrian and Jen Shang, 2010.)

Does the donor want the gift to be in effect during his/her lifetime or at death?

Depending on the type of gift the donor wishes to make, it will kick in either after or before death. For instance, if the donor puts an institution/organization in his/her will (a charitable bequest), it will only be available to the institution/organization after death. But if the donor gives through a CRT or CRUT, he/she will be giving the money upfront and it will be active during his/her lifetime and after death.

Does the donor wish to retain interest in the property gifted and to be involved with where the gift is used?

It is important for donors to be clear about how much money, time, and influence they are prepared to commit to a project, and that they have considered the strategic and personal commitments it will require.

Are the values of this organization aligned with the donor’s?

It is important to give to an organization with which the donor has a connection regarding values. That connection will make the donor willing to give more and participate in the organization if necessary. The donor can also represent the organization to the community to possibly recruit more donors.

Does the organization have an operating strategic plan and is it regularly revisited? Does it have an evaluation plan and methodology that captures real outcomes?

What determine the importance of strategic planning are the small number and the long term, organization-wide impact of the decisions in the strategic plan. It is important that the donors have a clear understanding of the goals and long term strategy of the organization so that they are aware of where their money is going and how it will achieve its objective.

Does the organization possess the financial health and managerial capacity to achieve its objectives?

It is important to be sure that the organization/institution to which donors are giving is able to perform the activities and objectives that it promises to. If the managerial capacity is lacking, or if the organization does not have the proper financial capacity to perform the necessary actions and execute its strategy, then it is a bad investment. It is important to ask for the future strategy and to meet other donors involved with various levels of leadership within the organization.

Does the organization readily make its financial and operating information available?

This information should be available on the organization’s website. Its tax forms should be readily available online to ensure that its practices are transparent and that it is financially reliable and accountable.

Donors need to know the tax status of the organization/institution to which they are giving: In order to be deductible, charitable contributions must be made to qualified organizations. Donors can ask any organization whether it is a qualified organization, or they can check IRS Publication 78, Cumulative List of Organizations. It is available at (,,id=172936,00.html)

It is important that all levels of donors ask these type of questions, and that such questions are addressed at a financial literacy program. “The principles that apply to the wealthy apply also to the less-wealthy because they still have limited resources and limited time,” Tierney says. “The moral of the story is: Don’t wait too long to ask life’s most important questions.” (



Starting in 2007, donors need a receipt for any donation. The old limit of $250 has been eliminated, so even a $10 bill in the collection plate requires a receipt if they want to deduct it. Here are some specific guidelines:

Donors may deduct up to 50% of their adjusted gross income in one year for charitable donations. (Certain contributions, though, may have lower limits.)

If they give more than 50%, they can carry the excess forward for up to five years.

If they donate goods to an organization, it must be in good condition or better in order to be deductible; and if it’s worth more than $500, they have to get a professional appraisal to prove its value.

If they receive something in return for their donation, they can only deduct the excess of their donation over what they received, i.e., if they paid $100 for a charity dinner with a value of $30, they can only deduct $70.



Patricia Annino
is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit,

Is it Reasonable to Expect Alimony for Your Eggs?

human eggsA previous New York Times article had an op-ed piece by Sarah Elizabeth Richards, author of “Motherhood Rescheduled: The New Frontier of Egg Freezing and the Women Who Tried It”.

In that op-ed piece Ms. Richards discusses the case of a 38 year old woman who is asking her soon to be ex-husband of 8 years to pay $20,000 to cover the cost of her egg freezing procedure, medication costs and several years of egg storage on the grounds that when they got married they started with the expectation they would start a family and now she may not have that chance much longer.

The couple had been unsuccessful in fertility treatments and as part of her legal case she is arguing that since fertility treatments were part of the marriage, they should be considered part of the marital lifestyle, which should be maintained as long as possible post-divorce.

The lawyer representing the woman is quoted in the article as saying that he hopes the case settles out of court. Should this go to court it would be a case of first impression in the country and we will all be watching what happens.



Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at To download Annino’s FREE eBook, Estate Planning 101 visit,

The Way-Early ‘529’ Gift

Grandparents Can Start a College-Savings Plan Before a Baby Is Born

By Peter S. Green

Photo illustration by John Weber

So you just threw your daughter a big wedding. Now comes the not-so-obvious next step: setting up “529” plans for estate planning, estate planning tips,the future grandchildren.

If that seems like rushing things, think again. With the average four-year price of a private college nearing $165,000 and rising 3.7% a year, anxious families are looking at lots of strategies for helping future grandchildren get a college education. One strategy is to open a 529 college-savings plan and have it start growing years before the future student is even born.

After all, anyone can start a 529, which is funded with after-tax income; the fund’s earnings and principal will be untaxed as long as the money goes to expenses that qualify as higher education. It makes particular sense for older parents with adult children to open a 529, as it helps get the savings ball rolling early. Moreover, if they later transfer ownership of the account to their grown children, both generations can benefit from some gift-tax exemptions.

Benefit Keeps on Giving

Jim Holtzman of Legend Financial Advisors in Pittsburgh explains: If a future grandparent starts a 529 whose beneficiary is the future parent, the grandparent can contribute tax-free up to $70,000—five years’ worth of contributions at $14,000 a year—or up to $140,000 for two grandparents. When an infant arrives with his or her own Social Security number, the parents—or the grandparents who still own the account—can designate the newborn as the beneficiary. Such transfers will likely avoid taxes, though they will eat into the donor’s lifetime gift allowance of $5.34 million.

In addition to increasing the amount of giving both sets of parents can do without owing gift tax, this can help wealthier grandparents reduce their estate below taxable level, particularly in states such as New York and Pennsylvania, where state estate-tax exemptions are far lower than the 2014 federal level, also $5.34 million.

Grandparents and parents can be tempted to maintain ownership of the account to help keep Junior on the straight and narrow. “The advantage of using a 529 is that the account-owner retains control, so when the kid graduates from high school, she’s not going to buy a Harley,” says Nancy Farmer, chief executive of the Tuition Plan Consortium, a group of 277 colleges in 39 states that lets parents (and grandparents) prepay tuition.

But if grandparents hang on to a 529 account, it can hurt a student’s eligibility for aid. Distributions from a parent-owned or custodial 529 reduce federal financial aid by just over 5% of the distributed amount. But distributions from a grandparent-owned 529 can reduce eligibility by half the distributed amount, says Mark Kantrowitz, publisher of, a website advising on funding college education.

And while grandparents’ assets aren’t considered in aid decisions by state schools, they do figure in some private-college aid grants, says Maura Griffin, a principal of Blue Spark Capital Advisors in New York.

Five Years Ahead?

When is the right time for prospective grandparents to act? Right now, says Cameron Casey, an estate-planning lawyer with Ropes & Grey in Boston. Waiting until a grandchild is born to start a 529 for them can mean years of lost earnings potential.

A 529 plan started with the maximum $14,000 initial gift, five years before a child is born, funded with $500 every month and earning interest at 3% compounded monthly, would yield $226,784 by the child’s 18th birthday. The same plan started at birth would yield $167,336.

Of course, the future is unpredictable. If a future grandparent thinks he or she may not live to see a grandchild’s birth, a will can provide for an executor or trustee to carry out 529 plans using assets in a revocable trust.

For grandparents concerned about what to do if the grandchild doesn’t go to college or has sudden medical needs, a special trust might be a better vehicle, says Ms. Casey, as it will allow more flexibility. Using a 529’s funds for something besides higher education will trigger a 10% penalty and make the earnings taxable.

If no grandchild ever arrives, it can be possible to reassign the account to a close relative without owing taxes or penalty.


Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at To download Annino’s FREE eBook, Estate Planning 101 visit,

The Importance of Congruency For Your Most Important Client in Financial and Estate Planning

It’s hard to overstate the importance of creating congruency among a client’s various legal, financial, business, and estate planning documents. Does their estate plan-which is hopefully aligned with the family’s goals, desires, and objectives – match their legal and financial plan documents? If the client is connected to a family business, real estate or philanthropic endeavor, is the estate plan congruent with their goals, objectives, and financial plan?family

For most families, the answer is no. Although families have likely attempted to keep their plans congruent, the reality is that each plan is built upon over many years by various independent professionals. Each of those professionals – the estate planning attorney, accountant, financial planner, banker, life insurance professional, philanthropic advisor – is focused on a different part of the system.

While independently their work may be excellent, these professionals are often responding to a particular need expressed at a particular time – minimize estate taxes, establish who should control the vote of the company stock, decide how to equalize assets, how to protect assets from a child or sibling divorce, etc.  Even if the “team” communicates well at these independent junctures it is unlikely that this communication is deep or continuous.

Each advisor, tends to focus on his or her specific area of specialty. Although some families might be fortunate enough to have a family office or trusted advisor who can help coordinate the communication among various professionals, neither tends to offer the 30,000-foot perspective that is usually necessary to provide true congruency among the many different plans.

And that type of perspective can be critical. When viewed at that level, it is common to see black holes in coverage – areas that no family member or advisor thought of because they were focused on their own specialty or on a specific need in a specific time.

It is wise to perform a congruency audit for your most important clients. This may reveal technical, communication, fiduciary, tax, or liquidity issues, or a lack of coordination of the pieces of the puzzle. A core issue that surfaces in almost every congruency audit is the lack of enough education about what the plan is, what the plan means, and what the consequences of the plan are.

It is typical for a plan to be a “snapshot”; but a family and its advisors must really view the plan as a “movie.” The system must be coherent, workable, and flexible enough to accommodate the changes that are inevitably around the corner. When congruency does not occur, the black holes eventually become visible and disrupt the foundation of the system.

In my 25 years of practice, I am still amazed at the black holes a congruency audit can show:

Recently, a family whose net worth exceeds $500 million asked us to review 26 irrevocable trusts that were drafted by one top law firm and reviewed by another. Our analysis revealed that none of the trusts contained a “spendthrift provision,” which makes all of the trust assets vulnerable to creditors and division in case of a divorce.

In another case, individual discussions with multiple generations of a family revealed that the advisors and the family were still primarily focused on estate and financial planning at the parental/entrepreneurial level, even though $50 million of wealth had been transferred to each child at the next generation level — and no significant planning had been done there.

A planning objective should be to attain congruency – when the family’s goals, desires, and objectives match the system that is established to support those goals, desires and objectives.

The Ideal Client Candidate For a “Congruency Audit” Could Be:

  • A family that understands the importance of congruency and would like to embark on an in-depth discussion of goals, objectives, and desires in tandem with an in-depth diagnostic review of all legal and financial documents and structures. A family in this situation is comfortable working with its current advisors, and as a precautionary measure, would want an additional review.  It’s like a family that is comfortable with its current physicians, but would go to the Mayo Clinic for a thorough battery of tests and a comprehensive diagnosis.  While the current team of advisors could feel threatened by an independent review, they really do understand that this type of review is both prudent and valuable.
  • A family in transition – one whose key patriarch,  matriarch, or influential family member has died, whose family office has disbanded, whose trusted advisor has retired, where there has been a generational switch in voting control of a family business, or a family member who must switch advisors because of a divorce or life changing event. When a significant change occurs, it is important to view the system with fresh eyes. This process will ground the family, educate them as to how they are currently positioned, and highlight recommendations that will be useful as they move forward.

·         A family in need of education – whose dynamic and financial wealth is entwined with legal documents such as irrevocable trusts, dynasty trusts, charitable trusts, limited liability companies, family limited partnerships,  and/or charitable foundations. The parties to each of those legal documents must understand their respective roles and responsibilities – the role of settlor, trustee, beneficiary, manager, limited partner, and unit owner. Within the complexities of family dynamics, there are  those who wear both a legal hat and a family member hat. There is often, however, a general lack of understanding as to how and when those hats compete and collaborate.

  • Often, the family members who currently operate the documents are not the same family members that established the documents. The current family members may be the children, grandchildren or great-grandchildren of the settlor. As part of the educational process, the family and its advisors could prepare collateral documents and mission statements that allow the members who are currently operating the documents to understand and work through their roles and responsibilities.


What a Diagnostic Assessment Process Could Entail

Should you wish to embark on this type of analysis for a key client, the process could consist of three phases:

Phase One: Assess what each family member understands: what are his or her individual goals, objectives, and desires, and those of the overall family plan.

Phase Two: An in-depth review of what the plan actually is, against the backdrop of what different family members have envisioned. This encompasses a thorough review of all pertinent legal documents (estate planning documents, corporate documents, shareholder agreements, voting trusts, and foundation-related documents) and discussions, if applicable, with the family advisors.

Phase Three: Preparation and delivery of a report which summarizes phases one and two, and which provides specific recommendations to achieve congruency.


Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit,