For those who know me, you should know that I get very excited over planned giving issues that the world would otherwise not consider very exciting.
This week's excitement: Bank of NY/Mellon giving notice to over 50 smaller planned giving programs to pack their bags and get their money out by September 1, 2009.
I have been warning about this for a few years but it is always weird to see your predictions come true.
A little context. Having worked for, with, or consulted to about 200 planned giving programs, I can honestly say that finding a good 3rd party administrator/investment firm is one of the key elements to running a smooth and successful planned giving program. Otherwise, you and other staff will be wasting your time trying to keep up with the checks, mistakes, paperwork, etc.. when there are firms that do it all and the cost is basically included in the investment management fees. More time seeing donors, less time administering - it is a no brainer even if there seems to be some more costs involved.
In the past few years, even before the recent downturn, fewer and fewer such providers have been willing to serve the smaller programs. Minimum total accounts expected were $5 or $10 million. What about the $1 million dollar programs? Or less? The challenge has been to find solutions for those smaller programs when the banks will no longer take on new small ones.
But, what about the programs that got in before the minimums were raised? Bank of NY used to be very flexible as they were building their business. Well, with Mellon now in charge of that program, it seemed like a matter of time before BYN/Mellon would clean house.
And, apparently, they have decided to do this with a hard date of September 1 (announced around June 1). Three months over the summer is not a lot notice for non-profits to find a replacement 3rd party admin/investment adviser - if you ask me.
Interestingly, two folks who had been with Bank of New York planned giving services opened a new provider this past year and seem to be ready to take on all of those smaller programs that don't have many options.
Kudos to Tom Aschoff and Danielle Green for launching a planned giving services program to serve this very under-served market. Here is a link to their web page: http://www.cornerstone-companies.com/PlannedGiving.aspx. From my conversation with them, it seems like they can offer the full range of planned giving administration and investment services - one stop shopping - for less than 100 basis points a year. And, their minimum fee seems reasonable - you'll have to call them yourself for more info.
What I am wondering is who is next to drop planned giving accounts? I am just thinking about all of the promises a few big firms have made to attract new planned giving clients in the past few years and they don't even know if they'll be in business, let alone be able to serve the low margin planned giving world.
Have a great 4th of July to all!
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4 comments:
Thanks for this Jonathan! It's been a struggle for small shops for some time to find that partner that can fit their gift administration needs. What Tom Aschoff has put together is a great service for all small shops!
Hey, I think it's exciting, too! And I agree that three months is not nearly enough time to transition to a new bank. Bank of NY will have to make some accommodations.
At a pg committee meeting I attended for one institution dealing with the notice that they have to find a new vendor, I assured them that they wouldn't have a hard deadline to get the money out.
Later that day, I heard back from the client that BNY/Mellon is still claiming that 9/1/09 is a hard date and all funds must be out by then. Pretty harsh but I still don't believe they'll liquidate accounts and distribute funds by that date if a new vendor isn't ready.
Jonathan: The folks at Citicorp Investment Services (Paul Hansen at whbny@comcast.net or (973) 951-5433) are also prepared to handle smaller accounts.
Margaret
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