Update on Gift Administration Providers

After writing my previous post, I confirmed that one of my previous programs had also been given the "pink slip." That program had a few million in CRTs and CGAs - CGA program was around $1 million and the CRTs probably totaled $1.5- $2 million.

From previous conversations with BNY/Mellon after they merged, they had said their minimum was basically $5 million, which was the highest I had encountered in the business.

Places like Merrill Lynch, PNC Bank, and Bernstein had indicated that $1 million was generally the threshold to overcome minimum fees. That means that once your assets are over that amount, then the minimum fees are covered in the regular fees charged (otherwise, you would have to pay out of pocket to make up any shortfall in covering the minimums).

This isn't the first time in the planned giving business that clients will be getting fired.

I recall about 10 years ago that one of the "major" promoters of planned giving services dropped numerous clients after a merger. Not pleasant for the charities involved since they were typically subject to very hard sales pitches and lots of promises and then unceremoniously dropped if the accounts weren't profitable enough. And, this same bank came back promoting their services harder than ever, with even more promises a few years later.

In fact, every where I went (i.e. sales pitches), I kept hearing that this same bank says they can provide all of the planned giving "consulting" services to be included in their standard fees. I just wondered if they could really come through on their promises and whether they would really be interested in helping a charity promote bequests which are usually 80% or more of planned gift revenue (see http://www.onphilanthropy.com/site/News2?page=NewsArticle&id=7559 for my article on why Bequests still rule the PG world) in addition to life income vehicles.

Sadly, one of my former clients got suckered into going with this "do it all" bank and found out the hard way that they weren't everything they claimed to be. And, my hunch is that this one unmentioned bank, along with others, will dropping planned giving programs in the near future as struggling banks will be looking to clean house of lesser profitable (or even not profitable) clients.

So, we'll see if this new provider (Cornerstone http://www.cornerstone-companies.com/PlannedGiving.aspx) and others who serve the smaller end of the planned giving market will be ready to step in when the big promisers start breaking their promises.