Planned Giving - The "buck" stops with us

In light of the recent scandal in New Jersey, and my dedication to warning against risky/questionable insurance deals for charities (as seen in my coverage of Barry Kaye's reported troubles in the press), its as good a time as any for the fundraising world to do our own soul searching and remind ourselves of some basic values that we need to live by.

Did anyone notice that part of the scandal involved the use of non-profit entities for money laundering? Personally knowing about this particular community, I can guarantee 100% that the "profits" from the alleged money laundering through those charities was for the charities - not someone's pockets.

Doesn't make it right. In fact, it was the worst thing they could have been doing with their charitable entities - the consequences destroying precisely what their missions are supposed to accomplish.

While I wouldn't jump to classify the various charitable insurance schemes and other "pushing the envelope" plans out there as criminal activities (as money laundering certainly is), there is a common denominator between them all. The question is how far should your non-profit organization go to raise money for your worthwhile cause?

Do you help your donors commit tax fraud by accepting donations that are really to pay private/religious school tuition? Or, do you "pay" your private/religious school teachers by reducing their tuition bills? Or, do you get involved in one of these impossible to understand insurance arrangements that might magically bring in a big wind fall for your charity? Or, do you join a multi-organization raffle that is clearly violating numerous federal and state regulations? I could go on all day - these are real situations that I come across all the time.

Planned giving, as a field in particular, has always been about doing the right thing for your charity and for your donors, within the boundaries of the law and with ethics. Numerous times, I have had to explain to donors or advisers that I only work within the boundaries law. Gift planners play by the rules, that's our game.

We take pains to inform donors of the consequences of their gifts, even if it means the gift won't happen. We sit through countless classes given by lawyers reviewing all of the various legalities involved in giving. We have a code of ethics promulgated by the national planned giving organization and they even ask you to attest to them before attending their conference.

The planned giving community screamed out against flim-flamsy split interest insurance deals (donors get charitable deductions on life insurance premiums but family gets most of the death benefits). We self regulated the donor advised fund business for 30 years (without scandal until the IRS idiotically gave the Fidelity Gift Fund its 501(c)(3) status). The field voluntarily adopted various codes of ethics and always comes out against the latest "can't be beat" plans that are legally questionable .

Bottom line for charitable institutions is that these no easy way out of good, old fashioned fundraising. Asking for money - that is how over 200 billion dollars a year in this country is raised. Various schemes, selling of products, other business entanglements, just don't compare to tried and true ways of raising money (major gifts, annual fund, direct mail, events, etc...).

Just think twice before you step outside of the traditional fundraising realm to raise funds for your charitable institution. Is it legal? Are you really running a business out of your charity? What are the potential consequences of government scrutiny? What are the potential consequences of this getting into the press? Does this make sense for your charity to be involved?

To quote one of my former clients who refused to be involved in one the insurance schemes discussed recently in this blog: "thank goodness we passed on this one."