Through the eyes of the gift planner (part 2)

If you didn't see my previous post about a typical gift planning situation click here: http://plannedgift.blogspot.com/2009/07/through-eyes-of-gift-planner.html

Part 2 of the story. Where we left off, we had an attorney asking me to help his client set up both a $1 mil+ CRT and an ILIT (Irrevocable Life Insurance Trust), and there was confusion between who would trustee the gift and so on.

For those experienced in planned giving, the next part should sound familiar. Donor in his mid-60s can not do a charitable remainder annuity trust for much more than 5% due to the low AFR (applicable federal rate). Problem is, the donor wants more (not sure how much more but definitely more than what an annuity trust could offer). And, the donor doesn't want to do a charitable remainder unitrust either. Somewhere in this story, I suspect an insurance salesman (behind the ILIT part) was promising a wonderful plan based on a 6% or higher annuity trust.

So, I ran a calculation to see what a charitable gift annuity would give the donor. Maybe a slightly higher rate and some guaranteed tax free income would help close this $1 million+ gift. The attorney responded to this proposal and was interested. Now my work was cut out for me. I had to somehow get this small organization to agree that it would be better off if its bigger parent org would accept a large CGA on its behalf. Then, I had to somehow get the big org to really understand what it means to accept a $1 million+ CGA and to consider reinsurance over a certain amount. After several calls, emails and memos, I finally thought we had everything set up to go until the last phone call with the CFO (of the smaller charity).

I thought the CFO should know that the larger, parent org would accept the CGA, take on the liability, maybe reinsure part of the gift, and that they should just know what's going on. Then he tells me that he needs to have his own board approve this plan (even though legally there is no liability on their part as they would not be the issuer of the gift annuity). Oh boy. Now I am waiting for the donor's attorney to get back to me and let us know if the donor wants to make the gift and I have a CFO of a related org (and ultimate beneficiary) saying he needs board approval for us to do this gift.

This story just shows you some of the challenges planned giving professionals can face in getting gifts closed. You might need multiple CFOs, Executives, VPs of Development on board and understanding a complex gift - but wavering all along the way. In the meantime, you have a donor and/or the advisor also wavering. And, I wonder what happens when the donor finally says that he/she is ready to make the gift and the intended beneficiary says they still need board approval.

Stay tuned for part 3, if the advisor ever gets back to me.