November 25, 2009 | Read Time: 2 minutes
Despite the stock market’s upward trend in recent weeks, most wealthy people continue to be wary of making big charitable commitments, fund raisers say.
One way to work around the problem is to encourage people to make certain types of planned gifts — donations that provide income as well as tax benefits to the contributors, says Robert F. Sharpe, a Memphis fund-raising consultant. Among the types of gifts he thinks fund raisers should promote: gift annuities, charitable remainder trusts, and lead trusts.
Many fund raisers have been trained to seek three- to five-year pledges to give a specific cash sum, he notes. When a donor hesitates to make such a contribution, he says, fund raisers typically ask the donor to put the charity in his or her will.
But donors can easily change their minds about whether to leave a bequest and the charity could end up with nothing. And even if the donor sticks with the plan, it could be decades before he or she dies and the charity has the money in hand.
By offering a donor more options, charities can find a way to get money sooner than they would through an outright bequest.
For example, Mr. Sharpe says, a man with $3-million in assets might have decided to make a bequest of $1-million to the college he attended.
If a fund raiser encouraged him to make the gift now, he might say no because his retirement assets had diminished in the economic downturn.
But if a fund raiser explained that the donor could set up a $1-million gift annuity, and then receive a small percentage of the assets annually, he might decide that that would be enough income to guarantee his security in retirement. And he would be reassured that at this death, his alma mater would get all the money that was left in the annuity.
