Guidelines for Reporting Planned Gifts Provoke Debate Among Fund Raisers

To help nonprofit organizations focus more public attention on the money they raise through planned gifts, the National Committee on Planned Giving has introduced new guidelines for reporting fund-raising totals.

Fund raisers have historically wrestled with how to characterize planned gifts such as charitable remainder trusts as part of campaigns, in part because their ultimate value to an organization depends to some extent on how long donors live.

Bruce E. Bigelow, a planned-giving consultant in Frederick, Md., who helped write the new guidelines, says the lack of certainty has meant that planned gifts are often not counted when nonprofit groups report how much they have raised in annual, capital, or endowment campaigns.

The new guidelines recommend that charities set three separate goals for their campaigns and then report the results in each category: outright gifts or pledges that can be used during the campaign period; irrevocable contributions that are expected to be used at some point after a campaign ends; and gifts that donors have promised but that carry no guarantees as to when or how much the contributions will ultimately be worth. Charities should report their progress toward those three goals separately, the guidelines advise. When reporting gifts, the guidelines say, charities should use the dollar amount of the donor’s commitment rather than discounting the gift to take into account the possibility that less money might be received.

A Bad Idea?

The guidelines have provoked controversy, in part because some planned-giving experts say it is a bad idea to count gifts that could never materialize. They say they fear charities will end up without the money they need for capital projects or other ambitious efforts if they are counting in the fund-raising totals gifts that donors might never make.

The Council for Advancement and Support of Education, whose standards for reporting fund-raising results are used by many charitable organizations, does not allow groups to include in their totals gifts that can be taken back, also known as revocable gifts. The council does, however, allow groups to count pledges toward campaign totals.

The committee also urges charities to count irrrevocable deferred gifts at a discounted rate, using an Internal Revenue Service formula to ensure that contributions that groups are due to receive in the future are not overvalued.

No government rules govern reporting of gifts, which has led many organizations to come up with their own approach for reporting their fund-raising totals.

Frank Minton, a planned-giving consultant in Seattle, favors the standards put out by the education council and says that charities will not be served well with two competing methods for counting campaign gifts.

“Any time you’re counting or valuing gifts based on the IRS discount rate, over time it’s reasonably fair and it’s a good standard,” he said. “If you credit deferred gifts at face value, you’re clearly overstating them.”

Many other planned-giving specialists disagree. Shari M. Fox, director of gift planning at the University of Cincinnati Foundation and chair of the board of directors at the National Committee on Planned Giving, argues that by discounting deferred gifts and by not counting those contributions that donors might someday take back, organizations fail to recognize and include many large gifts they receive during campaigns.

“By not including planned gifts in our campaign results, we are not including a significant portion of charitable activity on behalf of our institutions,” Ms. Fox says. “It says to the fund raiser and to donors that certain types of gifts are more important than others.”

As a result, she and others say, charities sometimes don’t realize how much their planned-giving appeals are producing, which could lead organizations to cut back on the number of planned-gift fund raisers during strained economic times.

Ms. Fox says that the National Committee on Planned Giving established the new guidelines in part to help charitable organizations find new ways to acknowledge gifts from big donors. In the past, she says, deferred gifts that were discounted and revocable gifts that were not counted toward campaigns were often viewed publicly as being less important to organizations. Donors who made deferred or revocable contributions were sometimes offended if their gifts were not recognized.

John H. Taylor, a fund-raising consultant who helped update the education council’s standards earlier this year, says he still feels strongly that charities should not count revocable gifts in their totals. But he says the planned-giving committee’s new standards are “not really in significant contradiction” to the education council’s standards.

“NCPG is saying that there are times when it might be appropriate to count revocable gifts — for example, when a fund raiser is talking with donors and prospective donors,” he says. “We’re saying that when you want to compare the success of your fund-raising campaign to the success of another, the only way you can do that is to follow the standards we put in place.”

The National Committee on Planned Giving is inviting comments on the counting and reporting guidelines through November 30. A copy of the guidelines is available on the committee’s Web site, at http://www.ncpg.org.