bequests

Planned Giving Nightmare Finally Winding Down

For longer term followers of this blog, you should recall the Huguette Clark story as one I reported on regularly.  You can read my posts on this story (click here for older posts), or the tons of internet articles, or even the book (and possibly movie)!  Just do a google search on her.

My interest, in brief, was that for a period (apparently the crucial period) of time in the mid-2000s I was the Planned Giving Director for Beth Israel Medical Center in New York, where Ms. Huguette Clark (a reclusive heiress) lived for over 20 years – paying rent and other costs to stay in the hospital.  The youngest daughter of William Andrews Clark (1800s Copper Baron, U.S. Senator, Wealthy Celebrity), Ms. Clark only did her will very late in life, and of course, did two of them within a month or so (at the same time I had her accountant at one of our planned giving events – to see if he would offer any clues as to whether the hospital might be in for a large bequest).  We assumed she had over a billion in assets (she passed away with over $300 million), so she was actually the “great hope” for Beth Israel to rebuild itself, if she, of course, would put Beth Israel in for 10% or so!  Wishful thinking.

In the meantime, the hospital did a wonderful job caring for her as she lived to 104 (even though she was a wreck when she arrived at Beth Israel 20+ years earlier).  And, Beth Israel’s bequest, in her second will, was only for $1 million.

What was worse, though, and why this was the ultimate planned giving nightmare, was that her great, great half nieces and nephews (or whatever distant relationship you can think of), none of whom (or their parents or even grandparents) even met Ms. Clark while she was alive, had orchestrated a campaign to smear her advisors and caregivers, and create a case for challenging her estate (which cut them out, for the most post and left everything to charity and her nurse and some friends).  They only succeeded in wresting $30 million or so from the estate (paltry considering the legal fees they probably incurred). But, they got one last bite at the apple – the settlement with the estate allowed the family to pursue Beth Israel Medical Center for the money they “stole” from Ms. Clark over the years. (Not sure if the Estate was still pursuing Beth Israel or somehow the long lost relatives were)

It is a great story, by the way, and I do recommend checking out Empty Mansions (http://www.emptymansionsbook.com/) by Bill Dedman. But, the planned giving angle has to do with trouble organizations can find themselves in. I am sure that Beth Israel spent millions of dollars in legal fees dealing with this case – just my guess.  And, for what? A million dollar bequest?

Anyway, the case is finally, finally is ending!  Guess what? The family missed the statute of limitations! “A Manhattan Surrogate Court judge, Nora S. Anderson, ruled last week that the statute of limitations had expired for the estate to argue that officials at the hospital, Beth Israel Medical Center, had manipulated Ms. Clark into donating.” That is from the New York Times’ reporting on this one. Click to see that story.

Ironically, Ms. Clark and her case outlived almost everyone involved – even the hospital that took care of her.  Beth Israel Medical Center is now owned by its arch rival Mount Sinai, so as a former Beth Israel guy, it would not have bothered me so much if Mount Sinai took a big hit on this one. Still, it bothered me how dedicated these long, lost relatives were to grabbing money from Ms. Clark (they were descendants – grandchildren and great grandchildren of Ms. Clark’s older half-siblings – all of whom were adults when Ms. Clark was born in 1906 – all descendants of a formerly wealthy family that squandered their wealth along the way).  This was their last chance as getting something.

Anyway, one last quote from Beth Israel’s doctor should send chills up our planned giving spines:

In 2000, Ms. Clark donated Manet’s Pivoines dans une bouteille (Peonies in a Bottle), 1864. When the painting sold far under its expected price, one doctor sent an internal memo that read: “I told her about the disappointing price of the painting, but she didn’t take the bait and offer a half-dozen more.”

Having been on the “inside” at Beth Israel, I can testify that there was no conspiracy to unduely influence Ms. Clark.  She was in charge, not the hospital.  It was only wishful thinking and some rather unpleasant statements that should never have been put to writing.

If you made it this far, you have to see this next post about a stolen painting of Ms. Clark’s that the F.B.I. recoved only to gift it to the purchaser’s favorite museum.  Click here for that one.

What moves people to add any charities to their estate plans?

blog post version_069As promised in my previous post, I plan to slowly release different data points from Russell James’ recent webinar “WHAT THE DECLINE OF WILLS AND ESTATE PLANS MEANS FOR PLANNED GIFT MARKETING” (click to view webinar) which looked at data from a long-term (15+ years) health and retirement study that also tracked attitudes and actions regarding charitable estate intentions.  The study involved over 25,000 respondents who answered questions every two years about a series of health and retirement issues; over 10,000 respondents passed away during the study giving us plenty of pre- and post-mortem data points never seen before in the planned giving world.

Look at the top ten factors to cause someone to put charity in their estate plans.  7 out of 10 have to do with coming to terms with one’s mortality.  In other words, testamentary planned giving (bequests) happen when people realize they will not live forever.

Now take a look at the top ten factors for REMOVING charity from one’s will:

blog post version_102

The exact same 7 factors for adding charities were in the top ten for removing charities!  Basically, this seems to tell us that anything that causes someone to address their estate plans – most likely coming from a realization of one own mortality – is a cause for potential change.

What does this mean for nonprofit planned giving programs?  Well, these data points should at a minimum teach fundraisers about when they should talk to prospects about planned giving.  The problem is that waiting until these death awakening moments happen may be too late.  Lots to think about here.

Stay tuned for more interesting findings to come!

Results in from bequest counting poll!

Thank you to the 30 or so people who took our informal poll on the counting of bequests!!

Now, you might say that 30 people is not much of a poll statistically.  True.  But, the results are useful in that they reflect the ranges of practices out there and options to consider.  And, I believe the results are actually a nice representation of the whole picture.

Here are the results, with my comments to follow each slide:

blog question 1

I am actually surprised at this result. I just assumed everyone, or almost everyone, includes realized  bequests in their annual fundraising totals.  Maybe the question was confusing as I should have asked “whether your org includes realized bequests in  your annual fundraising totals?”

Blog question 2

I would like to see this at 100% YES but at least this tells us that not every organization will use the so-called “irrevocable bequest” to pad their campaign numbers.  Bottom line: campaigns need the flexibility to include irrevocable bequest intents as long as reasonable age guidelines are used (i.e. over age 65 or 70 or older!) and this is not overly relied upon (will land your org into not welcomed litigation).

Blog question 3

OK, nobody went over 50% of their campaign with irrevocable bequests – not surprising.  But, most being less than 5% of their campaigns shows that irrevocable bequests are not overly popular.

Blog question 4

Who counts “revocable” bequests intents in their campaigns?!  Well, some do but it is certainly not the norm.  I am surprised that so many of the voters said they did – 8 out of 25 voters on this particular question.  That is 8 more than I expected but I am guessing that institutions are using their campaigns as springboards for their planned giving programs. In that case, I think it is a great idea to give some recognition in your campaigns for these revocable “gifts”.

Blog question 5

I had assumed that most charitable bequests are overwhelmingly unrestricted.  Either I am wrong or the respondents are not so representative of experiences I’ve seen.

Blog question 6

Lastly, I like the answers to this question – meaning the policies run the gamut.  And, that is fine because this is purely a policy question!  Your organization’s choice and even when your board decides to put unrestricted bequests into endowment, the funds are not permanently restricted and can be realized by board at any time!

Thank you to all who participated in this informal poll!  Please share this post with others – we are on a membership drive to push our subscribers over a 1,000 and reach 100,000 visitors to the blog.

Where is planned giving heading in 2013 and beyond?

Yes, we all know that this country is getting much older.  But, we also know that planned giving in general has slowed down tremendously since the start of the recession in late 2008.  If you are interested in seeing charts on recently updated data based on VSE annual surveys on the 1,000 colleges and universities that report their numbers each year, click on this link:

Trends in Planned Giving – Higher Education 2005-20012

This is the power point that I used on my first video blog (click here to check out the video blog post!).

So where is planned giving heading?  From looking at the charts, it looks like we are currently seeing a drop in bequests!  In terms of numbers of bequests (less people passing away?).  And, a lower average size bequests since 2008 (reflection of lower stock market?).

What happened to the wealth transfer?  Well, haven’t seen bequests from baby boomers, yet.  Give it a few years and get your planned giving act together!