by Deborah Kaplan Polivy, Ph.D.
Why don’t we use the correct language when speaking about endowment building? Why don’t we say building an endowment to ensure ongoing resources for our Jewish communities and organizations? We often use the terms “planned giving and/or “legacy giving” when what we really mean are contributions that will be placed into an endowment fund, either currently or at death, the distributions from which will be made according to some Board or Finance Committee spending formula. Planned Giving is a term that has been adopted almost universally when in reality it is a tool for making an endowment gift. If Legacy Giving is leaving something permanently behind in memorial or in honor, then it can pertain to a capital or endowment gift. (I just passed the entrance to a local college; etched in stone was the name – The Kathleen Driscoll Amatangelo Gate. I am assuming that this was a capital campaign gift – immediately spent but establishing a legacy in memory of this individual.)
What most not for profit organizations want and need to complement their annual campaign is the certainty of knowing that reliable monies are available from an endowment fund. The latter can be built in many ways but somehow we have come to focus on the “planned gift” or “legacy gift” and not on the outright endowment contribution. Even Maxyne Finkelstein, Chief Operating Officer, Birthright Israel Foundation, in a recent article in eJewish Philanthropy referred to planned giving. “Recently we introduced a planned giving function as part of our growth strategy as we realized that the ability to offer this gift to generations to come will be supported by our ability to move beyond being fully dependent on an annual campaign.” Hopefully, she means an endowment program in which planned gifts will play a part.
Another recent example is an Anti-Defamation League advertisement that appeared in The New York Times. It talks about about creating “A Legacy of Hope”. The word “endowment” is never used. “Legacy Gift Options” are identified. (November 2, 2011, p. A11) What are they talking about? What is a Legacy of Hope? Don’t they want current and future endowment gifts to ensure that their mission is continued? So why don’t they say it?
Why don’t we refer to the process of endowment building directly and clearly? Moreover, by constantly emphasizing the planned gift or legacy gift, we are forgetting that current endowment gifts are very valuable. The contribution is outright. Cash is in hand. The charity can make use of it today. It can be invested and a spending policy immediately imposed.
Deferred gifts with an income stream to the donor may be second best – at least the charity has the money in the bank if it is the trustee of the trust or the owner of a charitable gift annuity. Bequests can be terrific or useless – one never knows. We start all of these Legacy initiatives; people promise to put the charity in their respective wills and often they never do. The individuals are recognized by the not for profit organization on a list of “Legacy Donors” but in fact they may have not have taken any steps to include the charity in their wills or to designate it on their retirement fund beneficiary forms. The promise may be just a means to get “the solicitor off their back” or their name on a list.
When I began in the field of endowment development, the “Letter of Intent” campaign was all the rage. Individuals signed a “Letter” indicating that they would make a gift through their will to the Jewish Federation Endowment Fund. I had files full of such letters and repeatedly included the names of the signers on the list of members of our Legacy Society. And yet, when the individuals died, more frequently than not, there was no bequest. However, when we had a gift in the bank – a philanthropic fund which reverted to the general endowment on the death of the donor, a pooled income fund gift or a charitable remainder trust – we had the cash to establish the named, endowment fund. I saw the same pattern when I left the Jewish world and entered general community not for profit organizations.
However, the most striking recognition of the need for current endowment gifts occurred on the death of my own parents. They both outlived their assets. They had made small, outright endowment gifts throughout their lifetimes. At least the charities had the money and my parents had the enjoyment of making the gifts while alive.
I am not alone in asking for clarity. In a recent discussion on the Linkedin Partnership for Philanthropic Planning, someone asks, “Is it Time to Dump ‘Planned Giving’?” The participant questions whether the “very term ‘planned giving’ can be replaced by something more effective,” and one respondent replies that “gift planning” could be an option since it opens the conversation to current gift plans as well as deferred. My best explanation for why this simple change in syntax works is that it is donor-centered,” he concludes.
Finally, it has often been suggested to me that restricted gifts “are the way to go”. It’s claimed that they are the easiest to solicit. But in the long run, are they the best for the Jewish community? What happened to the idea of asking for unrestricted endowment contributions, either through outright or deferred gifts that would benefit the Jewish community as it changed over time? Are we forgetting the real purpose of endowment building? Isn’t it to ensure the future? And even more importantly, given that not for profits can sometimes barely cover their budgetary needs through annual campaign funds, wasn’t the endowment supposed to provide the organization or community with monies to experiment, conduct research and take risks? If every penny of the campaign is used for current budget needs and then endowment resources are directed in the same way, while at the same time we call for “innovation”, no wonder why private, independent foundations are the sources of change.
Let’s use the correct language. Let’s remember why we spend so much energy on endowment building. Let’s ensure our future and do so directly with a conversation. Leaving a legacy is an important concept. Let’s say what we mean-ensuring the future of our Jewish community by creating an endowment fund – either through an outright or deferred gift.
Deborah Kaplan Polivy, Ph.D. is an independent fund raising consultant. Her website is deborahpolivy.com and her most recent article on “Annual Gift, Endowment Gift, or Both?” will appear on page 1 of the December issue of Planned Giving Today.