Source: OINOS Educational Consulting
By Frank Marangos, D.Min., Ed.D., FCEP
“By doing good with his money, a man, as it were, stamps the image of God upon it, and makes it pass, current for the merchandise of heaven.” ~ John Rutledge
The rare British Guiana 1c magenta is considered the most valuable stamp in the world. Cut in the shape of an octagon, the stamp is the only one of its kind known to exist. Issued in limited numbers in 1856, the rare impress was discovered in 1873 by a 12-year-old Scottish schoolboy among his uncle’s letters. Since its initial rescue, the stamp has broken the previous world auction price four times, most recently selling in 2014 to shoe designer Stuart Weitzman for $9.5 million in only two minutes.
Before the advent of stamps, the addressee, and not the sender paid for the missive’s delivery. The introduction of the postage stamp by Great Britain in 1840 exempted the recipient of any responsibility. As the anglicized term “philately” is derived from a compound of two Greek words meaning “an affinity” and “exempt from tariff,” famous philanthropists and collectors of rare stamps like Buffet, Carnegie, DuPont, Steinway, and Weitzman, gradually became known as philatelists.
Planned giving is the strategic stamp of philanthropic philatelists. It is the prized postmark that can help theological schools and seminaries overcome their recurring financial challenges. While most educational institutions rightly place an equal emphasis on annual giving, major gifts, and capital campaigns, expert development officers require an additional focus to assure the future sustainability of their respective schools. Rather than inducing donor fatigue through frequent fundraising appeals, these leaders better serve their institutions of theological learning by cultivating long-term strategic-minded donors. By encouraging such potential planned givers to judiciously invest the altruistic stamp of their resources today, they are, in fact, helping entrepreneurial philatelists dispatch their impactful legacies to future recipients, free from any latent tariff.
The previous four parts of the commentary entitledTransfiguring Theological Education have utilized the General Standards of Accreditation (2017) published by the Association of Theological Schools in America (ATS) to help the nation’s theological schools and seminaries identify ways of overcoming the fiscal, administrative, and pedagogical challenges that currently threaten their survival. This essay will continue this pattern by examining how planned giving strategies can help institutions of theological higher education meet their long-term goals and help provide for responsible and effective financial management.
According to the 8th General Standard onInstitutional Resources, “an institutional advancement program should be planned, organized, and implemented in ways congruent with the principles of the school.” Apart from annual and capital giving initiatives, the Institutional Development and Advancement subsection of the 8th General Standard recommends that development efforts should include “planned giving conducted in patterns consistent with relationships and agreements with the school’s supporting constituencies.” But what exactly is planned giving and how can the nation’s theological schools and seminaries harness the valuable postmark of the strategy’s fundraising potential?
Planned giving is a strategic comportment within a comprehensive moves management cultivation process. In their journal article entitled, Planned Giving: The Future of Fund Raising (1991), Joan Edwards and Alden Tueller describe planned giving as a process that generally seeks “large contributions of accumulated assets, real estate, stocks, bonds, trusts, and paid-up insurance policies that require the oversight of a contributor’s financial advisors.” Planned giving should, consequently, not be understood as an add-on fundraising contrivance, amateurishly posted on a website menu of giving options. It is not a simple development tactic concerned with balancing the immediate budget, but an intricate, proactive, donor-centric, and long-term institutional advancement strategy.
In his monograph, Philanthropy and Fundraising in American Higher Education (2011), Noah Drezner, founder and editor of Philanthropy & Education, describes planned giving as a “strategic and long-term approach that has produced the nation’s largest gifts in higher education.” Frequently referred to as “legacy,” “bequest,” or “endowment gifting,” planned giving seeks to cultivate the promise of deferred resource(s) that are often (1) final and nonrecurring, (2) based on donor values, (3) include a reduction of gift taxes, and (4) transformational. Apart from providing philanthropic alignment and a path toward sustainability, Drezner agrees with Edwards and Tueller that planned giving fundamentally seeks to align a donor’s legacy aspirations with the assurance of significant mission impact.
The origin of planned giving can be traced to the classic Greek and Roman civilizations where perpetual family foundations allowed 1st Century citizens to leave and receive bequests. Later, throughout the medieval period, many social services were performed using the proceeds from land rents held in charitable trusts, and by the remainders from gift annuities funded for the benefit of the Church. During the Reformation, however, statutes were enacted that stipulated, that after a maximum of 20 years, the lands held by the Church were to return to the donor. More recently, America’s early educational, cultural, religious, and social service agencies were established and funded by philanthropists like Ben Franklin, John Harvard, John Carroll, Francis Alison, Leland Stanford, and others whose generous planned gifts created charitable trusts, foundations, and endowments that continue to exist today.
As costs associated with theological higher education in America continued to rise, planned gifts and bequests increased in importance. In addition to alumni, annual, and corporate giving programs, planned giving became critical to an institution’s financial security and sustainability. Planned giving is currently a way to support and enable philanthropic-minded individuals to make larger gifts than they could make from ordinary income.
The Association of Fundraising Professionals (AFP) defines a planned gift as a “voluntary and, often, major gift that involves integrating personal, financial and estate planning concepts with a donor’s plan for lifetime or testamentary giving.” Apart from the possibility of significant estate tax benefits, a planned gift provides a way to give beyond the use of current assets. While annual donations are made from a donor’s discretionary income, planned gifts are frequently made at death as part of a donor’s overall financial and/or estate planning. Planned gifts, consequently, require the assistance of qualified professional consultants, legal, and/or financial advisors to provide the needed expertise and confidentiality to appropriately complete and execute. So how and to what philanthropic philatelists should theological schools pilot their planned giving strategy?
In their 2012 Southeast Regional Conference presentation entitled, Effective Ways to Have the Planned Giving Conversation with Donors, the United Way suggests a four-phase approach to planned giving: (1) relating (romance), (2) discovery (research), (3) advocating (request), and (4) supporting (recognition). During the relating (romance) phase, development officers are encouraged to determine the trust and confidence levels that a prospective planned donor has to the institution he/she represents. While the second phase focuses on discovering a nonprofit’s legitimate need(s), the advocating stage seeks to determine whether or not the “perceived need(s)” aligns with the donor’s. The final supporting phase, tests the degree to which a potential planned giver would be satisfied with “investing” in such a partnership.
Marti Heil and Sandra Bate of the Indiana University Foundation advocate a similar cultivation approach. In their chapter, High-Net-Worth Donors, published in the 3rd Edition of Achieving Excellence in Fundraising (2011), the authors outline a six-step process that includes: (1) exploration, (2) evaluation, (3) enlightenment, (4) engagement, (5) encouragement, and (6) endowment. Like the United Way, Heil and Bates encourage institutional advancement officers to remain “disciplined” in working with high-net-worth donors. They promise that the “rewards” of personalized and fully engaged donors, enlightened with the organization’s mission, will be “truly transformational.”
In his article, Primary Donor Motivation: The Subtle Difference Between “Giving With” and “Giving Because” (2011), Eddie Thompson, president of Thompson and Associates, a charitable estate planning firm, classifies donors according to three motivations: (1) emotion, (2) habit, and (3) strategy. While three-fourths of all donors give from habit, Thompson suggests that others contribute resources as a result of emotional appeals. Strategic donors, he argues, “almost always pledge significant gifts and make giving decisions based on some strategic significance.”
Donor-centric methods of planned giving best align with the characteristics and motivational dispositions of strategic donors. Like the United Way and the Indiana University Foundation,Thompson and Associates provides a charitable estate planning process for strategic-minded donors that includes: (1) confidentiality, (2) value-based affinity, (3) net-worth estate appraisal, and (4) expert recommendations. Unlike the more transactional approaches that emphasize tax reduction and wealth-transfer strategies, Thompson’s values-based estate planning approach seeks to align a donor’s (1) financial and relational needs/concerns for their spouse and heirs, (2) personal credo of life principles, (3) approximate net-worth, and (4) legacy aspirations. However, only when these issues are suitably clarified, should social-capital tax and wealth-transfer strategies, such as charitable gift annuities, pooled income funds, and charitable remainder unitrusts, be addressed. The result of such a thoughtful and deliberate process is the execution of planned gifts strategies that are far less likely to be revoked in the future.
Planned giving methods provide donors the ability to (1) make a gift, often larger than he or she thought possible, (2) enjoy the satisfaction of providing the means for an institution to fulfill its mission, (3) reduce gift/estate taxes, (4) reduce or avoid capital gains taxes, (5) pass assets on to family members at reduced tax costs, (6) increase income and effective rate of return, (7) possibly receive income for life, and (8) leave an impactful legacy without giving up assets. Like a stamped letter, mailed today and enjoyed by a recipient tomorrow, the pre-paid philanthropic postmark of a properly developed planned gift will sustain the mission and work of the nation’s theological schools and seminaries far into the future. Such altruistic gestures are often called “legacy gifts” because so many are created to endow future generations with formidable influence.
The Council for Aid to Education recently reported that public colleges and universities raised $43.6 billion in 2017. This is the largest fundraising total ever recorded by the annual survey since it began in 1957. Giving by bequest totaled an estimated $35.70 billion, increasing 2.3 percent from 2016. Unfortunately, less than one percent of the nation’s colleges raised more than 28 percent of the record-breaking totals. Like most of their non-religious counterparts, contributions have severely declined, and enrollment at many of the nation’s theological schools and seminaries has fallen by nearly 25% over the past decade. According to the 2017 Moody Investor Service Report, the main contributors of this injurious situation are: (1) decreasing denominational support, (2) tuition discounts, and (3) declining enrollment. As a result, some of the oldest and most celebrated theological institutions of theological higher education in America are on the brink of financial collapse.
Fortunately, according to a recent article (Oct. 16, 2017) in the Stanford Social Innovation Review, an estimated $30 trillion will be inherited by the next generation in the United States from the prosperous Baby Boomers in the next 20 years. Considered the largest reassignment of financial resources in human history, the Great Wealth Transfer, may be the single greatest planned giving opportunity for theological schools and seminaries in the modern era. In order for these institutions to take advantage of this massive reassignment of capital, however, sophisticated planned giving strategies are required.
The Center for the Study of Theological Education at Auburn Theological Seminary offers valuable guidance to institutions of higher theological learning willing to refine their advancement efforts in order to leverage this historic transfer of wealth. According to their publication, Great Expectations: Fund-Raising Prospects for Theological Schools, apart from setting realistic goals, and requiring the participation of their institution’s president, schools of higher education should implement planned giving methods that include a variety of financial instruments adapted to donor values and value-centered legacy aspirations. While planned giving programs will not solve their immediate financial needs, the monogram ensures that academies disposed to doing so, will be “investing in their future’s financial well-being.” To effectively advance such development strategies, however, theological schools and seminaries will be required to contend against the negative influence of the Matthew Effect.
The Matthew Effect, or Principle of Accumulated Advantage, may be summarized by the adages “fortune smiles on the fortunate,” and “nothing succeeds like success.” While the concept is often used to explain positions of fame and status, it may also be applied to describe the cumulative advantage of economic capital. First proposed by sociologist Robert K. Merton in 1968, the theory’s name was coined from a parabolic phrase attributed to Jesus cited twice in the Gospel of Saint Matthew: “To everyone who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away” (Matthew 13:12; 25:29).
A 2011 fundraising study conducted by the Higher Educational Institutions (HEI) identified the existence of the Matthew Effect in 27 countries within the European Union. Despite the presence of significant untapped philanthropic potential, it was determined that not all universities were equally endowed with the same fundraising capacities. Privilege, concluded the study, begets privilege when it comes to successful fundraising among universities.
Like the HEI Study, a 2017 Fundraising Report of the Council for Aid to Education also concluded that the most prestigious educational institutions in America tend to raise the largest amounts of money from private sources. Unfortunately, existing positions of prosperity and institutional privilege do, in fact, serve to perpetuate an ongoing cycle of accumulative advantage in American colleges and universities, a trend that is especially pronounced in the nation’s institutions of theological higher education.
Since strategic cultivation increases an organization’s image, reputation, and priority with both current and future planned giving donors, OINOS Consulting has developed a Strategic Cultivation Method that is based on the Parable of the Sower (Matthew 13:1-12). If employed in tandem with more specialized value-based estate planning processes like the Thompson and United Way models, the general strategy can help the nation’s institutions of theological higher education counteract the Matthew Effect. Like the British Magenta octagonal stamp, the OINOS cultivation process includes the following eight interrelated steps.
- Servant: Classification of donors
- Soil: Clarification of donor’s credo of personal values and aspirations
- Situation: Alignment of personal credo with mission/vision of school
- Seed: Calculation of resources
- Scheme: Identification of most appropriate philanthropic tools/instruments
- Start: Execution of strategy
- Salutation: Celebration of philanthropic impact
- Supervise: Monitoring of on-going donor/institution relationship
The Parable of the Sower, upon which the OINOS Cultivation Method is based, is a story about the awesome investment that God has imparted to humanity. According to Christian sacramental theology, each individual is unique, beloved, “stamped” at baptism with God’s saving Grace . . . the “talent” to which the Parable of the Sower refers. God expects the faithful to utilize their respective charism to extend His Message, not to play it safe . . . or to hoard His Grace by burying wealth, time, and talents in the napkins of self-absorption, negligence, and/or timidity. On the contrary, by courageously advancing effective planned giving strategies, the nation’s institutions of theological higher education can ensure that future seminarians and students will enjoy a “return” on the inheritance that the Lord has bequeathed to his current Church.
In September 2014, a Brooklyn mailman named Joseph Brucato admitted intentionally hoarding nearly a ton (40,000 pieces) of mail over a 10-year period. The postal worker was arrested after his supervisor noticed that the mail carrier’s personal car was stuffed with undelivered envelopes. It took law enforcement agencies five hours to remove the stash of stolen letters they additionally found in Brucato’s apartment. While severe criminal charges were dropped against the then 68-year old postal worker due to his advanced age and poor psychological condition, one can only imagine the reaction of the recipients who finally took delivery of the messages he hoarded from them ten years prior.
Humanity is an interconnected mailroom of aspirational legacies, envisioned by strategic donors who wisely examine the past for relevant precedent, scan the present context for opportunities, and selflessly dispatch their impactful altruism far in to the future. By adhering the prepaid stamp of their respective talents on today’s challenges, philanthropic philatelists can insure that the priceless missives that the nation’s theological schools and seminaries have inherited will not be hoarded in the attic of languid complacency, but rather, faithfully transferred and multiplied in the soil of educational excellence.
Click below to read the whole series [These essays are an excellent blueprint for reorganizing Holy Cross Seminary and all seminaries in the USA.]: