March 31, 2014, Revised March 14, 2016
Planned gifts are a substantial part of the philanthropic support received by St. Margaret’s Episcopal Church to support its mission. These gifts usually involve tax and other forms of financial and estate planning activities. Often a significant portion of the assets a donor owns are used to create and fund the gifts.
Because of (1) the size of most planned gifts; (2) the responsibilities the Church often incurs for asset management and the (3) liabilities incurred for beneficiary payments, the Vestry establishes these policies and guidelines to assure that planned gifts are a productive and positive aspect of stewardship.
1. General Policies
A. Protection of Donor’s Interests
The Vestry and its volunteer and staff representatives of St. Margaret’s Episcopal Church (hereinafter referred to as the Church) shall always consider the interests of our donors as the first priority in planning gifts. This shall include, but not be limited to the donor’s financial situation and philanthropic interests, as well as any tax or other legal matters discovered by the Church’s representatives while planning a gift. A donor shall not be encouraged to make a gift which is inappropriate, in light of the donor’s personal or financial situation and the donor shall be advised if a gift proposed by another party or parties is contrary to this policy. A donor may expect any representative of St. Margaret’s Episcopal Church to reflect the dignity and respect consistent with the charitable purposes of the Church.
B. Confidentiality of Information
Information acquired by any representative of St. Margaret’s Episcopal Church about a donor or the donor’s assets or philanthropic intentions shall be held in strict confidence. Donors will be encouraged to notify the Church of their planned gifts, including bequests, and all such information will be kept confidential unless written permission to release it is obtained from the donor or his/her counsel.
C. Legal Counsel
The Rector of St. Margaret’s Episcopal Church or the Rector’s designee shall seek the advice of legal counsel in all matters regarding planned giving which involve any agreement which is binding on the Church. All planned gift agreements provided to a donor by the Church will be created by or reviewed by legal counsel. Each prospective donor shall be urged to seek the advice of independent legal counsel prior to the Church acting in any way as a party to a planned gift. A donor who chooses not to engage counsel must acknowledge this decision in a written statement addressed to the Vestry before the Rector may accept a planned gift.
It is neither the province of the Church nor its volunteers or staff representatives to give legal, accounting, tax or other advice which is usually reserved to the donor’s counsel while acting on the Church’s behalf. This policy does not preclude any duly licensed person representing the Church from advising a donor or such donor’s counsel regarding a gift with appropriate disclosure to the donor and to the Church.
D. Authority for Negotiation
The Rector is authorized to negotiate planned gift agreements with prospective donors. The Rector may delegate such authority in writing to another Officer or member of the Vestry with the approval of the Executive Committee.
E. Authority for Approval
It is the intent of this section to establish reasonable limits for the approval of planned gifts to protect the Church, its donors, and its volunteer and staff representatives. Planned giving agreements must be approved in writing by the Rector or the Rector’s designee, as set forth below, by a Warden, or the Chair of the Planned Giving Committee. Any member of the Executive Committee is authorized to sign planned giving agreements that have been approved as provided herein. Any responsibility assumed by the Church in relation to a planned gift must be consistent with the policies of the Church, the Episcopal Diocese of San Diego, and the Episcopal Church. The Vestry may act as trustee, co-trustee, successor trustee, charitable remainderman, and charitable income recipient. The Church may enter into charitable gift arrangements, authorized by law, by contract and bargain sale.
The Rector or the Planned Giving Chairperson is authorized to approve and accept, on behalf of the Vestry, any planned gift made by will or other estate planning instrument which is unrestricted in nature and funded with cash, publicly traded securities or other financial instruments with a ready market. Gifts of real property, interests in an operating business or gifts that are restricted to designated purposes will be approved as provided below:
2. Approved Gift Plans
The Rector or the Planned Giving Chairperson is authorized to approve the following agreements without regard to gift amount: Any planned gift in which the Church will receive the charitable interest, or a portion thereof, in which the Church is neither named as trustee nor has other fiduciary responsibilities or liability. Other gifts may include the following methods.
A. Outright Gifts
This is the most preferred gift form because of the immediacy of its usefulness in our mission. Outright gifts should always be encouraged first when possible. Outright gifts may take the form of cash and gifts of property.
B. Bargain Sales
This gift form creates an outright gift or part of the value of property because of the donor’s sale price is less than the fair market value. Usually, a donor sells property to the Church and the Church, in turn, sells the property to another buyer.
C. Charitable Remainder Trusts
A charitable remainder trust allows a donor to give property or cash that will be used by a third party (the trustee) to earn an income that is paid to income beneficiaries (usually the donor or donors) for life or a term of one to twenty years. At the end of the income payment period, the trust principal is distributed to a charitable remainderman such as the Church. There are two forms of the charitable remainder trust—the unitrust and the annuity trust.
The unitrust provides an income based on a set percentage of the trust principal. The payout percentage is chosen by the donor at the outset. Each year the trustee multiplies the value of the trust fund by the percentage chosen and pays that amount in annual, semiannual, quarterly or monthly payments. This is the most flexible charitable trust agreement, and is the arrangement of choice for most donors.
The annuity trust provides a fixed dollar income which is chosen by the donor at the outset. The payments don’t change and will come from trust principal should earned income not be sufficient. Payments may be annual, semi-annual, quarterly or monthly.
D. Charitable Lead Trust
The trustee of a charitable lead trust (also known as a charitable income trust) pays the income of the trust to a charity or charities and, at the end of a fixed period of time, the trust corpus is transferred to one or more non-charitable beneficiaries. These gifts can produce dramatic gift and estate tax savings, providing a way for a donor to be philanthropic and preserve assets for family and/or other heirs.
E. Life Estate Contracts
This arrangement allows a donor to make a gift of the remainder interest (that which is left after the donor’s lifetime) in a personal residence or second home to the Church, and reserve to himself or herself a life estate (the privilege to live in the home or second residence for life). These gifts are contracts. The donor agrees to pay all property taxes due, maintain the residence and provide adequate insurance. The Church will accept outright life estate gifts. It is suggested that the services of an estate planning attorney be secured to review all contracts for life estate gifts.
F. Gifts of Life Insurance
A donor may give a paid-up life insurance policy to the Church, naming the Church as both owner and irrevocable beneficiary. A donor may give a life insurance policy to the Church that is NOT paid up if the policy has a current gift value or if the Rector of Church is assured that there is a reasonable expectation that the donor will continue to make gifts that will be at least equal to the cost of premiums for that policy. Should a contributed life insurance policy require additional premiums to remain in force, the Finance Committee shall determine the prudence of accepting such contributions and the donor shall be made aware that the Church cannot guarantee that policies requiring premium payments will be maintained.
Gifts made by will are encouraged and accepted as provided in these policies. The Church may act as trustee for charitable trusts established by will so long as the non-charitable interest in the trust so established does not exceed 30 years.
The Rector is authorized to approve agreements, as listed above, which are funded with real property or an interest therein so long as the Rector provides for Vestry approval: (i) An appraisal or market evaluation of the value of the property (fair market value) furnished by a qualified professional appraiser for real property, and (ii) an assessment of the property regarding environmental regulations and liabilities showing the Church will not incur more than a generally accepted normal business risk by taking the property as owner or trustee; and (iii) sufficient information to accurately determine the ownership of the property and any mortgages or liens that may be filed against the property; (the Church shall NOT accept encumbered property which would cause the Church or any charitable trust to be disqualified as a charitable entity); and (iv) assurances from the donor that he or she will act as required by applicable laws and regulations to ensure that the resulting trust or other planned gift will qualify as a charitable entity; and (v) the gift is entirely (100%) of the property or there is a commitment from the donor or other owners to immediately sell the non-gifted interests in such property (provided that a majority of the Vestry of the Church may waive this requirement upon showing of good cause).
Further, the Rector and the Planned Giving Chairperson, acting together, may request the consideration of any planned gift that is not provided for in these policies (provided the potential gift is permitted under applicable law and regulation) by the Vestry at a regular or special meeting called for the purpose of consideration of the request. Should the Chair of the Vestry determine that the Vestry cannot act in the time necessary to satisfy the prospective donor, he or she may convene a meeting of the Vestry of the Church, the Church’s legal counsel and other persons as the Chairman may deem necessary, to hear and consider a proposal by the Planned Giving Chairman. Approval of the planned giving agreement by a majority of the Vestry shall be sufficient to authorize the Church’s acceptance of such agreements. The provisions of the Church’s bylaws regarding meetings shall apply to this situation, as shall all applicable policies of the Church.
A. Fiduciary Responsibility
The Church may serve as trustee of charitable remainder or lead trusts.
If able to accept, the Rector of the Church shall ensure that all assets held in trust are invested so as to produce results consistent with the mutual best interests of the donors and the Church. The Rector shall report, as directed by the Treasurer, to the Finance Committee regarding the state of these investments. The Finance Committee shall provide an annual report to the Vestry on all investments held in trust, their condition and any changes in policy or operation the Finance Committee recommends.
Following the approval of a planned gift, the Rector shall determine and report to the Treasurer a course of action for the investment of trust assets. Consistent with applicable laws and regulations, the Rector may utilize the services of financial professionals who serve the donors who establish charitable trusts. The Rector is authorized to terminate said relationships should they no longer serve the best interests of the Church or the beneficiaries or conflict with the Church’s duties and responsibilities as trustee.
B. Charitable Intent of Donors
It is the policy of the Church not to enter into planned gift arrangements that do not reflect at least some donative intent on the part of the donor. The Rector will document in the file for each planned gift the scope and nature of the donative intent expressed by the donor or donors.
C. Restricted Gifts
Donors may choose to restrict the use of their planned gifts to any purpose consistent with the charitable purposes of the Church. So long as the restriction is general in nature and not contingent on specified future acts by the Church or any subsidiary of the Church, the Rector may accept the restriction and bind the Church to its provisions. Donors may offer successively less limiting restrictions if they wish. Each donor will be asked to agree that, should the restrictions they choose not be appropriate at the time of the maturity of their gift because of changes beyond the control of the Church, the Vestry may use the gift in a manner that meets the then current greatest need.
D. Types of Gifts
In general, the Church may accept any gift that is provided for in law or custom so long as such gift is consistent with the other provisions of these policies and guidelines. The Vestry may, on recommendation of the Planned Giving Committee, determine that the Church will emphasize or concentrate its efforts on encouraging one form or type of gift. At all times, however, the preferences of the donor, as noted in Section 1, shall be more important than the Church’s preference for charitable gifts.
Planned gifts are usually the largest and most helpful gifts the Church receives. To express the Church’s gratitude for this generous support, the Rector is authorized to offer permanent recognition of this philanthropy.
F. Church Services, Costs and Compensation
The solicitation, planning and administration of planned gifts is a complex process involving the donor’s philanthropic, personal, legal, tax and financial considerations. For this reason, donors often seek the counsel of legal, tax and other experts (gift planners) who represent clients in the planning process and in implementing gift decisions.
The Church will provide, as references in Section III, documents and other materials that will expedite the formation of planned charitable gifts. Those costs will be borne by the Church. The Church SHALL NOT pay any fee or commission, directly or indirectly for the right to receive a gift (because gift planners should be compensated by those they represent and to whom they are responsible and for whom services are provides.).
In addition, no person in the employ of the Church may accept any compensation or material benefit from a donor as a result of the gift planning process.
(As adapted from Crescendo Interactive, Inc., Camarillo, CA © 1995-2008)