Bar Harbor Trust Services helps Maine non-profits attract planned gifts.
“Fundraising is becoming critical for non-profit organizations,” said Joe Pratt, Managing Director and Trust Officer at Bar Harbor Trust Services. “The tough economy has made it even more important for charities to find new ways to attract donor support. Most donors know they can ‘write a check’ to support their favorite charity, but many donors are unfamiliar with planned gifts.
“Planned gifts include charitable bequests, charitable trusts, pooled income funds, charitable gift annuities, and several other gift options,” said Pratt.
“Donors are generally unfamiliar with planned gift options, and many non-profits don’t have the infrastructure to attract or accept such gifts,” he said. “This limits the options that charities offer their donors and prevents them from receiving what could be substantial gifts.
“We work with charities and help them become more familiar with planned giving and then help them put in place the mechanisms necessary to accept these gifts,” Pratt said.
During the last 12 years, Bar Harbor Trust Services “has developed a comprehensive planned giving service. We educate non-profit boards, staff, volunteers and donors about planned gifts,” Pratt explained.
“We help the charity decide which planned gift options to offer to their donors,” he said. “We then help them integrate planned giving into their existing fundraising efforts.
“Charitable gift annuities are very popular with donors, in part because the rates are so attractive,” Pratt said. “A charitable gift annuity is a written agreement between a donor and a charity, where the charity agrees to pay the donor a lifetime income in exchange for the gift.”
Typically, a donor gives the charity cash or investment securities. The charity invests the funds and makes annuity payments to the donor. Upon the donor’s death, the charity is free to use the remaining principal for its charitable purposes.
Internal Revenue Service rules “assume [that] 50 percent of the original gift will be left when the donor dies,” Pratt said. “Nationally, though, the amount left for charity has averaged around 70 percent.”
According to Pratt, the donor is also eligible for a charitable income-tax deduction. “As a rule of thumb, the donor will get a tax deduction of about 25 to 33 percent of the value of the gift,” he said. “This has the effect of increasing the rate the donor receives.
“The number of Maine non-profits that are establishing planned giving programs is increasing,” Pratt said. “In 2001, we had no planned gift clients and zero planned gift dollars.
“Since then we have partnered with 24 Maine non-profits and helped them facilitate dozens of individual gifts with a [combined] value of more than $8 million,” he said.
Bar Harbor Trust Services works with charities that range “from quite small to very large in size,” he said. Maine Coast Healthcare Foundation in Ellsworth is an example. “Three years ago,” Pratt said, “we met with the MCHF staff and board to discuss whether they should offer charitable gift annuities to their donors. The board voted to do so,” Pratt recalled.
“The donor response has been positive,” Pratt said. “In the past three years their donors have made gifts of about $200,000. We feel it has been a successful partnership [with MCHF]. We enjoy working with their development staff, board, and donors.”
According to Pratt, the charities that have partnered with Bar Harbor Trust Services have received planned gifts that range from $10,000 to more than $1 million in value. “These are gifts that would not have happened without the charity’s decision to offer additional planned gift options to their donors,” he said.
“We know the charities need the financial support, and we know their donors have a desire to give,” said Pratt. “What we do is bring both sides together by finding a planned gift arrangement that fits their respective needs and circumstances.
“As donors become more familiar with planned giving, it is less a question of if they will give and more a question of which charity will they support,” Pratt said. “As charities recognize the importance of planned giving, we’re getting more calls about our services.
“We enjoy working with so many worthy organizations and the donors who support them,” he said.