Policies

Polices are simply a list of dos and don’ts that your organization (staff and volunteers) will adhere to. Written policies need to be in place at the outset of the establishment of a planned giving program, to guide and govern the actions of those who come after us. Ultimately, these policies are in place to act as guidelines for accepted protocol and to prevent future harm to the organization from the unintentional but imprudent actions of staff, board members and other volunteers. These policies do not need to be onerous or complicated and can replicate the policies of other, similar organizations. They should be reviewed and updated over time to reflect changes to taxation and the planned giving environment in general. Established policies give comfort to both donors and their advisors and will assist them in developing their plans to make non-cash gifts to your organization.

Standard will clauses

Many organizations develop a set of standard will clauses (preferred language in a will) that can be used by donors and their legal counsel when preparing wills that include a charitable gift. Legal professionals will often contact organizations asking for information on how the will should be worded. The clauses should set out the wording as your organization would like it to appear in wills. The standardized wording should be initially vetted by your board of directors and legal counsel to ensure that no ambiguities exist with respect to donors’ intentions, and that there is an “escape clause” that empowers your organization to redirect gifts if the original intent of the gift can not be realized. This material should be set up electronically so it can be sent quickly and easily with appropriate standard cover letters to donors, lawyers and notaries.

Gift acceptance policies

Gift acceptance policies are a list of procedures pertaining to your organization’s acceptance of a gift. The policies will protect the donor and will ensure that your organization does its due diligence in determining if you are in a position to be able to accept the gift. The policies will ensure that the gift makes sense for the donor in terms of his/her personal financial position, as well as hos or her tax and estate plan. (Donors should always be encouraged to seek independent professional legal and financial advice).The gift also has to make sense for the charity on an after-cost basis. In addition, risk of liability to the board and its directors must be understood and minimized. Gift acceptance policies should be developed for all types of gifts with special attention to:

• Bequests, gifts of residue, testamentary trusts and other gifts through a will
• Life insurance / donor-owned and charity-owned
• Publicly traded securities and flow through shares
• Charitable remainder trusts and other inter vivos (living) trusts
• Gifts of private company shares
• Outright gifts of real estate (including environmental risk policy)
• Gifts of life interest (residual)
• Gifts of RRSPs/RRIFs
• Annuities

 

The Canadian Association of Gift Planners (CAGP-ACPDP) Code of Ethics

The Canadian Association of Gift Planners has developed a document that outlines the standards of professional and ethical practice that provide an excellent code of conduct for all gift planners and their programs. Issues that are addressed in the code of conduct include:

• The balance of interests between the donor’s aims and the charity’s needs
• Confidentiality
• Appropriate compensation for the gift planner
• Conflict of interest
• The need to encourage donors to obtain independent counsel
• Honouring the donor’s intentions
• Professional development

 

Investment policies

When considering a planned gift to a charity, donors can and do demand to see the investment policies of the charity. This is of particular importance to those donors anticipating establishing an endowment fund or a donor advised fund. It is important for all charities to demonstrate their understanding of their fiduciary obligations by developing and monitoring their investment policy statement and making a simplified version of it available to donors. Usually established by the board of directors or a subcommittee of the board (an investment and finance committee for example), the investment policy statement will determine the disbursement quotas and the asset class allocations for an organization’s investment portfolio, among other things.

Endowment policy

An endowment is a sum of money that is held and invested by a charity for their long-term benefit. Only the income is spent by the charity. There are two types of endowment funds, an unrestricted/general endowment fund, and restricted use/special purpose funds.

It is the restricted use/special purpose funds, often named for a donor or his/her family and with clear guidelines as to the use of income, that require a standard policy. The management of the funds as well as your charity’s recognition and ongoing stewardship responsibilities with respect to donors and/or family should be clearly spelled out. This standardized policy needs to be formally approved by your board.

Endowment agreement form / endowment template for terms of reference

This document provides an historical record about the donor and the reasons why the endowment fund was established. It is usually signed by both the donor (or his/her family) and the charity. It clearly describes such things as:

• The purpose of the fund (endowment)
• Source of funds
• Investment and administration of the fund
• Expenditure of the income
• A list of signatories who have control over the expenditure of income

 

Terms of reference for planned giving committee

Most charities consider establishing a planned giving committee made up of volunteers from the professional advisor community (lawyers, investment advisors, insurance professionals, etc.). The committee usually consists of five or six members and should have representation from a diverse group of communities. The meetings should be conducted according to a document that outlines the purpose of the committee and the roles of the members.

Leslie Howard is founder of Planforgifts.com, one of Canada’s premier web-based planned giving resources for charities, nonprofits, professional advisors, volunteers and donors. For more information on planned giving strategic plans, visit www.planforgifts.com and become a member.