Every donor has an intent when supporting an organization, whether that be to create an endowment, fully fund a program, or provide the unrestricted support that enables their chosen recipient to serve the needs they wholeheartedly agree with. However, many donors may be unable to fund their intent through a cash gift.

Gift planning, when combined with the donor’s desires, enables this to happen. One example from a university client was a donor, John Smith, who wished to fund an endowed full scholarship (currently $35,000 per year). John was 62, married, paying for the last year of college for their fourth child, and hoping to make a lasting impact on his university in honor of his 40th reunion.

When John met with his gift officer, he told the officer of his desire to establish the scholarship but did not believe he had the resources to fund it in full. He was going to receive a one-time longevity bonus from his company that would amount to $250K after taxes but had little additional capacity beyond the $10K he gave annually to the university.

John’s gift officer proposed a solution that would meet all of John’s needs within his current economic capacity. The gift officer suggested that John purchase and make the university the owner and beneficiary of a second-to-die life insurance policy. They were able to find a $1.5M policy with a single premium of $225K, which John could fund from his longevity bonus. Additionally, if John desired that the university begin awarding the scholarship immediately, he could add an annual $25K to the $10K he normally gave the university. That gift could pay the scholarship each year until the insurance policy matured. John would be able to fund the additional annual gift with half of the tuition he had been paying for the prior 12 years for his four children to attend college, which ceased with his payment that year.

By listening to the donor and examining a multitude of planned gift options, the giving officer was able to accommodate the donor’s wishes despite initial roadblocks.

NOTE: The insurance policy value and premium are specific to this donor and are provided as examples only, please check with the specifics of your donor to determine the exact costs.