Old Products, New Products:

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Old Products, New Products Bringing more and
larger donors into the CDFI world
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Traditional role of individual donors at CDFIs

• Investors (usually small amounts)
• Donors (usually smaller amounts)
• And many CDFIs do almost no outreach to
  individuals at all.

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Source Giving USA
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• Five new products for individual donors and
  investors
• Outright major gifts
• Life Income Gifts
• Pass-through gifts
• Legacy Society
• Collaborations with donor-advised funds

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1. Outright Major Gifts

• We have NO interest in making a loan.
• Laws of charitable proportionality
• Enough to make a difference
• Not so much as to carry the whole thing
• Traditional nonprofit model make the case, fill
  in the table.

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1. Outright Major Gifts

• Face-to-face is best feasibility study
• Unrestricted not a sell. Endowment not quite
  right.
• SolutionFund for Innovation
• Five gifts, 225,000 tentative goal 1.5
  million.
• You have to ask!

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2. Life-income gifts
100 total value
1 or 2 a year or less! in dividend income
The burdens of good investment The appreciated
security
10 cost basis
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2. Life-income gifts
If sold
100 total value
Capital Gain (taxed usually at 20)
Creates frozen investment portfolios
10 cost basis
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Charitable Gift Annuities
Transfer of asset
Life income

• Advantages to Donor
• Increased income
• Avoidance of capital gains taxes
• Partial income tax deduction
• Favorable tax treatment of the income stream
• Assets removed from estate
• Chance to make a major gift!

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Charitable Gift Annuities
Transfer of asset
Life income

• Advantages to NHCLF
• New, significant gifts to permanent capital
• Natural progression for lenders
• Positions us as a major player in fundraising
  and gift planning

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Charitable Gift Annuities
Transfer of asset
Life income

• Planned Giving Meets CDFIs
• Question of cost of capital
• Need for careful policies.

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2. Life-income gifts

• Charitable Gift Annuities one of several planned
  giving opportunities.
• (Also Charitable Remainder Trusts and Charitable
  Lead Trusts)

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3. Pass-through gifts and grants

• CDFI as intermediary for individuals and private
  foundations/advised funds
• Goal is to get to community-based end-user
• CDFI as easy way for donors to reach small
  organizations
• CDFI as a way to provide anonymity
• CDFI as a way to minimize hassle
• Stock transfers
• Lots of small grants (for foundations)
• FY 2002 nearly 400,000 passed through

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4. Legacy Society

• For estate plan commitments
• Bequests
• Planned gifts
• Gifts of loans

• Modeled after colleges and other nonprofits
• Need Create social milieu for charitable estate
  planning
• Challenge Create social milieu for charitable
  estate planning

Roll-out planned for FY 03
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5. Collaboration with Donor-Advised Funds

• New Hampshire Charitable Foundation
• Committed to invest 1 million in NHCLF
• 500,000 from general funds
• 500,000 from advised funds

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5. Collaboration with Donor-Advised Funds
Opportunity 1 Getting in front of major
donors Opportunity 2 Become the
socially-screened investment option at community
foundation Opportunity 3 Mechanism for donors to
make a loan AND get a tax deduction Opportunity
4 Over 500 community foundations in the country!
NOTE Not an outright gift, but possible source
of major investments plus a way to reach
wealthy individuals.
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5. Collaboration with Donor- Advised Funds

• Calvert Giving Funds at Calvert Foundation
• Could develop into source of significant gifts
  to CED world
• CDFIs could evolve into folio managers
• Calvert and CDFIs, both as intermediaries
• Ideally, as conduits, not as bottlenecks

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Your turn Response and Discussion