Planning for planned giving: a "golden age of philanthropy" is upon us but less than a third of America's 3,000 not-for-profit colleges and universities have endowments. Few have the resources to set up planned giving programs, but there are effective ways for your school to attract endowments. Here's how

Matrix: The Magazine for Leaders in Education, June, 2001 by Judith Harkham Semas

Last month Stanford University announced a $400 million gift--the largest ever to a single American college or university--from the foundation created by William Hewlett, the late computer pioneer and Stanford graduate. According to Howard Pearson, Stanford's director of Planned Giving, that gargantuan gift is the culmination of many decades of connection and cultivation.

As have most large educational institutions, Stanford has made a substantial, long-term commitment to funding and staffing its alumni relations and development functions. It has about 275 people involved in communicating and maintaining contact with alumni, researching and cultivating potential donors, acknowledging gifts, educating the public about the benefits of financial planning, planned giving and more. Of these, nine work in planned giving exclusively: five are planned giving officers, and four provide administrative support.

At small and mid-size colleges and universities, however, the picture is very different. The National Association of College and University Business Officers, whose members represent more than 2,100 institutions of higher learning, estimates that less than one-third of America's 3,000 not-for-profit colleges and universities have endowments. Few have funded or staffed the development function beyond bare-bones minimal levels, and fewer yet have effectively staffed planned giving.

"Many schools focus on meeting annual budgets without making long-term plans," says Lyle Brizendine, vice president of institutional trust services of TIAA-CREF Trust Company. "Others don't have the resources to set up endowments and planned giving programs or are intimidated by the complexities."

Such a short-term focus will be especially costly in the coming decades because of a tsunami of intergenerationally transferred wealth just beginning to break into the lives of the baby boomer generation. Recently refined in a computer-modeled study by Boston College professors John J. Havens and Paul G. Schervish, this financial surge is now estimated at $41 trillion on the low end and as much as $136 trillion on the high end over the 55 years from 1998 to 2052. That is many times greater than the oft-cited $10 trillion figure generated in a 1990 study by Robert Avery and Michael Rendall. Havens and Schervish predict that "a golden age of philanthropy is dawning--especially among wealth holders and the upper affluent."

Bolstering this wave of incoming baby boomer wealth is the growing popularity of charitable giving. As one certified fundraising executive says, "Philanthropy is in. Magazines that publish the names of the world's wealthiest people are now publishing lists of the world's top donors, too."

These donors are not satisfied to merely write a check. They have a hands-on style and a penchant for adopting investment models in their giving, according to a recent report by the Philanthropic Initiative, a nonprofit organization based in Boston. As "high-engagement" philanthropists, they want to help make decisions, too.

Donor-advised Funds

One vehicle generating new interest in this high-engagement school of giving is the donor-advised fund. A donor makes an irrevocable contribution--usually into a mutual fund--and receives an immediate tax deduction. The money invested then belongs to the fund, however, donors can recommend when and where the contributions are disbursed. As the account grows over time, additional funds become available for charitable purposes.

Although some of the large brokerage houses have established such funds, many universities have created their own as a gift-giving option--sometimes with the help of a trust organization such as TIAA-CREF.

A not-for-profit organization known for providing benefits plus financial services to the education and nonprofit research communities, 80-year-old TIAA-CREF began offering institutional trust services in July 1999. Today its trust company focuses on the growing smaller-endowment market.

"Consolidations and other developments within the brokerage and banking industries, the traditional providers of endowment and planned giving services, have led them to focus on serving only the largest programs--those over $100 million," says Brizendine. "However, 90 percent of endowments are under this level. We focus on this large, underserved segment."

A Waiting Game

Of all the gift options available, planned giving is poised to become the largest source of fund gifts for higher learning institutions, says Steve W. Batson, chairman of the Association of Fundraising Professionals and vice president for university relations at Georgia Southwestern State University.

"Because of the huge pool of potential dollars out there, if we've got the programs in place and they're working right, at some point we will find that we took in more money through planned gifts than through our capital campaign," he says. "I don't know when, but it's going to happen."

Georgia Southwestern recently beefed up its planned giving procedures although, as Batson says, "it's a waiting game. Planned giving takes a while once you establish the programs, information, recognition and procedures." The school's program includes a planned giving society--its recognition component. "We started our Legacy Circle two years ago. During the first year it generated planned gifts at the $1 million level; in year two we believe that figure has increased to $4 million."