Pride Foundation PG Policies and Procedures



THE PRIDE FOUNDATION

Planned Giving Policies and Procedures

This template is not meant is not intended as legal advice. Your organizational goals, purpose and values should drive the creation of this document.

TABLE OF CONTENTS

I. Preamble 1

II. Introduction and Definitions 2

III. Coordination of Gift Solicitation 3

IV. Planned Giving Goals 3

V. Guidelines 4

VI. Organization 4

VII. Payment of Fees 5

VIII. Policies 6

IX. Other Charitable Beneficiaries 9

X. Procedures 9

XI. Management 12

XII. Standards of Care 13

XIII. Planned Giving Methods 13

Appendix I—Model Standards of Practice for the Charitable Gift Planner 17

Appendix II—Delineation of Responsibilities—flow chart 19

—Delineation of Responsibilities—table 20

I. PREAMBLE

This document lays out for the Pride Foundation (hereafter generally referred to as “Foundation” or “Pride”) directors, staff members, and other internal audiences a set of contemporary policies and procedures to promote and administer a successful planned giving program. It also explains various planned giving vehicles and how each of these vehicles should be managed.

While the Foundation recognizes that it may be named beneficiary of planned gifts created without its knowledge or assistance, it can provide greater service to its supporters by creating policies and procedures concerning planned gifts.

The Foundation is not itself able to offer the expertise to facilitate all aspects of planned giving, nor can it effectively handle administrative or money management aspects of all kinds of gifts. However, it has a number of supporters who might consider making planned gifts if shown how, and it has outside resources available to help obtain and manage various facets of such contributions. The Foundation will train staff and volunteers to recognize and motivate potential planned gift donors, and will call on outside expertise as necessary to help obtain and administer a variety of planned gifts.

This document assumes that the Foundation will itself accept most types of planned gifts, serve as trustee or co-trustee of split-interest remainder gifts (where the income or tenancy rights go to one beneficiary and the remainder rights to another), and obtain experienced outside resources to handle money management, tax reporting, etc.

In addition, donors may choose to use commercial fiduciaries to establish certain types of planned gifts and may even do so without the Foundation’s learning of such gifts until they are received. The Foundation will encourage its supporters to inform and involve it while making such arrangements so that all designations are correct and workable, so that it can establish an appropriate relationship with the fiduciary, and so that it can thank donors suitably.

Because planned giving is more complicated than other elements of the fundraising program, this policies and procedures document focuses primarily on planned gifts. However, it also shows how planned giving fits in with other elements of fundraising and offers suggestions for strengthening those elements, especially as they relate to laying the groundwork for planned giving. (See the Planned Giving Action Plan for more details on planned gift marketing and management.)

Likewise, this document takes into account that the Pride Foundation’s policies and performance in handling its gift investments and the charitable trusts for which it is trustee are crucial to how well it will be able to obtain future outright and planned gifts. All elements of fundraising—and related elements of administration—should complement each other, and the approaches to and contacts with any one donor should be seamless and fully integrated.

The primary purpose of the planned giving program is to help donors make gifts to the Foundation by informing them of Foundation needs, gift opportunities, and the techniques of planned giving. The primary tasks within the planned giving initiative are: 1) to introduce potential donors to planned giving concepts that can help both them and the Foundation; 2) to educate and motivate those potential donors to explore the concepts further with financial and legal counselors, Foundation officials, and planned giving counsel; and 3) to secure planned gifts that are appropriate and support the needs and interests of donor(s) and the Foundation. This document outlines the policies and procedures the Foundation will follow to achieve the above objectives.

II. INTRODUCTION AND DEFINITIONS

A strong overall fundraising program to individuals is an important element in fulfilling the Pride Foundation’s long-range mission. The Foundation will encourage, solicit, and assist potential donors in making regular ongoing gifts and will establish various planned giving vehicles that are consistent with sound economic principles and the Foundation’s mission.

The Foundation intends to offer individuals the opportunity to integrate their charitable objectives into their overall estate planning to maximize financial resources for themselves, their dependents, and others, including the Foundation. The fundraising program to individuals will primarily consist of five elements:

A. Annual Fund: to raise unrestricted operational resources on a regular basis from present, new, and prospective donors; families; friends; etc.

B. Campaigns: specialized fund drives or major gift initiatives for capital or endowment needs.

C. Commemorative Gifts Program: to honor living individuals and memorialize those who have died.

D. Events: that raise funds on a one-time basis or begin new friendships and help cultivate existing relationships (e.g., Visionaries activities), and lead toward future gifts.

E. Planned Giving: featuring the use of existing tax laws and estate planning techniques to foster gifts that will now, or eventually, support the Foundation’s mission. These may include tax-advantaged current gifts, “deferred” gifts that provide immediate income tax benefits to the donor while postponing benefits for the Foundation (with or without income to the donor or other beneficiaries), gifts by bequest, revocable non-tax-advantaged gifts as part of estate plans, and other types of giving. Several of these giving instruments will be outlined later. Planned giving techniques may be used to benefit the Annual Fund, Campaigns, the Commemorative Gifts Program, and other fundraising initiatives when appropriate. The Planned Giving program will have three main thrusts, all of which will require careful cooperation and coordination between the Development Office and the Finance and Operations Office:

1. Marketing and obtaining gifts: This may require working at times with consultants or with other fiduciaries.

2. Managing gifts: This will require reliance on outside managers for planned gift investment and account management (annuity payouts, IRS filings, etc.), plus consistent collaboration between Development and Finance and Operations to assure a high level of donor stewardship.

3. Accountability: Making sure that gifts are used as the donor wishes or, if unrestricted, are used in accordance with the Foundation’s policies as set forth in this document and elsewhere.

III. COORDINATION OF GIFT SOLICITATION

It is the responsibility of the Development Office to coordinate all types of fundraising programs and all solicitation of gifts in order to avoid excessive or duplicative appeals in the name of the Foundation.

Programs to be coordinated through the Development Office center in the five areas listed above in Section II.

Other responsibilities of the Development Office, such as maintaining databases, prospect files, and operating procedures; obtaining and tracking private and government grants; preparing gift reports and fundraising literature; gift processing; working with fund-raising volunteers; and making public or private statements regarding gifts are largely beyond the scope of this document.

IV. PLANNED GIVING GOALS

The Foundation’s planned giving program is intended to:

A. Help potential donors recognize charitable estate planning as a way to attain specific objectives for themselves, their dependents, and others, as well as the Foundation.

B. Provide for the extension of the donor’s interests and influence into the future.

C. Provide a service for the Pride Foundation’s supporters and other friends by helping them put their general estate plans in order as well as take care of charitable intentions. This is especially important to members of the GLBT community, who often lack access to many of the legal safeguards available to married persons.

D. Develop additional resources necessary to support the Foundation’s financial needs and mission.

E. Provide information regarding the Foundation’s mission and financial needs.

F. Appropriately thank and recognize all donors.

V. GUIDELINES

All fundraising by the Pride Foundation, and particularly in the planned giving arena, must be guided by the principles of stewardship as applied to current economic, legal, and tax structures. This means that the planned giving program will present information that is current, accurate, and relevant to donors, and also helpful to each individual in making the best use of his or her assets.

A. Planned giving is donor centered. The objectives of the donor generally take precedence over those of the Foundation. However, at times the Foundation might turn down gifts that are not in its best interest, even though they fit the donors’ objectives.

B. Planned giving should not take the place of ongoing regular support for the Foundation’s work; rather, it complements annual giving. The distinction must be made clear to supporters of the Pride Foundation. Planned gifts are often one-time, nonrecurring contributions—usually of capital rather than income—that may be channeled into an endowment fund or designated for some other specific purpose.

C. All planned gifts will be permanently and appropriately recorded in the Development Office and the Finance and Operations Office, including information about the donors for future reference. Planned gifts that will involve the creation of an endowment fund must be accompanied by a carefully written endowment agreement signed by the donor(s) and the Executive Director of the Foundation or a designee.

D. Donor designations will be followed to the extent that they are consistent with the general mission of the Foundation and are legally and practically possible.

E. Where there is no designated purpose for a planned gift, the Pride Foundation’s Board of Directors will determine future use.

VI. ORGANIZATION

The acceptance of many types of planned gifts commits the Foundation to fulfill obligations extending into the future, and must therefore be authorized by the Board of Directors. The planned giving program must be operated effectively and efficiently by competent employees, volunteers, and/or contract personnel who are responsible to the Board.

The Executive Director of the Foundation, members of the Foundation’s Board, and other staff and volunteers are responsible for motivating and obtaining planned gifts. They will work with appropriate consultants, fiduciaries, and/or financial and legal counsel (especially for C and D below). While the Development Director will oversee the planned giving program, the Executive Director and Board of Directors must assure the following:

A. A systematic and highly professional effort, sustained by adequate budgetary support, to achieve a significant number of planned gifts, over time.

B. A high quality marketing program that demonstrates knowledge of the functional characteristics of approved planned giving instruments, a thorough understanding of the institution’s fiduciary management responsibilities for various types of planned gifts, and appropriate recognition of planned gift commitments.

C. That program marketing and management incorporate current tax and legal developments that concern estate planning generally and planned giving in particular.

D. Ensuring that adequate records and financial accounting systems are maintained.

E. That staff provide regular reports to the Board and constituents about planned giving developments and achievements.

In summary, a successful planned giving program involves legal, tax and investment elements; unique business and accounting procedures; aggressive, but careful, marketing; and top-quality donor counseling and stewardship. The Development Office and Finance and Operations Office must work closely in the day-to-day management of the program.

VII. PAYMENT OF FEES

A planned gift is a charitable transfer of assets for the ultimate benefit of a qualified charity, in this case, the Pride Foundation. Fees and expenses connected with that transfer, including attorney’s fees, shall generally be borne by the donor.

The Foundation’s policies are:

A. Finders’ Fees. The Foundation will not pay finders’ fees for planned gifts.

B. Appraisal Fees. The donor generally must bear the cost of property appraisal, which may be deductible as a miscellaneous expense on his or her income taxes. In rare cases, the Foundation may choose to pay for an additional qualified appraisal prior to accepting a gift, to further substantiate its value or to further help evaluate its acceptability, etc. However, if a Foundation-paid appraisal is done to establish the gift’s value for the donor, under Internal Revenue Service regulation the cost of the appraisal becomes taxable income to the donor.

C. Broker of Record. If a planned gift is proposed to the Foundation by a licensed real estate or securities agent, Pride may consider a request to name the agent or his/her company as broker of record with respect to the liquidation of assets funding the gift.

D. Environmental Audits. The donor generally should pay for such audits. However, in order to protect itself, the Foundation may choose to pay for an environmental evaluation as part of the process of determining the acceptability of a property gift, but only if the estimated value to the Foundation is at least $50,000. Other evaluation factors may include the location of the property, the probability of completing the gift arrangement, and the number of years until the gift is available for the Foundation’s use.

VIII. POLICIES

The Board of Directors hereby adopts policy statements committing the planned giving program to positions that protect the best interests of donors, staff and other representatives of the Foundation, the Foundation itself, and those charged with fiduciary management of the program:

A. Model Standards of Practice. The Foundation’s planned giving program and its staff, volunteers, and other representatives associated with it will adhere to the “Model Standards of Practice for the Charitable Gift Planner,” a copy of which is appended to this document.

B. Conflicts of Interest. The interests of donors must come before those of the Foundation, although the Foundation will not be a party to gifts that would be advantageous to donors but of little benefit or detrimental to the Foundation. No commitment should be urged upon any donor or prospective donor that would unduly benefit the Foundation or its representatives, consultants, or volunteers, at the expense of the donor’s interests and welfare. The potential for conflict of interest is especially great when those who handle commission-based products are involved as volunteers assisting with the effort. It is important to avoid not only actual conflict, but also the appearance of conflict of interest.

C. Undue Influence on Donors. The role of the Foundation’s representatives is to inform, counsel, and assist prospective donors. These representatives must exercise extreme caution to avoid pressure and undue influence when dealing with prospective donors.

All representatives shall conduct activities on behalf of the Foundation in accordance with acceptable professional standards of accuracy, trust, integrity, and good faith. Volunteers who are involved with the planned giving program in any advisory or promotional capacity, and who earn their living by selling financial products, must be especially careful in this regard (see VIII (B) “Conflicts of Interest,” above). Generally, such volunteers, if they are engaged in the promotion of a product or service, shall not serve or purport to serve, as official representatives of the Foundation or the planned giving program in any dealings with prospective donors.

Pride Foundation staff and consultants involved in planned giving marketing and management must be paid a salary or fixed fee. Volunteers who serve in any official capacity representing the Foundation and the planned giving program must do so under the conditions described above, and they must not receive any commission from or otherwise have a personal monetary interest in any gift.

D. Confidentiality of Information. All information concerning donors (including their names and addresses, the names of beneficiaries, the nature and value of assets, the amounts of gift provisions, etc.) must be kept strictly confidential, except for general recognition or when a donor grants written permission to use selective information for purposes of referral, testimonial, recognition, or example. Foundation representatives who violate this policy could be subject to immediate dismissal.

E. Trusteeship of life income gifts and other trusts. The Pride Foundation may serve as co-trustee or trustee of charitable remainder trusts where 1) it will receive irrevocably at least 51% of the remainder, 2) the value of the Foundation’s interest will be at least the minimum level necessary to establish a trust as specified in this document, 3) the number and age(s) of beneficiaries fall within the Foundation’s guidelines, and 4) other charities that may be involved, if any, agree to provisions deemed appropriate by the Foundation. It will, in almost all cases, use outside services for trust administration and money management.

As a service to other charities serving the GLBT community, the Pride Foundation—functioning as a community foundation—may also serve as co-trustee or trustee of charitable remainder trusts for the benefit of those charities. In such cases, the Foundation will charge the same fees it charges to trusts for its own benefit. At the termination of each such trust, the remainder will stay at the Pride Foundation as a permanent endowment fund with the income restricted to the charity or charities designated to the donor. Again, the fees attributed to each such endowment will fund be the same as those charged to Pride’s own endowment funds.

In addition, an attorney, bank, community foundation, or trust company may act as the trustee, or the donor may act as his or her own trustee. Representatives of the Foundation may discuss with the donor the pros and cons of each type of trustee.

F. Legal and Financial Counsel. Prospective donors will be urged—in writing—to consult their own attorneys and/or accountants to review the income and estate tax consequences of any gift, the terms of any trust agreement, and the advisability of the gift in light of the donors’ overall estate plan and financial circumstances. If donors ask for attorney and/or accountant recommendations, the Foundation may suggest the names of at least three attorneys and/or accountants who are experienced in working with charities and with complex charitable gifts.

The Foundation will obtain advice as necessary from legal counsel on matters related to its planned giving program and will not enter into any agreement providing for a specific gift vehicle for which the document has not been approved by its legal counsel, that of the external fiduciary, or both. The Foundation’s liaison with counsel should be through the Development Director or Executive Director, other Board-designated individual(s), or the planned giving consultant.

The donor’s legal counsel will normally draft any necessary trust documents, although the Foundation may provide sample documents. The Foundation may use the services of bank trust departments or other appropriate resources to draft trust or other gift documents, subject to approval by the donor’s counsel.

Staff, counsel, or volunteers who represent the planned giving program shall not give legal advice to prospective donors, but may provide illustrative materials and suggestions—clearly identified as such—for review by donor’s counsel.

G. Scope of Service. The services of Pride Foundation representatives may extend beyond consideration of the Foundation to help donors remember other charitable interests they may have. (For example, if a donor wishes to help another charitable organization as well as the Foundation, the representative may point out that proceeds from a life income gift can be distributed to more than one charity, thus enabling the donor to fulfill many objectives; however, the stipulations regarding the minimum value of the Foundation’s remainder interest as specified herein must be recognized in communication with prospective donors.)

H. Negotiation, Acceptance, and Signing. Only the Executive Director of the Foundation, Development Director, other Board-designated individual(s), planned giving counsel, and selected other personnel approved by the Board of Directors are authorized to negotiate and reach agreement on the terms of planned gifts on behalf of the Foundation with prospective donors. Any representative, however, may initiate gift discussions.

The authority to accept gifts made directly to the Foundation rests with the Board of Directors. The Board hereby delegates this authority to the Executive Director, who will be represented in accepting planned gifts by the Development Director or Executive Director, either of whom may act separately. At the earliest possible stage of a planned gift’s development, the Development Director shall advise the Executive Director and Finance and Operations Director about the nature of the proposed gift, its general terms and conditions, and any special circumstances surrounding it. If the Executive Director determines that there are extraordinary circumstances that merit a broader review of the prospective gift before it is accepted, he or she, in consultation with the Board chair and/or chair of the Finance Committee or Investment Committee, shall have authority to determine the level of additional review and the course of further action before the subject gift is accepted. If no further review is deemed necessary, the gift transaction will be closed by the Development Director or Executive Director as soon as possible.

Accordingly, no agreement providing for a planned gift will be entered into by the Foundation unless it has first been approved by the persons so authorized under this paragraph and by legal counsel as provided in VIII (F) above. The Board of Directors, acting through the Finance Committee, Investment Committee, or both, has the right to accept or reject any gift made directly to the Foundation.

The Foundation shall not be party to any gift that would improperly inure to the benefit of any individual in any manner that would jeopardize its tax-exempt status.

The Board hereby authorizes the Executive Director to sign planned gift agreements, after the process for obtaining such agreements has met the terms and conditions specified in this document.

I. Acceptable Property/Screening Process. For outright gifts to the Foundation, see the Foundation’s Gift Acceptance and Valuation Policies.

The Development Director or Executive Director will closely examine unusual or questionable gifts and follow the procedures in the Gift Acceptance and Valuation Policies as appropriate.

J. Valuation. To protect the donor and the Foundation, value shall be established in accordance with Internal Revenue Code and Internal Revenue Service guidelines set forth in Publication 561, “Determining the Value of Donated Property,” other relevant IRS publications, and the “Instructions for Form 8283.” The Foundation will require Form 8283 for all non-cash gifts of more than $500, and will follow up by filing Form 8282 when non-cash gifts exceeding $5,000 are subsequently sold within two years of the date of gift. This section will be amended as necessary whenever tax laws change.

The donor is responsible for establishing the value of donated property and for paying appraisal or other fees associated with establishing that value. Unless the fair market value of an asset that may be used to fund a planned gift can be readily determined from an objective and readily available source (e.g., quotations on a national stock exchange or “blue book” valuations of vehicles), the prospective donor must obtain an independent qualified appraisal of the assets to be donated, as defined in IRS Regulation §1.170A-13(c)(3).

IX. OTHER CHARITABLE BENEFICIARIES

In a spirit of helping all donors achieve their various charitable objectives, the Foundation will inform donors that they may use various charitable instruments illustrated to help other nonprofits in addition to the Foundation and that they may, in many cases, split the proceeds among charities. As outlined in VIII (E) of this document, the Pride Foundation may offer charitable gift annuities and serve as trustee or co-trustee of gifts that will also or exclusively benefit other charities serving the GLBT community.

X. PROCEDURES

A. Potential Donors. The Pride Foundation intends to create and facilitate authentic charitable motivation rather than compete in the commercial estate planning arena. However, it will use the best available professional services to benefit its friends and supporters, as well as the Foundation.

To establish and sustain a successful planned giving program, the Foundation must identify and focus its marketing efforts upon individuals who can reasonably be expected to make significant financial commitments during their lifetimes (e.g., outright tax-advantaged gifts, trust gifts) or at death (e.g., bequests, pay-on-death arrangements). The first objective is to identify a broad reservoir of those who might make such commitments to the Foundation.

1. Individuals on planned gift potential donor lists shall be singled out for specialized promotion, cultivation, and contact programs.

2. The Foundation periodically will ask appropriate staff, volunteers, and friends for referrals.

3. The Foundation will periodically review and update prospect lists.

4. Those who interview potential donors may, with discretion, request the names of other potential donors.

5. Seminars, advertising, and direct mail shall be designed to generate inquiries and names of additional potential donors.

6. Criteria for qualifying potential donors for special attention shall include:

a. those who have a high level of interest in the Foundation

b. record of giving

c. financial capability (determined by ethical research)

d. age

e. other personal circumstances

7. Procedures relating to mailing lists, records, files, research, and reporting shall be carefully supervised by staff, and all prospect and donor information shall be maintained with complete confidentiality.

Potential donor names shall include current and past members of the Board of Directors, friends of the Foundation, staff, donors of record, volunteers, other interested individuals, and prospective donors referred by interested parties.

The second objective is to single out individuals in the reservoir who are good prospects for special attention and effort.

B. Personnel. Members of the Board of Directors, planned giving counsel, staff, and other volunteers shall be properly trained up to the level of involvement expected from each of them, to represent the Foundation in matters of estate planning and planned giving. They shall be guided by the needs of the potential donor and the established objectives, guidelines, and policies set forth herein.

C. Approaches. Pride Foundation representatives shall consider each potential donor as unique and distinct, with individual needs, interests, and circumstances. The role of each staff member and volunteer is that of counselor, friend and catalyst, not solicitor or salesperson. Representatives must not try to replace qualified professional counsel. In their role as catalysts, representatives may provide information that will help potential donors:

1. Identify their financial planning needs and objectives for:

a. Self

b. Dependents

c. Obligations and favors

d. Charity

2. Evaluate resources:

a. Summarize assets and sources of income

b. Make adequate provision for life changes and contingencies

c. Inventory estate

3. Determine personal wishes and needs:

a. Directive to Physicians and Health Care Durable Power of Attorney

b. Organ donation

c. Funeral plans

d. “Loving Letter” to heirs

e. Guardian for minor children

4. Create an estate plan:

a. Combine objectives

b. Consider alternatives and consequences

c. Update or write will

d. Set affairs in order for maximum lifetime benefit and estate plan

efficiency

e. Include charitable provisions for the Foundation and other charities

D. Promotion. The planned giving program shall be promoted through information regularly disseminated in Foundation newsletters and other appropriate communications media. Information may include case histories, “testimonials,” and encouragement to request information, as well as educational pieces about the importance of estate planning and about charitable giving techniques. The objective of all promotional materials shall be to generate inquiry or incentive to take some clearly defined action.

General planned gifts information, technical brochures, bequest wording, information about handling personal wishes, and appropriate forms and illustrations shall be available and distributed at suitable times to individuals who respond or inquire.

E. Records and Systems. Record keeping and systems management will primarily be the responsibility of the Development Director.

The Development Director will assume responsibility for potential donor mailing lists, files, contact records, donors’ personal and financial information, gift plan negotiations, receipts, gift acknowledgments, records of expectancies, and account designations for gifts received directly by the Foundation. In general, donor contact and planned gift contact shall be the responsibility of the Development Director, who will supervise and coordinate volunteers and others.

The Finance and Operations Director will be responsible for custody of funds received directly by the Foundation, for accounting and investment purposes. The Development Office and Finance and Operations Office, jointly, shall ensure that proceeds from planned gifts are used for their designated purposes. The records and systems established in the Finance and Operations Office for management of planned gifts shall be developed by the Finance and Operations Director in conjunction with the Foundation’s auditing firm and detailed in written internal financial procedures.

F. Estate Planning Professionals. Those in positions related to estate planning who have potential donors as clients may be informed about the Foundation’s planned giving effort. These include attorneys, accountants, trust officers, investment advisors, life insurance agents, financial planners, brokers, and others. Potential donors should be referred to such persons whenever appropriate.

However, it should be understood that charitable estate planning is a specialty, and even excellent estate planning professionals may not be especially knowledgeable about charitable techniques. For this reason, knowledgeable Foundation staff, counsel, and volunteers should be prepared to help educate them about planned giving.

Agents of wealth and selected estate planning professionals may be subjects of special cultivation procedures and may be included on planned giving mailing lists.

XI. MANAGEMENT

A. Place of Planned Giving Effort. The planned giving effort is under the oversight of the Board of Directors. Its policies and procedures should fit into those established for the larger development function. While the Board has the ultimate authority, it is understood that carrying out planned giving functions will usually be delegated to staff members, primarily the Development Director.

B. Use of Legal Counsel. Proper use of legal counsel is integral to the planned giving effort. No planned gift negotiations should be concluded without the review of legal counsel, whether that of outside fiduciaries, other resources, the Pride Foundation, the donor, or any combination of these. Pride should not be party to any document, will, trust agreement, etc. that has been drafted or executed without approval of legal counsel. Counsel acting on the Pride Foundation’s behalf will not take the place of counsel for the donor. To protect all parties, a donor who refuses to work with his or her own counsel will be asked to sign a document stating that the Foundation urged that he or she find legal representation and the donor refused.

Promotional literature, technical brochures, and charitable estate plan proposals may be submitted to legal counsel for approval before circulation.

Legal counsel should be an essential part of any advisory body assisting the planned giving effort and should be available to those involved in administering planned gifts.

C. Distribution of Funds. The Executive Director of the Foundation is responsible for distributing available funds as directed by terms of the gift but will delegate this responsibility to the Finance and Operations Director.

D. Investment of Endowment Funds. The Board of Directors, acting through the Finance Committee and Investment Committee, is ultimately responsible for the investment of funds available for endowment. The Board delegates management responsibility for endowment to the Finance and Operations Director and outside investment counselors selected by the Board. This includes permanent endowment (which is usually designated by terms of the gift) and temporary “funds functioning as endowment” (sometimes called board-designated endowment or quasi-endowment). The funds functioning as endowment are usually created when the Board designates that unrestricted funds will for a definite or indefinite period be treated as endowment for investment purposes, but may be expended when needed. See the Pride Foundation Investment Policies document and check Financial Accounting Standards Board (FASB) materials for more specifics.

XII. STANDARDS OF CARE

Gifts made to the Foundation shall be handled according to the following procedures for gift acceptance, handling, and acknowledgment:

Undesignated Annual Fund or commemorative gift donations shall be allocated according to procedures established by the Board of Directors. All donor-designated gifts shall be used as designated. A warm thank-you letter and a separate receipt shall be sent to the donor upon receipt of any gift, preferably within three business days of receiving the gift. More specific guidelines appear in the Planned Giving Action Plan document.

Appropriate counsel shall be consulted for potentially problematical gifts such as real estate, etc., before the Foundation agrees to accept the gift [see XI (B) above and the Pride Foundation Gift Acceptance and Valuation Policies document].

XIII. PLANNED GIVING METHODS

This section contains a brief and general overview of more common planned giving methods; it is not complete as to types of vehicles or tax consequences. More specific information will be provided as appropriate to prospective donors, and all prospective donors should consult their own attorneys, accountants, or other tax advisors.

The Pride Foundation may accept many types of planned gifts directly. These include:

A. Tax-Advantaged Outright Gifts. Donors may give outright lifetime gifts (immediately available for expenditure or investment) of appreciated assets such as real estate, stocks, etc., to obtain favorable capital gains and income tax treatment of their gifts. See the Foundation’s Gift Acceptance and Valuation Policies document for policies on gifts-in-kind and restricted gifts.

B. Bequests. Donors may make provision for deferred gifts in the form of outright bequests in properly executed wills or living trusts. This is the most common form of planned gift. The Foundation may provide language suitable for various kinds of bequests. While bequest provisions do not result in income tax savings to the living donor, they may provide positive tax advantages for the estate and other heirs.

C. Life Insurance. Donors may make the Foundation the beneficiary of a policy or may irrevocably make the Foundation both owner and beneficiary. If the Foundation is named beneficiary and receives the proceeds, there may be significant estate tax savings because the proceeds of the policy will be deductible from the donor’s taxable estate. If the Foundation is made owner as well as beneficiary, the living donor will also receive income tax deductions for the current value of the policy and for contributions made to the Foundation by which it pays policy premiums. Donors can also use insurance to provide “wealth replacement” trusts for their heirs in conjunction with gifts to charity. In such cases the money in the insurance trust can pass to the children totally liquid and totally tax free.

D. Gifts of remainder interests. A lifetime gift of a remainder interest may be appropriate if a donor wishes to benefit the Foundation but retain life tenancy or income or have the income paid to others. Such a gift can result in the donor’s avoiding capital gains taxes and gaining income tax and estate tax benefits for the value of the remainder interest. A bequest of a remainder interest for the Foundation’s benefit may fit if the donor wishes another person to have an intervening income interest. Such a bequest can be deductible for estate and inheritance tax purposes to the extent of the actuarial value of the remainder interest. The Foundation may receive many types of remainder interest gifts, including:

1. Gifts of Remainder Interests in Homes and Farms. Donors may give a personal residence, vacation home, or farm to the Foundation while retaining the right to lifetime use or use for a set period of time. Such a gift may result in the donor’s obtaining a current income tax deduction for the actuarial value of the remainder interest without disturbing current living arrangements. A residence must be the donor’s personal residence but need not be the principal one; thus, donors may use a vacation home to make the gift. The donor continues to pay taxes, insurance, maintenance costs, etc.

2. Charitable Remainder Trusts. Such trusts generally can be set up for the lifetime(s) of one or two persons or for a term of not more than 20 years, or for a combination of lifetimes in being and a term of not more than 20 years. The minimum age of income beneficiaries generally should be 55 for trusts set up for the lifetime(s) of one or two persons. They may be set up during the donor’s lifetime or at death. Generally, no remainder trust shall be written for less than $50,000, except in special circumstances, such as plans to build a retirement trust over time.

a. Charitable Remainder Unitrusts (CRUTs) provide the donor or other noncharitable beneficiary(ies) with a fixed percentage (not less than five percent) each year of the net fair market value of the trust assets as determined annually. Especially when funded with hard-to-sell assets, unitrusts may be set up to distribute the lesser of the net income or the stated percentage each year; if so, when the income exceeds the stated percentage, such excess may be distributed to income beneficiaries, but only to the extent of past deficiencies. Such trusts may also initially be set up to distribute net income or the stated percentage, then “flip” to pay the stated percentage once the asset is sold; this allows the trustee and money manager to optimize investment total return. The type of trust depends on the type of asset used to fund it and the donor’s needs.

b. Charitable Remainder Annuity Trusts (CRATs) provide the donor or other noncharitable beneficiary(ies) with a fixed dollar amount annually of at least five percent of the initial net fair market value of the trust assets.

3. Charitable Gift Annuities (CGAs) are agreements whereby the issuing agency agrees, in exchange for the donor’s gift, to pay a fixed lifetime annuity to the donor and/or other beneficiaries. The obligation may begin immediately, or the donor may have the annuity obligation begin at some time in the future. No annuity agreement shall be for less than $10,000 or cover more than two lives. The amount of the annuity payout is determined by rates suggested by the American Council on Gift Annuities, an advisory organization composed of more than 1,400 charitable institutions. The Council’s annuity rates are designed to provide a residuum gift to the issuing charity of approximately 50% of the value of the property transferred.

Annuity contracts are written between the issuing charity and the donor, guaranteeing a constant, periodic payment to the beneficiary(ies) for life. After the death of all income beneficiaries, the remainder will be distributed in accordance with the donor’s wishes (and the charity’s guidelines). CGAs may be set up only with a charity that complies with state requirements for offering gift annuities. At this time the Foundation will seek an exemption from the State of Washington to offer CGAs to residents of Washington and will explore what is necessary to offer CGAs to residents of other states.

Because of the complexities of administering split-interest gifts (where the income or tenancy rights go to one beneficiary and the remainder rights to another) and the great potential for financial liability associated with them, the Foundation shall require that money management, tax reporting, etc., of all gifts of remainder interests with retained income (e.g. life income trusts, term of years trusts, gift annuities, etc.) be handled by well-qualified managers who are experienced in the handling of split-interest charitable gifts.

E. Gift of qualified retirement plan assets. Donors should be cautioned against making direct lifetime charitable gifts of qualified retirement plan assets under current tax law, because such gifts are subject to income taxes. However, living donors may choose to make charitable gifts—preferably of other appreciated assets—in years in which they make withdrawals from their retirement plans; the charitable deduction can help offset the tax due on distributed assets. They may also make such gifts in conjunction with other gift vehicles, such as Charitable Remainder Trusts and Charitable Gift Annuities (see above for both).

Money invested in these plans is not subject to income tax when invested, so the income tax generally is due when the money is withdrawn, even when distributed to other individuals after the death of the plan’s owner. However, making charitable gifts of qualified retirement plan assets at death can be an excellent strategy, as the income tax then does not have to be paid. Such gifts may help lessen the bite of both estate taxes and “Income in Respect of a Decedent,” or “IRD,” taxes.

Donors can best make outright gifts at death through naming the Pride Foundation on the plan’s beneficiary form, which can be provided by the custodian of the IRA, 401(k), or other type of retirement account. Donors can name the Foundation for the entire amount or for a percentage of the plan, or can name the spouse as primary beneficiary and the Foundation as secondary beneficiary. Donors should use the beneficiary designation document, because retirement plan assets left to a charity through a will or living trust may be taxed.

An excellent way to optimize amounts to noncharitable heirs as well as make a significant gift to charity is to set up a testamentary Charitable Remainder Unitrust (see above) funded with qualified retirement plan assets.

The Pride Foundation will not directly accept the following type of gift:

Charitable Lead Trusts generally are set up to pay a unitrust amount or an annuity amount annually to the charity for a set number of years, then return the principal to the donor or—more usually—pass it to the donor’s designee at the end of that period. They may be set up during the donor’s lifetime or at death. Charitable lead trusts are most beneficial to those with significant estate tax concerns.

Because of the potential for liability and conflicts of interest, the Pride Foundation will accept an income-beneficiary interest in charitable lead trusts but generally will not serve as trustee or co-trustee of charitable lead trusts. Upon request, the Foundation may provide the donor with information on institutions in his/her locale that have legal authority and the ability to act as trustee of such trusts.

Exceptions to stated limitations will be made at the discretion of the Foundation and will be based on sound considerations, such as the likelihood of subsequent additions by the donor and the age of the donor.

ADOPTED BY THE PRIDE FOUNDATION BOARD OF DIRECTORS BY:

_______________________________________________ _____________________________

Allison Beezer, Board President Date

_______________________________________________ _____________________________

Audrey Haberman, Executive Director of the Foundation Date

Model Standards of Practice for the Charitable Gift Planner

Preamble

The purpose of this statement is to encourage responsible gift planning by urging the adoption of the following Standards of Practice by all individuals who work in the charitable gift planning process, gift planning officers, fund raising consultants, attorneys, accountants, financial planners, life insurance agents and other financial services professionals (collectively referred to hereafter as “Gift Planners”), and by the institutions that these persons represent.

This statement recognizes that the solicitation, planning and administration of a charitable gift is a complex process involving philanthropic, personal, financial, and tax considerations, and as such often involves professionals from various disciplines whose goals should include working together to structure a gift that achieves a fair and proper balance between the interests of the donor and the purposes of the charitable institution.

I. Primacy of Philanthropic Motivation

The principal basis for making a charitable gift should be a desire on the part of the donor to support the work of charitable institutions.

II. Explanation of Tax Implications

Congress has provided tax incentives for charitable giving, and the emphasis in this statement on philanthropic motivation in no way minimizes the necessity and appropriateness of a full and accurate explanation by the Gift Planner of those incentives and their implications.

III. Full Disclosure

It is essential to the gift planning process that the role and relationships of all parties involved, including how and by whom each is compensated, be fully disclosed to the donor. A Gift Planner shall not act or purport to act as a representative of any charity without the express knowledge and approval of the charity, and shall not, while employed by the charity, act or purport to act as a representative of the donor, without the express consent of both the charity and the donor.

IV. Compensation

Compensation paid to Gift Planners shall be reasonable and proportionate to the services provided. Payment of finders fees, commissions or other fees by a donee organization to an independent Gift Planner as a condition for the delivery of a gift are never appropriate. Such payments lead to abusive practices and may violate certain state and federal regulations. Likewise, commission-based compensation for Gift Planners who are employed by a charitable institution is never appropriate.

V. Competence and Professionalism

The Gift Planner should strive to achieve and maintain a high degree of competence in his or her chosen area, and shall advise donors only in areas in which he or she is professionally qualified. It is a hallmark of professionalism for Gift Planners that they realize when they have reached the limits of their knowledge and expertise, and as a result, should include other professionals in the process. Such relationships should be characterized by courtesy, tact and mutual respect.

VI. Consultation with Independent Advisers

A Gift Planner acting on behalf of a charity shall in all cases strongly encourage the donor to discuss the proposed gift with competent independent legal and tax advisers of the donor’s choice.

VII. Consultation with Charities

Although Gift Planners frequently and properly counsel donors concerning specific charitable gifts without the prior knowledge or approval of the donee organization, the Gift Planners, in order to insure that the gift will accomplish the donor’s objectives, should encourage the donor, early in the gift planning process, to discuss the proposed gift with the charity to whom the gift is to be made. In cases where the donor desires anonymity, the Gift Planners shall endeavor, on behalf of the undisclosed donor, to obtain the charity’s input in the gift planning process.

VIII. Description and Representation of Gift

The Gift Planner shall make every effort to assure that the donor receives a full description and an accurate representation of all aspects of any proposed charitable gift plan. The consequences for the charity, the donor and, where applicable, the donor’s family, should be apparent, and the assumptions underlying any financial illustrations should be realistic.

IX. Full Compliance

A Gift Planner shall fully comply with and shall encourage other parties in the gift planning process to fully comply with both the letter and spirit of all applicable federal and state laws and regulations.

X. Public Trust

Gift Planners shall, in all dealings with donors, institutions and other professionals, act with fairness, honesty, integrity, and openness. Except for compensation received for services, the terms of which have been disclosed to the donor, they shall have no vested interest that could result in personal gain.

Adopted and subscribed to by the National Committee on Planned Giving and the American Council on Gift Annuities, May 7, 1991. Revised April 1999.

National Committee on Planned Giving

233 McCrea Street, Suite 400

Indianapolis, Indiana 46225

317-269-6274 FAX: 317-269-6276

e-mail: ncpg@iupui.edu

Model Standards of Practice Copyright © 1999 by the National Committee on Planned Giving. All rights reserved. Used with permission.

Planned Giving Policies and Procedures Overview

Delineation of Responsibilities

The Pride Foundation Board of Directors

(Ultimately responsible; delegates fundraising and financial management activities to

Board Committees, staff, outside experts, and volunteers)

Board, Volunteers, Staff

Initiate Gift Discussions

Finance Committee/Investment Committee

(Final arbiter, but delegates most fundraising tasks and responsibilities to Development Director; most financial management to Finance and Operations Director)

Gifts Identified

Development Director

“Simple” gifts such as cash, “Complex” gifts. May request

securities, tangible personal property, decision from Finance or Investment

in-kind gifts, etc. Committee; based on analysis, legal &

professional advice obtained and presented by the Director of

Development and others, as

appropriate, Committees

evaluate gifts

Declined Accepted Accepted Declined

Finance and Operations Director

Oversees investment management

Planned Giving Policies and Procedures Delineation of Responsibilities

|Task |Board (Has overall |Finance Committee |Executive Director |Development Director (DD) |Finance and Operations |Planned Giving |

| |responsibility for everything |Investment Committee | | |Director (FOD) |Counsel |

| |through Committees) | | | | | |

|Motivating and initiating gift |X |X |X |X |X |X |

|discussions |(and other volunteers) | | | | | |

|Negotiation | |Normally delegates to DD, PG counsel, |X |X | |X |

| | |and perhaps others | | | | |

|Acceptance of cash; securities; | |Normally delegates to DD |May provide |X |May provide input/advice | |

|tangible personal property; in-kind | | |input/advice | | | |

|gifts; bequests; real estate; life | |May provide input/advice | |Will obtain background | | |

|insurance; remainder interests; | | | |information and legal and | | |

|retirement plan assets; bargain sales;| |May be called on for final decision | |professional advice as needed | | |

|mortgages; notes; mutual fund shares, | | | | | | |

|etc. | | | |Will provide information and | | |

| | | | |analysis to Finance & Investment | | |

| | | | |Committees when needs final | | |

| | | | |decision | | |

|Acceptance of LLPs; closely held | |Normally delegates to DD. More likely|More likely to be | |More likely to be asked | |

|securities in closely held corps; S | |to be asked for input/advice. |asked for | |for input/advice | |

|corps or privately held securities; | |May be called on for final decision |input/advice | | | |

|copyrights, etc. | | | | | | |

|Signing | |Normally delegates to Executive |X | | | |

| | |Director | | | | |

|Liaison with legal and financial | | | |X |X |X |

|counsel | | | | | | |

|Systems, record keeping, | | | |X | | |

|acknowledgment, etc. | | | | | | |

|Distribution of funds (as directed by | | |X |X |X | |

|gift terms) | | |(through FOD) | | | |

|Oversee fund investment | |X | | |X (under Investment | |

| | | | | |Committee) | |

|Determine use for unrestricted gifts |X | | | | | |

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(consults with Executive Director as needed)

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