CGNA: Donor Questions | Identying Charitable Passions and Noncash Giving Opportunities, Part 2 of 2

CGNA: Donor Questions | Identying Charitable Passions and Noncash Giving Opportunities, Part 2 of 2

Article posted in Assets on 13 July 2017| comments


It is more important to identify passion, than assets. This process is explored with probing questions.

This article is an excerpt from Charitable Gifts of Noncash Assets, a comprehensive guide to illiquid giving by Bryan Clontz, ed. Ryan Raffin. Published by the American College of Financial Services for the Chartered Advisor in Philanthropy Program (CAP), with generous funding from Leon L. Levy. For a free digital copy, click here, and to order a bound copy from Amazon, click here.

By Jay Steenhuysen

Below is an in-depth examination on questions to ask potential donors. This topic is based on Jay Steenhuysen’s “Philanthropy Planning: What to Say and Do in the Room with your Donors/Clients to Explore and Document the Philanthropy Mission.” For quick take-aways on donor development, see Donor Questions Quick Take-Aways. For further details, see Donor Questions Additional Resources.

Charitable Philosophy and Goals

Rather than looking to the donor’s history, these questions look forward. Knowing what he or she hopes to accomplish in the future is obviously very important.

1. Broadly speaking, what is your rationale for charitable giving?

a. Do you feel that any of the following play a role in your rationale?

i. Giving back to those who gave to you?

ii. Making a difference in the world?

iii. Addressing a specific need that touched your life or the life of a loved one?

b. Do you recognize any element of luck, blessing, or grace in your success?

2. Have you ever made any gifts outside the normal context of your giving? If so, what and why? Why do you consider these gifts outside the norm? In retrospect, how do you feel about those?

3. Do you have any lifetime charitable goals? Tell me about those.

a. Assuming those goals are realistic, what will you need to do ten years from now to ensure that the goals are met in your lifetime? Five years from now? In the next two years? This year?

Accomplishing Charitable Goals

This continues to “drill down” to the specific gift that the donor has in mind. It probes timing, underlying asset, and other family involvement—all details that the parties will need to complete the gift transaction effectively.

1. When do you envision making your primary charitable contributions?

a. Do you want to make a large gift now? Do you want the gift to be a bequest? Do you want it to come after a family member’s lifetime?

2. Do you have what you need to accomplish your current and lifetime charitable goals?

a. If not, when do you anticipate achieving that goal?

3. Are you planning an outright gift, or would you prefer an income stream?

4. What sort of asset will you use to fund the gift?

a. Will you transfer that asset as-is to charity? Will you sell it first and give the proceeds towards charity?

5. Who will be making the gift?

a. Who owns the assets which you plan to donate?

b. Who will the charity publicly acknowledge?

c. Do any other family members need to be a part of this conversation?

Exploring Options for Giving

Next, investigate possible alternatives to the gift which the donor already has in mind. The donor may or may not have considered these, which is why someone needs to ask. Since there may be tax or other financial advantages to different types of assets as gifts, or different gift structures, these alternatives can be literally very valuable.

1.What do you envision your estate being like? Who gets what?

2. What is your investment philosophy?

3. Are you impacted by the financial markets?

4. What do you think will happen in the markets?

5. What do you think of the recent increase/decrease in the market?

6. What impact will this have on you in the near term?

7. Do you own shares in a company that experienced an IPO, merger, or stock buyback this year?

8. What is your goal for these assets?

9. Do you own a vacation property? Does your family still use it?

10. Aside from the assets you already plan to put towards charity, what other major assets do you own?

11. Do you have any major income-producing assets?

a. Will these assets be given away (during your lifetime or by bequest)? Will they be sold?

b. Would you consider funding your gift with those assets?

i. If so, would you still want an income stream? For how long?

ii. Would any family members need an income stream?

12. Do you own any major non-income-producing assets?

a. Will these assets be given away (during your lifetime or by bequest)? Will they be sold?

b. Would you consider funding your gift with those assets?

i. If so, would you want an income stream? For how long?

ii. Would any family members need an income stream?

13. Are you familiar with planned giving vehicles like charitable remainder trusts, charitable lead trusts, gift annuities, etc.?

a. If so, have you considered using one? Do you use one?

Tax Questions

Charitable giving does not happen in a vacuum; the Knight/Frank 2016 Wealth Report confirms that taxes are the number one concern of ultra-high net worth people. The tax consequences of giving often are an essential part of the plan and can inform the structure of the transaction and the nature of the actual asset the donor gives. Since tax issues are so often at the heart of planned giving transactions, the answers to these questions can sometimes be the driving force behind the gift.

1. Do you have any goals as far as your tax burden in the near future or long term (beyond “pay as little as possible” of course!)?

a. What about your estate and any associated tax there?

2. Have you considered how your gift might affect your tax deduction?

a. Are you looking to maximize your deduction in the near term?

b. Would you be willing to trade a smaller deduction for income?

c. Would you consider deferring your deduction?

3. Are the assets you plan to donate appreciated long-term capital assets?

a. Do you have any appreciated long-term capital assets that you are not planning to donate?

Questions about Professional Advisors

The chances of the donor and charity completing the gift transaction without the involvement of any third-party professional advisors are very unlikely. Luckily, these professionals often have the knowledge and expertise necessary to work out all of the details of the transaction.

1. What sorts of professional advisors do you employ (financial planners, accountants, lawyers, estate planners)?

2. Have you discussed your charitable goals with them?

a. If so, do you have any formal plans in place (trusts, wills, etc.)?

b. Would you like us to provide you and your advisors with some educational resources on possible planning techniques and associated benefits?

The Value of Questions

These questions can be used to develop and guide an ongoing donor conversation in a variety of circumstances. They can be used by fundraisers for donor discovery, including whether there are significant assets in the family; if donors have made gifts of assets in the past; and their long-term thinking about how they want to structure their philanthropy. They also can be used to validate donors’ commitment to an organization’s mission or identify interest in specific programs they care about. The resulting conversations can provide a deeper understanding of how donors developed their current interests and practice their philanthropy.

As reported in the 2014 U.S. Trust Study of High Net Worth Philanthropy, nearly 62 percent of donors have some idea about how much they want to devote to charitable giving; however, just 3.3 percent have a written mission statement to guide their giving. The entirety of these questions can be used to help donors create a mission statement that defines their practice of philanthropy and quantifies what they are achieving through their giving.

Donors have a vision of how they want to make a difference in the world. When a fund- raiser helps a donor find a way to implement his or her vision, they are contributing to the donor’s life in a profound and meaningful way. Being a fundraiser is a service job that provides care to the donor. It allows donors to express their deepest values and passions in a meaningful way. It generates excitement by providing them with the opportunity to join a group of like-minded people who share their values and give in a way that truly impacts the world.

Numerous studies have demonstrated that donors want to have a conversation about philanthropy with their advisors. A 2012 study by Fidelity noted that 70 percent of advisors think that giving assets to charity is too difficult and avoid the topic. This sets advisors who have a working knowledge of how to transfer gifts of assets apart from their peers.

The higher purpose for these questions and the resulting conversations is donor / client satisfaction. Fundraisers and allied professionals who ask the right questions and develop these deeper conversations become valued partners in philanthropy with their donors / clients.

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