FundSvcs Community

 View Only
Expand all | Collapse all

Bequest Intention Increase

  • 1.  Bequest Intention Increase

    Posted 09-13-2021 02:04 PM

    Hi all,

     

    A donor has notified us that they have increased their bequest intention in their estate plans from 15% (originally booked with an estimated value of $200,000) to 30% (new provided estimated value of $930,000 as the total amount for the 30%).

     

    Since there has been an increase in the percentage, I am aware that we can book a new bequest intention, but the question becomes at what value. It is my understanding that we can only book the value of the new 15% increase, which I understand as 50% of the estimated $930,000 ($465,000), since the original 15% was counted in a previous campaign. That the remaining $265,000 ($930,000 - $200,000 booked - $465,000 to be booked) cannot be counted since it would be considered an increase in the original 15% value already booked. Am I correct in my understanding? Also, can anyone provide where this is stated in the CASE Management and Reporting Standards book or documented elsewhere?

     

    I was also given a specific hypothetical example to find out an answer, but I believe follows the same rules above.  A donor has a previously booked bequest intention of 100% of their estate valued at $1,000,000, but recently sells their company for $50,000,000 increasing their overall estate value to $51,000,000, would we still not be allowed to adjust the value of the bequest intention? Even with that large of an increase to the estate?

     

    Any information would be gratefully appreciated.

     

    Sincerely,

    Marc Robb



    ------------------------------
    Marc Robb
    Director of Advancement Services & Donor Relations
    Rowan University
    robbm@rowan.edu
    ------------------------------


  • 2.  RE: Bequest Intention Increase

    Posted 09-13-2021 03:34 PM
    The underlying premise behind the CASE Standards is to count  gifts - at their current value -  when given.  Increases due to market values are not "new" gifts.  Similarly, you do not reduce a gift or bequest when the value DECREASES.  A gift is a gift at the time it is given.

    As for the NEW 15% added to your bequest expectancy, you should count your portion based on the market value when the change was made.  The original 15% is unchanged.

    Do note that when a bequest is REALIZED during the same campaign period in which the bequest was made, you can count the difference.  Similarly, if the bequest comes in for LESS, you must reduce the bequest and count what came in.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 3.  RE: Bequest Intention Increase

    Posted 11 days ago

    John -- per your comment on counting the difference on realized bequests that were pledged previously during the same campaign period... what if the bequest was pledged years before the campaign started?  Does the charity still count any overage as a new gift? 

    E.g., donor pledge $100,000 bequest in 2005 based on a best guess of their residual estate amount, but the realized bequest comes in at $150,000 in 2022. 

    Thanks, 

    Tom 



    ------------------------------
    Tom Yates
    Temple University
    Executive Director of Gift Planning
    215-926-2545
    tyates@temple.edu
    ------------------------------



  • 4.  RE: Bequest Intention Increase

    Posted 11 days ago
    The entire amount received counts as cash in the door for VSE purposes.

    In theory, you should not count anything in the current campaign as the commitment was not made during the campaign.  It's similar to how pledge payments are treated.  If the pledge was made before the campaign, payments made during the campaign are not counted.

    I have seen organizations establish their own rules for campaigns that count any money that comes in during the campaign regardless of when it was committed.  I do not endorse that practice.  However, if that's approved by the Board before the campaign begins, then that is a policy you can follow.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 5.  RE: Bequest Intention Increase

    Posted 11 days ago

    Hi John -- sorry, I don't think my question was all that clear.  In my example, my question is does the charity count the $50,000 in extra realized bequest money that was not expected (based on the previous donor pledge of $100,000 and the actual realization of a $150,000 bequest)?  Thanks, Tom 



    ------------------------------
    Tom Yates
    Temple University
    Executive Director of Gift Planning
    215-926-2545
    tyates@temple.edu
    ------------------------------



  • 6.  RE: Bequest Intention Increase

    Posted 11 days ago
    Expectancies only "count" in campaigns.  Realized bequests count when they are realized for VSE purposes.  Meaning that you would not have reported any cash in the VSE until you receive the entire thing.

    When it comes to campaigns, you do count the expectancy in your totals.  If you receive more than you expected, you count the difference as well.  But generally, you only count that difference if it comes in during the same campaign as when the expectancy was recorded.  However, this "overage" is often counted even when it comes in during a different campaign.  I discourage that only because the donor did not make a commitment for that campaign, much like pledges made during prior campaigns.

    John
    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 7.  RE: Bequest Intention Increase

    Posted 11 days ago

    Thanks John -- based on my example, how would a charity treat/count the extra $50,000 if it were to follow your recommendation and not count it for the current campaign?  Where in time is that $50,000 booked?  

    Also, Temple is not always in multi-year campaign mode... I assume when you refer to the term "campaign" that word can be interchangeable with a charity's fiscal year (if it's not in a multi-year fundraising campaign).

    As always, thank you! 



    ------------------------------
    Tom Yates
    Temple University
    Executive Director of Gift Planning
    215-926-2545
    tyates@temple.edu
    ------------------------------



  • 8.  RE: Bequest Intention Increase

    Posted 11 days ago
    Tom, you would NEVER have counted the $100,000 in cash previously.  You would record the realization of $150,000 one time only - in the fiscal year it was received.

    Bequest expectancies only show up in multi-year campaign totals.  You report the expectancy when it is made.  If the donor subsequently adds to that amount, you record the increase later.  But, if you receive more than you recorded as an expectancy, you do not record a new expectancy.  You simply count the cash received.

    At NC State we produced two sets of fundraising reports:
    • Gifts and New Commitments - only outright gifts and new pledges and bequest expectancies
    • Gift Receipts - cash in the door, including outright gifts, pledge payments and realized bequests
    To answer your question, that "extra $50,000" is never booked as an expectancy unless the donor tells you they are increasing the bequest.  However, you account for the $50,000 when you record the $150,000 realized bequest.

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 9.  RE: Bequest Intention Increase

    Posted 11 days ago
    Perfect, thanks John.

    ------------------------------
    Tom Yates
    Temple University
    Executive Director of Gift Planning
    215-926-2545
    tyates@temple.edu
    ------------------------------