How a Gift To Your Church Can Also Solve A Problem

In a previous post, I mentioned that I had just started to read, “The 11 Questions Every Donor Asks”, by Harvey McKinnon. Because I have over 20,000 face-to-face interviews under my belt in the financial and estate planning arena, I figured I could come up with my own eleven questions. However, my questions would be questions donors should be asking, but don’t.

Now that I have finished the book, I can report that Mr. McKinnon relays many more than eleven questions than his book title purports. I didn’t count them, but there could be a hundred. This is an excellent book and I recommend it for anyone who is involved in fundraising for his or her church.

The plethora of questions is going to make it even more difficult for me to come up with my own eleven, despite the fact I am taking a different slant. My list consists of questions people don’t ask because they don’t know enough about the subject matter. Nevertheless, I’m going to give it my best shot.

My first question people should be asking was, “How can I make a gift to my church without disinheriting my children”?

Today, my second question is, “How can making a gift to my church also solve a problem I have”?

This may sound a little self-serving, but, hey, we’re all human. From a practical point of view, why wouldn’t someone be interested in making a gift if a pressing problem was simultaneously solved?

More important, if you are a fundraiser for your church, wouldn’t you have a better chance at securing a gift if the process of making the gift also solved a donor’s problem?

The key to making this happen is two-fold. First, you have to determine what problem(s) your donor has. This is a skill and topic all to itself. It involves asking questions and patiently listening to the answers. Second, you have to know the potential problems. Education is the solution.

If you’ll permit a short plug, that’s where my publication The Smart Giver comes in. Each of the 24 lessons outlines a typical problem and provides a solution that results in a gift to the person’s church.

Let me give you one quick example of how a gift to a person’s church can also solve a problem.

Libby is a senior living on a fixed income. The current economy has not been kind to her. She has a $50,000 CD down at the bank that has been providing some of the income for her living expenses.

Libby has three problems:

1. The CD is only paying 4.5%.

2. All of the CD’s interest is taxable. In Libby’s tax bracket, she only has $1,900 a year of spendable income.

3. She’s scared to death she will lose her money. Her CD was with Washington Mutual, one of the biggest savings and loans in the country, and they went bankrupt. Her CD was taken over my JP Morgan Chase, another financial giant, but that’s not making Libby sleep any better.

One of the lessons in The Smart Giver goes into detail about how these three problems are solved. I also have a short video at The Smart Giver Podcast that deals with Libby’s problems.

Here, I’ll simply provide a before and after picture:

	Before	After
Amount	$50,000	$50,000
Annual Interest Rate	4.5%	7.1%
Annual Income	$2,250	$3,550
Percent Not Taxed	0%	70.3%
Effective Annual Interest Rate	4.5%	8.49%
Income Tax Deduction	0	$20,047
Gift to Libby’s Church at Her Death	0	$50,000

  
In summary, our solution:

1. Increases Libby’s income.

2. Lowers her taxes.

3. Both of these stretch the buying power of the income from her $50,000.

4. Since Her money was moved to an institution she has supreme confidence in, her worry has evaporated.

5. Results in a gift to her church.

Three Steps Toward Building an Endowment Fund for Your Church

For all the good churches do, most of the funding for their ministries come from pledges. What if every church was endowed? Here are some suggestions you can employ in your church to build a bigger endowment fund.

All 88 keys of the Phoenix Symphony’s Steinway piano are endowed. They went for $5,000 a key. Penn State has every position on its football team endowed.

Is your church endowed? If not, why not?

The church I just started to attend just celebrated its 50th anniversary. It’s not a big church – about 350 members. It finished 2008 $33,000 in the red.

This is not unusual. Because of the current economic climate, many churches took a big hit the fourth quarter of 2008. In a December 1, 2008 article, The Barna Group predicted that churches would receive $3 billion to $5 billion less than expected the last quarter of 2008.

Financing ministries from the interest on endowment funds goes a long way toward shielding the good a church can do from economic downturns.

Some churches have done a good job building their endowment fund. I would refer you to ‘Financing American Religion” by Mark Chaves and Sharon L. Miller. However, every church can do more. Here are several of my opinions about some of the steps needed to build a church’s endowment fund.

1. Fish where the big fish swim

You probably have heard of the 80/20 rule, which holds that 80% of anything comes from 20% of the people involved in the activity. With respect to building an endowment fund, it’s more like 98/2. You need to concentrate on major gifts. 98% of the money will come from 2% of your congregation.

2. Solve a problem

While it is true that many donors are 100% altruistic, you stand a better chance of getting a major gift if you can show a major donor how to solve a problem that simultaneously results in a gift to your church.

Most of these problems involve tax savings. For example, how to sell a business without paying a capital gains tax and how to pass on wealth to the next generation without first giving half of the person’s estate to the government are typical examples.

Yes, I know, the tax aspect of major gifts is not the primary reason gifts are made. Most of the time, it’s not even on a person’s list. Nevertheless, if you can show someone who is interested in your cause how to make a gift that satisfies his or her interest and support of your mission and help them solve a problem at the same time, your chances of getting the gift (maybe even a larger one) is enhanced.

3. Provide case study information

I believe that many potential major donors do not know about the planning techniques the law allows that lead to a major gift.

In my financial and estate planning practice of 39 years, I called on numerous business owners who had no idea they had a problem. No one had ever pointed the problem out to them. My view is that it’s the same lack of communication of “what’s possible” that limits the receipt of major gifts by a church.

If you provide examples of what others have done to solve specific problems, people can easily see if the solution might work for them. This is the first step in opening up a dialogue about the possibility of a major gift.

The Psychology Behind Church Stewardship

I’m just starting to read the book, “The 11 Questions Every Donor Asks” by Harvey McKinnon. So far, I think it’s a great book. It is written for fundraisers and people on boards whose partial role is to solicit gifts.  It would certainly make sense to be on the shelf of every pastor’s office as well as every member of the church’s stewardship committee.

By contrast, The Smart Giver, which I publish, is written for the churchgoer. In McKinnon’s book, people in a church congregation are on the other side of the equation as potential donors.

Harvey McKinnon has been involved in fundraising for three decades. He’s pretty much a household word in the profession. The forward to his book was written by Jerold Pannas, who is like the king.

By contrast, I am not a fundraiser. I come from the financial and estate planning world. However, I have spent nearly 40 years (and over 20,000 face-to-face interviews) helping people solve problems, in a lot of cases, they didn’t even know they had before I walked in the door.

Let me give you a quick example. I used to call on business owners with a list of ten questions. Instead of spouting off all my credentials (who cares?) I would simply ask each question one at a time and shut my mouth. Pretty good selling, actually. To make my point, here is one question. This is not true when applying today’s tax rules, but it is a real good example.

Here is the question: “Mr. Business Owner, are you aware that if your wife dies before you do that the IRS is going to want up to 50% of the value of your estate paid to them in cash within nine months?”

To clarify: I live in Arizona, a community property state. When I was using this question, estate taxes were due when either spouse died. Not true today.

To pick up on my story…

As I sat there in silence (extremely hard to do), I often could see the blood drain from my prospect’s face. No one clutched their chest, but I’m sure their heart beat took a leap. The reason was that the businessman’s business generally represented the bulk of his estate. It was all tied up in bricks, mortar and steel. The prospect of having to convert half of it into cash within nine months was scary and in most cases impossible. It would break him and all his hard work would go down the drain.

Of course, I had the solution: simply buy a life insurance policy on his wife.

My point is, though, that most people I called on were fat, dumb and happy. They had no clue they were living with a potential problem that could ruin them financially—much less having to deal with the loss of a loved one.

So even though I am not a fundraiser, I think I am qualified to come up with my own eleven questions. However, the title of my book would be, “The 11 Questions Every Donor Should Ask”.

Why “should” ask? Because, just like my business owner example, most people don’t know enough about all the options they have in making a gift to even know the questions it would make the most sense to ask.

So over the next couple of months, I’m going to give it my best shot to come up my own 11 questions everyone should ask.

Here’s the first one… How can I make a gift to my church without disinheriting my children?

Let’s say you owned a piece of property that now is in the path of progress. You bought it many years ago for a song or inherited it. Your church approaches you and asks you to donate the land because it wants to build a new building.

As much as you may love your church and even be emotionally connected to the cause that the building will promote, here’s the tug of war that may be going on in your mind: you want the property to go to your kids. You always have and they are looking forward to it.

What’s the chance of your making the gift?

On the other hand, what if there were a way for you give the property to the church and still provide your children with an equivalent value as their inheritance? In other words, what if there were a way for you to “give it away and still keep it?”

Let’s flip this around. What if you were the pastor or a member of the stewardship, finance or building committee and you came armed with a plan that would allow the parishioner with the land to make the gift and not cut his children out of his will? What do you think your chances of getting the gift would be then?

Actually, there are a number of ways to “give it away and still keep it.” I can think of four off the top of my head as I write and each is covered within the lessons contained in The Smart Giver.

So, that’s the first question people “should” be asking themselves: “How can I make a gift to my church without disinheriting my children?” Ten more to go. Stay tuned.