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Despite
limited tax incentives and relatively unsophisticated marketing efforts, large
sums are being given worldwide to charitable institutions via bequests and other
gift planning arrangements. In Holland, for example, a leading healthcare
organization raised the equivalent of $62 million in a recent year from bequests
out of a total of $128 million in private contributions. Yet if you ask most
Europeans and others from around the world if they “do planned giving,” you
will likely get a negative reply.
These
were among the first impressions Robert and Timothy Sharpe gathered as they
conducted a master class and two breakout sessions on planned giving at the 22nd
annual International Fundraising Conference (IFC), held outside Amsterdam in
October 2002. The 800 participants hailed from 62 countries. The Sharpes’
classes included participants from Holland, Germany, Sweden, England, Italy,
Belgium, Egypt, France, Hong Kong, Thailand, the Philippines, the U.S., and
other countries. Here, they share some of their experiences and impressions
gained at the conference and in the course of experience they have gained
assisting their U.S.-based clients in their gift planning efforts abroad.
More
than meets the eye
“We
were initially struck by the fact that there really is a great deal more gift
planning activity occurring, particularly in western Europe, than most American
fundraisers think or many Europeans recognize,” observes Robert Sharpe. “In other parts of the world, people don’t tend to connect what may be
the common practice of leaving a chartable bequest via the will or similar
vehicles with the term ‘planned giving,’ because outside the U.S. there may
be few tax and other financial advantages associated with such gifts.
“Based
on what they have learned about planned giving in this country, many outside the
U.S. have come to link ‘planned giving’ largely with the tax planning
aspects of major gift development. Many of those in our sessions were surprised
to learn that studies by the NCPG and others have found that much of the planned
gift activity in the States is, in reality, not motivated primarily by tax
considerations.”
Uneven
distribution of activity
The
mission focus of the majority of the organizations at the conference was in the
areas of medical research, environmental and political action, and international
relief and development. There were relatively few persons representing the
educational, cultural, local hospital, and social service organizations that
have to a large extent been funded through state support.
As
in the U.S., older persons, particularly in continental Europe, tend to be
conservative investors and frugal spenders, in part due to memories of very hard
times in their youth. This cultural phenomenon has resulted in concentrations of
wealth in the hands of older people that appears even more pronounced than
similar trends in the U.S.
“In
the near term, this concentration of wealth will continue to lead to European
charities’ receiving a great deal of private support via charitable bequests,
or ‘legacies,’ as they are known in Great Britain especially,” remarks
Timothy Sharpe. “Today’s older generation of western Europeans, who continue
to benefit from broadly available publicly supported health care and other
benefits, may be in a better position to benefit charitable interests along with
their families than their U.S. counterparts, because they may not have the same
degree of fear of outliving their resources. For now, they believe the social
safety net will continue to take care of them, leaving more to pass to family
and charity alike.”
Looking
ahead, however, many at the conference shared deep concerns about what most
believed would be the inevitable downsizing of very generous public welfare
programs that prevailed in many nations in the decades following World War II.
“Like the U.S., they too have baby boomers who are growing older with fewer
people behind them to pay retirement and healthcare costs. The same demographic
crisis we will face here in the States in the second and third decades of this
century will also be felt in Europe and elsewhere. But it may actually feel
worse because of the possible reduction in the level of benefits that
generations of Europeans have become accustomed to in their later years,” says
Robert Sharpe. “Representatives of a Swedish health care system indicated they
were at the conference to learn how to provide the ‘margin of excellence’
through private funding in light of gradual reductions planned in government
support of local hospitals.”
Melding
of the past and the future
For
all of these reasons, more and more nongovernmental organizations (NGO’s)
around the world are beginning to look to more structured and intentional
encouragement of planned gifts as a growing source of future funding.
In
discussions with Sharpe session participants a consensus emerged that it was not
really a question of whether an organization “did planned giving,” but
rather whether it enjoyed support from voluntary giving. As larger gifts
worldwide tend to come in forms other than cash, the real question becomes how
to structure such gifts on an outright and deferred basis. “It then became
clear that to a large extent, we were simply bringing back to Europe and
elsewhere methods and traditions surrounding them that were originally brought
to the U.S. from abroad many years ago,” says Tim Sharpe.
Robert
adds, “Many of the gift planning tools we commonly employ in the United States
today have a long history and deep roots in Europe, the Middle East, and
elsewhere. A participant from Egypt noted that vehicles very similar to
charitable lead trusts had been used for centuries to facilitate a combination
of wealth transfer and funding of social needs. Bequests, trusts, gift annuity
equivalents, and more were all being actively used to promote the public good
centuries before the founding of the United States and long before there were
any federal income, gift, and/or estate tax benefits associated with them.
“In
reality, the U.S. has had the privilege of preserving and building upon these
ancient forms of giving during the twentieth century, while much of the rest of
the world suffered the devastation of a depression sandwiched between two World
Wars and their aftermath. During that time, there was little alternative to
extensive reliance on tax-fueled social service systems. In recent years,
however, we are seeing a return to more of a mix of public funding and private
philanthropy. We believe this trend will accelerate with the growing economic
power of the European Economic Union and increased wealth in Asia.”
Robert
Sharpe further observes that “the United States in effect served as a sort of
cultural ‘backup drive’ as we preserved funding means developed elsewhere in
the past. We are now simply reintroducing many of the same plans to the
grandchildren and great-grandchildren of those for whom such plans were
commonplace prior to World War I. As part of that process, we are also
reinforcing in our own minds the non-tax motivations that originally gave rise
to these plans.”
In
2003, the Sharpe Group enters its fifth decade of service to America’s not-for-profit community and those who provide its funding. As the world continues
to grow smaller and more interdependent, the Sharpe Group will continue to
adapt, innovate, and help facilitate the transfer of wealth from the most noble
among us to those organizations and institutions that through their funding meet
vital human needs.
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