Alan Bacharach

Alan Bacharach does an interview with Mazarine Treyz, the Wild Woman of Fundraising about Planned Giving

Your donors are going to love you for offering planned giving options to them. Why? Because you’re allowing them to give you money instead of the government. Money that they would have to pay in any case can now go to you. Want to learn more? Read on!

Who is Alan Bacharach? He’s a wealth advisor at Wealth Strategies Northwest.

I met him at the WVDO event, shown to the left.

The reason you should read this interview is because when you get people to sign up for your planned giving program, they will ALSO give more money as yearly donors. Don’t be short sighted and focused on short term money. Think long term and your donors will too. This interview tells you the first steps in setting up your first planned giving program.

Mazarine: Q1. What’s your background and how did you get involved in this field?

This is gonna sound strange, but when i was in high school, I was in the library and I picked up a copy of the wall street journal and started reading it. I’ve always been fascinated by this business but I avoided it because it was a bit solicitous. I started becoming an investment advisor 15 years ago. I was doing marketing for a couple of internet startups, they went under, and I was approached by a headhunter to become an investment advisor. I started learning everything I could.

Mazarine: Q2. Okay Alan, give me some investing 101!

Most people are financial failures.You’ll be amazed at how much people fail. We have a trillion dollars in student loan debt. And more people file for bankruptcy than get college degrees every year.

We’ve convinced ourselves we’re a consumer oriented economy. We’ve convinced ourselves that it is better to spend money than to save. There is this concept in this country that we can just print money. It didn’t work in the great depression, it didn’t work in pre world war two germany, and it doesn’t work now.

On the evils of credit cards:
Saving money is a huge issue. People don’t really understand safety and security anymore. A lot of the blame is with credit cards. Credit card offers to high school and college kids. Wayne State university does not allow credit card companies to come onto campus. At PSU, Portland state university, your student id is a credit card. We need to make obtaining a credit card more like obtaining a mortgage. When i first had a credit card, it was American express, and it had to be paid off, in full, every month.

Don’t use borrowed money on a depreciating asset! That means, don’t take out a car loan.

On the nature of compassion: I mentioned that most people who give to charity have a salary of less than $100,000 a year. Alan said, “I have a nephew that worked in street fundraising for a few weeks. And one of their main things they teach is “don’t ask the suits.” This correlates with a study published by Scientific American on how the rich lack compassion and why this is.

We don’t pass on our religious preferences as much as we pass on on our economic preferences to our children. Charitable families become charitable for generations.

People just don’t understand that you should look at your protection first, your safety and security, make sure they have savings and liquidity and THEN look at investments. So first, get insurance. Then, get savings. FINALLY, look at investments.

Check out this SHOCKING VIDEO:


Mazarine: Q3. What do you wish more small nonprofits knew about gift planning?
Ask. Ask. Ask.

They tend to be so focused on dollars NOW that they’re scared to work on their endowment. What they don’t get is when someone writes your nonprofit into their will, into their charitable planning, that person will also give more money year to year. It will endear your nonprofit to them and they will give more money annually. If you’re doing a capital campaign 1/3rd of the first money you raise goes to the endowment. The Most important money to go after for endowments is qualified money. It doesn’t make any difference to the charity.

Mazarine: Q4. What are 3 main things that nonprofits need to do to start a gift planning program?

1. Educate your staff, board and lay leaders.

2. Ask consistently

3. Speak, meet face to face with individuals. It’s not enough to have a brochure or talk in your e-newsletter about it. Support Starbucks. Howard Scultze did not start Starbucks to sell coffee. He started it as a place between home and office for people to meet. Coffee was just a financial aspect of the business. Successful businesses have a mission.

Mazarine: Q5. How can you FRAME your planned giving program?
Alan: Small nonprofits should tell this to their staff, board, and donors.

There are three places you can give money.
1. People you choose, including yourself
2. The Government.
3. Or Charities.

You must pick at least two. Which two are YOU going to pick?

10% of people are charitably inclined. 10% are charitably opposed. 80% in between are charitably receptive. If I could give you a charitable proposition that gives you a neutral or better proposition than where you are today, would you take it? Would you give your taxes to the charities you choose? Would you rather the money go to takes or the charities you choose?

Mazarine: Q6. Why is it so important to start a charitable trust NOW?

Alan: The $5.12 current exemption and discounting.  If you are a high net worth individual facing estate taxes, even in a recession, you may want to take advantage of depressed market values, and the leverage offered by discounting techniques, by acting sooner rather than later. You can:
– Contribute assets with depressed values to an FLP and gift FLP interests to family members. More can be given away while staying within the annual gift tax exclusion because of depressed values.
– Take a valuation discount while still available under the law.
– Enter into a long term Grantor Retained Annuity Trust (GRAT) arrangement funded with FLP interests and take further advantage of the favorable interest rate environment to even further reduce the taxable gift amount.

Mazarine: Q7. How to talk with your major donors about charitable trusts: a planned giving seminar? a brochure? Something else?

Alan: What touches YOU most? TV? Reading? Or the personal touch?

Mazarine: The personal touch.

Alan: Do you ever look at TV and get convinced of something?

Mazarine: No.

Alan: Ultimately, you have to meet with an individual one on one. Put it in your quarterly e-newsletter, sure, say something like, would you prefer to get 6% on a gift annuity, or 2% on a CD? For questions call “your development person”

Most donors don’t think they have enough wealth to do charitable gift planning. It’s a paradigm.

Mazarine: Q8. Here’s why your donors are REALLY going to love you for offering them a planned giving option. What’s one thing nobody knows about how your assets are taxed after your death?

Alan: The most taxed asset after death is your IRA. Make a charity your contingent beneficiary for your IRA. Leave the house to the kids.

At its worst, in Oregon, an IRA can be triple taxed at 80%.   IRA gets the full estate tax, 10%, plus 10% state tax, plus federal tax of 35% and the income tax. There is some credit off of the income tax for paying estate taxes. If you leave your IRA to grandchildren, you get the generation skipping tax too. Pretty bad!

The only area that is this bad is Qualified money. Qualified money is tax deferred retirement savings. IRAs, 403 bs, 401 ks. And non-qualified pension plans, which some executives have. Most people don’t have these.

I cannot tell you how many people think they’re saving money with their IRA when they aren’t. It’s not a tax savings plan. It’s a tax deferment plan. BIG DIFFERENCE.

Wow. I learned a lot. how about you? Do you want to learn more about planned giving?