Partners in Philanthropy: Professional Advisors and Community Foundations

Partners in Philanthropy: Professional Advisors and Community Foundations

Partners in Philanthropy: Professional Advisors and Community Foundations

In a year when charitable giving has skyrocketed, many individuals are seeking information on how to maximize their assets for the cause they care about most.  Financial professionals including wealth managers, retirement planners, personal bankers and philanthropic advisors are key resources for individuals looking to leave a legacy.

While methods of giving have increased in recent years from donor-advised-funds to impact investing, few individuals realize they may be on the verge of throwing away a legacy-sized gift that would cost them nothing to donate to their favorite charity: their unneeded life insurance policy.

88% of life insurance policies lapse without paying a death benefit. This untapped asset class holds billions of dollars in charitable funding that would otherwise go to waste as policy-owners decide they no longer need the coverage. Insuring A Better World Fund works with financial professionals and charities  to transform their clients and donors’ unneeded life insurance into philanthropic ideals at no cost.

We save lapsing policies and drive their value to charity. By donating an unneeded life insurance policy, donors can make legacy-sized gifts to their favorite charity with a simple, no-cost process. Upon donation, we pay all premium and other costs for donated policies to relieve donors and their selected charities from the financial burden of maintaining the policy. Donors choose. We pay. Charities receive.

Community Foundations: Catalysts for Change

  1. Community foundations are public charities that create grants, steward funds and identify community needs within specific geographic locations. The Council on Foundations confirms there are over 750 community foundations within the United States providing critical resources and community leadership. In 2017 alone, community foundations across the nation gave an estimated $5.48 billion to charitable causes.

    Many community foundations work closely with financial professionals of all types to create individualized giving plans for their clients. They provide experience in charitable gift planning as well as trusted nonprofit relationships within the donor’s community. Their position as nonprofit professionals and financial stewards makes them the perfect partner for professional advisors with clients who have philanthropic goals. 

  1. Interested in finding a community foundation near you? You can use the foundation locator from the Council on Foundation’s to search your area.

Find a community foundation near you!

Use the foundation locator from the Council on Foundations to search your area

How we work with Community Foundations & Professional Advisors

  1. As a financial professional, you are uniquely situated to help your clients achieve their philanthropic goals. We help you simplify charitable gifts of life insurance for your clients. Your level of involvement is up to you. We will work with you and your client together or with your client alone. From start to finish we provide:

1. Industry Experience

Insuring A Better World Fund’s unique method of aggregating hundreds of donated policies allows us to take advantage of the law of large numbers that insurance companies have relied on for years. In general, a single charity is not able to acquire enough policies within a portfolio to establish actuarial credibility.

Our leadership team uses their combined 70 years of experience in the life insurance space to maximize the value of charitable gifts of life insurance. We accept only those policies that have value to charity.

2. Nonprofit Accountability

Your clients can be confident that their donation will be distributed to their charity. We work with a third-party servicer and custodian to ensure transparency and accountability throughout the entire life of a policy. As a 501(c)3 nonprofit, Insuring A Better World Fund’s sole mission is to transform this untapped asset class into valuable charitable funding for decades to come.

3. Free Consultation

Not sure if your client’s policy qualifies? Our consultations are always free for you or your client. You can also view our resources for financial professionals to read more about our qualification process and what policies are generally accepted for donation.

Spotlight: Foundation for Appalachian Ohio

We spoke with Tracy Mann, Director of Professional Advisors at the Foundation for Appalachian Ohio (FAO), about the impact Insuring A Better World Fund had at FAO. Insuring A Better World Fund partnered with FAO to host a webinar for their professional advisors in Ohio that highlighted the no-cost opportunity of charitable gifts of life insurance for their clients. FAO is a community foundation serving the 32 counties of Appalachian Ohio that works to retain investments and increase opportunities for Appalachian Ohio communities by inspiring and supporting philanthropy.

Here is what Tracy had to say:

View our webinar with FAO that highlights the vast opportunity in the life insurance space for community foundations and financial professionals to benefit themselves and their clients/donors.
  1. “Insuring A Better World Fund makes it possible to receive a type of gift that otherwise would not be possible for us to receive. Through our partnership with Insuring A Better World Fund, our donors have the opportunity to donate their unneeded life insurance policies to FAO and/or its funds.

    Insuring A Better World Fund’s team has relevant, inspiring communications about their services. They bring the technical knowledge and the personal impact of charitable giving.  We have gotten great feedback from our professional advisors and fund representatives. They see it as an added gift option, increased investments for Appalachian Ohio and good feelings for donors.”

How do I get started?

  1. It is as simple as sending us a message or calling us. We will answer any question you have about our donation process and provide you with resources that will help you identify policies that are valuable as charitable gifts. If not now…when? Call us today at (312) 819-0790 or send us a message below!

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A New, No-Cost Ask of Your Donors

A New, No-Cost Ask of Your Donors

A New, No-Cost Ask of Your Donors

In a famous Seinfeld episode Jerry and George pitch George’s idea for a new TV show to big network executives. When George describes the show to the network executive, the honcho asks what is the show about? George’s answer is the show is about “nothing.”  Even Jerry looks at him bewildered and says well it’s about something. George emphatically states no. The show is about “nothing,” absolutely “nothing”.  

With Insuring A Better World Fund, the cost to the charity and the donor is nothing, absolutely nothing. 

Insurance is risk transfer. Life insurance, like any other form of insurance, is a safeguard for a tragic scenario. It provides financial security for those who are financially dependent on the insured. It is peace of mind for individuals, families and businesses alike, and Americans have shown that life insurance is a valued asset to them. Today, there is roughly $20 Trillion of life insurance in force in the United States. 

However, many policy owners arrive at the point where the original reason for purchasing life insurance is no longer relevant (i.e. the spouse or children they needed to provide for are no longer dependent on them and/or the premium cost is too high). Rarely, policy owners will opt for a life settlement, the sale of their life insurance policy. The rest, nearly 90% of policy owners, will simply lapse or surrender the policy.  

In fact, The Life Insurance Settlement Association estimates that their industry is serving a very small percent of their potential market. Over $100 Billion of death benefits is lost each year! 

What if that wasted value could be driven to charity?

That is exactly what we thought. Charitable gifts of life insurance are not a new concept to gift planners and charitable organizations. Key findings from a special report published in 2019 by Giving USA showed that 19% of respondents had listed a charitable beneficiary on a life insurance policy. 

Charitable gifts of life insurance can be a powerful tool for an individual to make a legacy gift. However, as many working in planned giving know, life insurance can be a problematic asset for charities.  

Traditionally, there have been three ways to donate a life insurance policy to charity.  

  1.  

1. A donor names a charitable organization as the owner and beneficiary of their existing policy.

 If the policy is “paid up” i.e. no more scheduled premiums, then the charity receives the death benefit amount upon the donor’s death. If the life insurance policy donated requires additional premium: 

      • The donor may agree to pay the premiums to the charity. The charity acts as a conduit and pays the premium to the life insurance company. The charity receives the death benefit amount upon the donor’s death. Caution: These donations often lapse when either the donor stops paying the premium to the charity or when the life insurance requires increased unplanned premium to keep the policy in force. Due to the prolonged low interest rate environment, required increased premium is quite common today. 
      • If the donor does not want to continue paying premium, the charity will cash the  policy in for the surrender value. As the policy is “cashed in,” there is no death benefit to the charity.  

Donors may receive a tax deduction. 

2. A donor creates a new policy and designates the charity as the owner and beneficiary

Provided an “insurable interest” can be demonstrated to the insurance company (usually board members or a history of giving by the insured) similarly, donors will pay the annual premium by gifting the premium amount to the charity each year. The charity acts as a conduit and pays the premium to the life insurance company. The charity receives the death benefit amount upon the donor’s death.  Caution: These donations often lapse when either the donor stops paying the premium to the charity or when the life insurance requires increased unplanned premium to keep the policy in force. Due to the prolonged low interest rate environment, required increased premium is quite common today. Donors may receive a charitable tax deduction.

3. A donor names a charitable organization as the beneficiary to a policy while retaining ownership.

This option allows donors the right to change the beneficiary at any point and the donor determines the portion of the death benefit for charity. Caution: These donations often lapse when either the donor stops paying the premium to the charity or when the life insurance requires increased unplanned premium to keep the policy in force. Due to the prolonged low interest rate environment, required increased premium is quite common today. Donors or their estate may receive a charitable deduction.

  1. All these scenarios require skilled financial planners, significant administrative work from the charity and continue to place an annual financial burden on the donor. Most importantly, despite that coordination many of these gifts lapse. These barriers mean that for most charities and prospective donors, life insurance is significantly under-utilized as a charitable legacy gift. 

    These barriers have led us to now: a tragedy where American seniors and charities lose billions in benefits annually by lapsing or surrendering unwanted life insurance policies. 

The Alternative: Insuring A Better World Fund

  1. Gifting a life insurance policy through Insuring A Better World Fund removes these barriers. Our in-house expertise, policy-aggregation method and secure funding allows a charitable organization to accept a gift of life insurance at no cost to them or their donor.  

    Our unique aggregation methodology provides for charities designated by donors to receive regular distributions from a large portfolio of donated polices. Traditionally, a single charity does not have the resources to accumulate enough polices to be actuarially credible. We aggregate hundreds of individually donated life insurance policies to establish a vast new source of predictable cash flow to charities. No more waiting for your donor to die! 

    Our innovation expands charitable organizations’ access to this largely untapped asset class. A charity does not need a robust gift planning program or a life insurance specialist on their team to maximize a policy’s value. This means gift planners (or other staff wearing multiple hats) have more time to focus on stewardship rather than risk assessment.  

    There is a multi-billion-dollar opportunity for charities in the life insurance space. Each year will bring more opportunity as we are seeing The Great Wealth Transfer unfold. By providing ease of access to charities and removing barriers to donors, Insuring A Better World Fund is making sure policies that inevitably lapse are repurposed to better the world. 

How can my charity get started with Insuring A Better World Fund?

Get in touch.

  1. Our leadership team will be happy to answer any questions you have regarding charitable gifts of life insurance or Insuring A Better World Fund’s process. You can also view our resources for charities.

Engage your donors.

  1. Insuring A Better World Fund will provide your organization with free marketing information and answer any questions from donors on your behalf. 

    There is over $100 Billion of life insurance that is being thrown away each year by your potential donors. 10,000 people a day turn 65. The statistics show that many of your prospective senior-aged donors are already considering lapsing their policy. No change to human behavior is required. This is a no cost ask that transforms an asset they do not want into your next legacy gift. 

    There is nothing to lose and everything to gain. Together, we can ensure a better world for us all, one unneeded life insurance policy at a time.  

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