counting

GUIDELINES FOR REPORTING AND

COUNTING CHARITABLE GIFTS

2nd Edition

Guidelines for Reporting and

Counting Charitable Gifts

Printed in the United States of America by the National Association of Charitable Gift Planners

200 S. Meridian Street, Suite 510 • Indianapolis, IN 46225

Phone: 317-269-6274 • Fax: 317-269-6272 • E-mail: info@charitablegiftplanners.org

Web Site: www.charitablegiftplanners.org

This publication is designed to provide accurate and authoritative information in regard to the subject

matter covered. It is provided with the understanding that the publisher is not engaged in rendering

legal, accounting or other professional services. If legal advice or other professional assistance is required,

the services of a competent professional person should be sought.

From a

Declaration of Principles

jointly adopted by a committee of the

American Bar Association and a committee of publishers and associations

Executive Summary

The Guidelines for Reporting and Counting

Charitable Gifts recommend that fundraising

campaigns of whatever duration would be better

structured, clearer in their expectations, more

transparent in their reporting and more truly

comparable if they were to set three separate and

complementary goals and report fundraising results

in these three dimensions:

1. An outright goal for gifts that are usable or

will become usable for institutional purposes

during the “campaign” period (whether one or

more years).

2. Irrevocable deferred gift goals, for gifts

committed during the “campaign” period but

usable by the organization at some point after

the end of the campaign period.

3. Revocable gift goals for gifts solicited and

committed or pledged during the “campaign”

period but in which the donor retains the right to

change the commitment and/or beneficiary.

These guidelines also recommend that charities

report their progress toward each of these goals

separately, using face value numbers.

Key Principles—The guidelines are based upon

several key principles. Among the most important of

these are that the guidelines should:

• Be clear, transparent and easily understandable

by development professionals as well as the

wider audience of staff, volunteers, regulators

and benefactors.

• Provide a mechanism for comparison among

charitable organizations based on criteria that

can be applied comparatively across the broad

charitable community.

• Take into account the considerations of the

donor.

• Focus on counting and reporting, not

accounting, valuation or crediting.

• Recognize that the IRS charitable deduction

calculations were not created for the purpose of

counting planned gifts and, while valid for tax

purposes, do not offer a way of counting

planned gifts that recognizes the total campaign

and development effort.

• Recognize that campaigns are usually finite,

often with a multi-year timeframe. We also

recognize that some organizations conduct a

series of annual campaigns with a structure very

similar to multi-year campaigns.

The Partnership would like to acknowledge the time,

effort and support provided by Chris Yates and his

successors as Chair of NCPG, Shari Fox, and Joe

Bull, by the members of the task force listed below,

and by Tanya Howe Johnson, President and CEO,

and Barbara Yeager, Director of Operations of the

Partnership. We also acknowledge our gratitude to

Jeff Comfort and his colleagues on the Valuation of

Planned Gifts Task Force, who spent a great deal of

time over several years wrestling with a highly

complex and controversial issue. Finally, we wish to

acknowledge the leadership and vision of Dave

Gearhart and his colleagues at the University of

Arkansas and the National Capital Campaign

Counting Guidelines Committee.

NCPG Task Force Members

Bruce E. Bigelow, Chair

Charitable Development Consultant

Guidelines Development

Andrea M. Latchem

Senior Philanthropy Advisor, Syracuse University

Scott Lumpkin

Associate Vice Chancellor, University of Denver

Steven L. Meyers

Vice President, American Committee for the

Weizmann Institute of Science

James F. Normandin

President, Memorial Medical Center Foundation

Acknowledgements

Gary Dicovitsky

Vice President, Development & Alumni Relations

California Institute of Technology

Tanya Howe Johnson (ex-officio)

President & CEO, National Committee on Planned

Giving

Review Panel

Debra Ashton

Principal, Ashton Associates

Laura Hansen Dean

President & CEO, Community Foundation of

Southern Indiana

Kevin Johnson

Retriever Development Counsel, LLC

Peter K. Kimball

Director of Gift Planning, Harvard Universtiy

Thomas P. Lockerby

Associate Vice President for Capital Giving, Boston

College

Benjamin P. Madonia

Director of Planned Giving, Hamilton College

Kathryn Miree

Kathryn W. Miree & Associates, Inc.

Katelyn L. Quynn

Executive Director of Development, Massachusetts

General Hospital

Ronald E. Sapp

Ron Sapp & Associates Ltd.

Nelson J. Wittenmyer

Executive Director of Gift Planning, Cleveland Clinic

Foundation

Of Counsel

G. David Gearhart, Chair

National Capital Campaign Counting Guidelines

Committee

Chancellor, University of Arkansas

Joseph O. Bull

Senior Philanthropy Office, The Nature Conservancy

Endorsements

Association of Fundraising Professionals

(www.afpnet.org)

Association of Philanthropic Counsel

(www.apcinc.org)

National Capital Campaign Counting Guidelines

Committee ([email protected])

The Partnership offers these guidelines as an option

for use by charitable organizations in counting and/or

reporting charitable gifts to external constituencies.

We encourage each organization to implement

counting and reporting procedures that satisfy its

needs for monitoring and communicating progress

toward fundraising goals.The following organizations

have formally endorsed the Guidelines as a best

practice for management reporting. If your

organization would like to endorse the Guidelines,

please contact Barbara Yeager at [email protected]

or (317)269-6274 ext. 12.

Introduction ..................................................... 6

Definitions and Distinctions ................................. 8

Recommendations ............................................ 9

Practical Considerations ....................................10

Specific Counting and Reporting Guidelines .........12

Category A: Outright Gifts .......................... 14

Pledges ....................................................14

Cash ........................................................14

Marketable Securities .................................15

Closely Held Stock ......................................15

Gifts of Property .........................................15

Nongovernmental Grants/Contracts ..............15

Realized Testamentary Gifts ........................15

Realized Retirement Plan Assets ..................15

Category B: Irrevocable Deferred Gifts ...... 16

Split Interest Trusts ....................................16

Retained Life Estate ...................................16

Charitable Lead Trusts ................................16

Contents

Category C: Revocable Deferred Gifts ........ 16

Estate Provisions ........................................16

Retirement Plan Assets ...............................16

Gifts That May Be Counted in

More Than One Category ............................ 18

Life Insurance ............................................18

Wholly Charitable Trusts Administered by

Others ......................................................18

Gifts That Change Character

During the Campaign Period ........................ 19

Exceptions ...................................................... 20

Conclusion ...................................................... 20

Further Reading...............................................21

Sample Reporting Form ....................................22

Introduction

In March 2005, the National Committee on Planned

Giving (now the Parthership for Philanthropic

Planning) published the Guidelines for Reporting and

Counting Charitable Gifts, the result of nearly two

years of deliberation, consultation and collaboration

by a national task force. Simultaneously, NCPG

continued a series of conversations with other

organizations and groups of professional leaders

interested in coming to agreement on common

guidelines that could be used by nonprofit

organizations of all types. Among these organiza-

tions is the National Capital Campaign Counting

Guidelines Committee, a group of senior

development professionals from across the country.

In each of these conversations, credibility and

transparency arose as the key issues critical to any

sector-wide standard. For far too long, boards,

executive officers, volunteers and employees

charged with carrying out the mission of charitable

organizations have questioned the validity of

fundraising reports. Formal campaigns seemed to

grow exponentially in size, but the usable dollars

failed to match the sometimes grandiose announced

campaign totals. Now, as nonprofit organizations

strive to comply with the spirit of Sarbanes-Oxley

legislation, and as the public—both those with an

intimate knowledge of a particular organization and

those who observe from a distance—view mega-

campaigns with increased skepticism, charitable

organizations are seeking new and more trans-

parent ways of reporting fundraising results, while

also recognizing the wide array of gift vehicles and

mechanisms now available to donors.

Historical Context

Initially, fundraising campaigns were focused efforts

designed to accomplish one specific project, almost

always a capital building, expansion or renovation

project. In the early days of campaigns, organ-

izations would often employ outside fundraising

counsel, who would organize a team of volunteers,

solicit businesses and individuals in the community

or within the organization’s easily identified con-

stituency, and raise the funds. Campaigns were

focused on cash gifts only, were relatively short in

duration, were “unusual” events in the life of the

organization, and were staffed by volunteers

directed by an outside fundraising professional

brought in specifically for that purpose. Few

charities employed full-time development officers.

As organizations began to build their own internal

fundraising resources and increasingly focused on

raising money every year, they began to think about

campaigns in new ways. Campaigns became annual

efforts with articulated goals, and increasingly multi-

year efforts in which long-term relationships with

donors played a far more important role than they

had earlier. For that reason, professional staff

fundraisers have become heavily involved in the

direct face-to-face solicitation process. While

volunteers continue to play a vital role, staff

members have increasingly taken the lead in

organizing and conducting campaigns.

Second, charities moved from single-project focus to

a more comprehensive effort, in which all the needs

of the organization—capital, endowment and current

operating—were folded into the campaign structure.

Third, charities are always in a quasi-campaign

mode. Even if organizations are not in a formal

campaign, they are raising as much money as they

can for the on-going priorities of the institution;

there is no let-down or “rest period” between

projects as there used to be.

Finally, charitable organizations recognized that not

all assets come in the form of cash, and that both

non-cash assets and new and more complex

methods of transferring those assets would increase

access to more and larger gifts. Planned giving

became an important part of successful fundraising

campaigns, whether the annual campaign or

themore highly visible multi-year comprehensive

campaign.

Even as this evolution in campaign definitions took

place, the actual structure of campaigns remained

static. Organizations continued to set a single

financial goal and to operate under the premise that

all gifts, no matter what kind or what character,

could be counted and reported in a way that would

be recognized as equivalent to all other gifts. This

paradigm has limited the ability to structure

campaigns in ways that will attract the largest gifts.

It has circumscribed the capacity to explain in clear

and transparent ways the various types of gifts that

make up campaigns. It has also limited the ability to

focus on real results across the broad spectrum of

gift options. These guidelines recommend a new

paradigm for structuring both annual and multi-year

campaigns and for counting and reporting gifts

within those campaigns.

A Note About Transparency

Transparency in reporting standards is a function of

accuracy, completeness and clarity. These counting

guidelines address all three dimensions.

In the past, many organizations have reported

campaign progress using complex formulae for

deriving net present value of gifts and gift

commitments. Unfortunately, individuals and

organizations differ on the appropriate formulae to

use, and the results rarely reflect the actual value of

a gift to an organization. The guidelines focus on the

character of the gift, placing commitments in three

easily recognized and unambiguous categories. By

not mixing these types of commitments, the

guidelines accurately reflect the results of an

organization’s development activities. Organizations

that choose to combine the three categories into a

single campaign total risk obscuring the real nature

of the organization’s philanthropic support.

Second, these guidelines account for all

commitments made during the campaign period, not

simply those for which the donor received an

immediate tax deduction. Bequest commitments and

other deferred gifts, whether revocable or

irrevocable, are all part of the goals of a complete

fundraising program, and should be reported. The

fact that they do not represent money “in hand” is

unambiguously presented by the three-category

reporting structure.

Finally, the guidelines strive for clarity. Donors,

boards of trustees, administrative staff, faculty

members and other constituencies often care little

for the fine distinctions of the accounting profession.

Reports of fundraising activity should reflect clearly

the activity that has transpired and its results. By

reporting three complementary but separate

categories, these guidelines emphasize that clarity.

They speak the same language that donors use

when they make their gifts, and that other groups

speak when they issue reports.

Counting and Reporting: Counting and reporting

are arithmetic activities. Counting is the numeric

summary of activity, results and progress toward

goals. Reporting is the process of conveying to a lay

audience clearly and transparently what has

happened during a specific timeframe.

Accounting: Accounting is a process of keeping

financial books based on a set of generally accepted

guidelines and principles, in order to present a fair,

comparable and understandable picture of an

organization’s financial state at any given time.

Valuation: Valuation is an assessment of the actual

value of an item to the person or organization that

possesses it. Value may be determined by any

number of methods and may reflect net present

value, the future purchasing value, or even a

subjective value based on non-financial

considerations, such as the impact on marketing or

the ability of a specific gift to attract others in its

wake. The Valuation Standards for Charitable

Planned Gifts define valuation as

a reflection of the

present value of the ultimate purchasing power of

the gift.

Crediting: Crediting is institution-specific and

represents the way each organization grants

recognition to its donors. It is up to each institution

to set its own standards and requirements for

documenting commitments. For example, some

organizations require written confirmation of a

bequest provision while others rely solely on a

donor’s verbal commitment. Such recognition need

Definitions and

Distinctions

not stem from any of the factors of counting and

reporting, accounting or valuation, although a given

organization may use any of these calculations as

the basis of its donor recognition policies.

Campaign: Our use of the term “campaign” simply

recognizes that charitable organizations report

results in definitive time segments. Most

organizations report on an annual basis and,

because all gifts that are committed that year are

counted, those organizations may be said to be in an

annual “campaign.” Periodically, some organizations

place a longer multi-year “campaign” umbrella over

their fundraising activities and may report gifts

committed during this longer period. Throughout the

guidelines, we use the term “reporting period” to

encompass traditional multi-year campaigns and

other time frames in which a nonprofit elects to

report fundraising activity. When charities elect to

enter multi-year campaigns, they will, as they do

currently, prepare two complementary reports, one

of annual activity and one for the multi-year effort.

Further clarification is on Page 6 of this report.

Distinction Among Counting, Valuing and

Crediting: Confusion of the terms and processes

related to “counting,” “valuing” and “crediting” is

very common. In general:

1. Counting provides a way in which all charities

can record what they do, so that they can report

their activity and results clearly to the public,

compare results and measure against clearly

articulated and unambiguous goals.

2. Counting provides a way to measure the intent

of the donor, since most donors focus on the

dollar amount of their commitment at the time

they decide to make it, and not on the net value

to the charity in an ultimate sense. All gifts,

revocable and irrevocable, current and deferred,

should therefore be counted.

3. Counting complements valuation, which is an

institution-specific calculation and measures the

value to that organization of the total gift

transaction over time. These Guidelines for

Reporting and Counting Charitable Gifts are

compatible with the Valuation Standards for

Charitable Planned Gifts

and should be used as

complementary tools. See list of suggested

readings for this report.

4. Counting commitments and reporting them are

external processes, intended for public

Recommendations

Campaigns and other fundraising efforts would be

better structured, clearer in their expectations,

more transparent in their reporting and more truly

comparable among organizations if they begin with

three complementary goals:

1. Category A: An outright goal for gifts that

are usable or will become usable for institutional

purposes during the reporting period (whether

one or more years).

2. Category B: An irrevocable deferred gift

goal for gifts committed during the reporting

period but usable by the organization at some

point after the end of the period.

3. Category C: A revocable deferred gift

goal for gifts solicited and committed during the

reporting period but in which the donor retains

the right to change the commitment and/or

beneficiary.

These three categories should guide

both

the goals

charitable organizations set at the beginning of their

campaigns, and the reporting of results during the

campaign period. In this way, organizations can

measure results against aspirations, and can

articulate clearly and definitively that all three types

of gift commitments are crucial to achieving

charitable mission. By setting clear goals in each of

these categories from the beginning of a campaign,

organizations can move more directly to

conversations with donors about potential gifts to

each of the three complementary goals. The “three-

tiered” ask becomes a natural part of the campaign

effort.

Charities should report progress toward these goals

using face value data. Because these guidelines

focus on reporting and not valuation, the specifics of

each gift, like the age of the donor or the payout

rate from a life income arrangement, are not

relevant factors. Charities should report the

numbers as a record of activity. So long as charities

associate the reported numbers with the compar-

able goal or category of activity, there should be no

confusion about the meaning of the data.

By establishing three goals, confusion about counting

will diminish, staff and volunteers alike will have a

clearer sense of their focus, and reports will not

attempt to mix gifts that are intrinsically difficult to

combine into a single accurately reportable number.

These guidelines specifically do not offer a method-

ology that purports to compare commitments from

different categories that are inherently different in

character. Categorical goals reflect, much better

than a single goal, the true nature of campaigns and

annual fundraising efforts as they currently exist.

Charitable administrators should “count” toward

their stated goal in each of the three categories

only

new

commitments made during that reporting

period. However, we recommend that charities

report all charitable receipts or changes in

commitments that affect the financial state of the

charity, even when these are not counted toward

campaign goals. The sample reporting form (page

22) provides a separate column for reporting

commitments that have changed in character during

a reporting period, like trusts or annuities that have

matured or revocable commitments that have

become irrevocable. For use in a campaign context,

the sample reporting form also includes a column

for reporting matured gifts that were committed and

counted toward the goals of a previous campaign.

The breakdowns suggested in the sample reporting

form are intended for internal reporting clarity. We

recommend that

only

the summary results in the

three major categories should be reported to

external constituencies.

information and comparison among

organizations, while valuation is an internal

process, based on the factors peculiar to each

organization’s investment and financial

experience.

5. Likewise, crediting a particular donor’s gift is an

internal process dependent on each

organization’s history, mission and policies.

Practical

Considerations

their activities or creating layers of complexity that

look to many like obfuscation. Such campaigns are

like the fruit seller who tells his auditors that he has

100 pieces of fruit in his inventory. This may be true,

but it says nothing about how many pieces are ripe

(i.e., can be consumed today), how many need to

wait for some time until they are edible, how many

might spoil after a while if not used, or how many

he will get tomorrow from the delivery cart—and

certainly it says nothing about the number of

individual apples, oranges or bananas. These

guidelines will enable charities to articulate clearly

what resources are available in what timeframes

and thus eliminate the increasing confusion that

clouds a uninumeric system of reporting.

These guidelines establish a method of

comparability among nonprofits.

Just as “value” is an internal process that may rely

on factors that are unique to each nonprofit and is

therefore non-comparable, “counting” is an external

process that should enable comparability across

institutional lines. Using the IRS tax calculation

formulae to ensure comparability takes into account

only

some

fundraising activities and leaves out a

large segment of the fundraising results. A much

more straightforward focus on reporting, making

sure that the results are categorized appropriately,

achieves comparability by setting a structure and

multiple goals at the beginning of the process, so it

is easy to see how many annuities were written, at

what face value this year, as opposed to last, or as

opposed to other organizations. It is important to

understand that the guidelines stress comparability

of results,

not

comparability of value. In counting

and reporting charitable gifts, there should be no

confusion between gifts usable today, gifts guaran-

teed but postponed until a future date and gifts that

are of potentially great value down the road, but

that require continued stewardship. All these

activities take time, resources and attention. All

should be part of the reported activities and

achievements of fundraising programs.

These guidelines enable organizations to

count and report

ALL

gifts and commitments.

These guidelines allow charitable organizations to

recognize

all

the activity of staff, volunteers and

donors, not simply those measured by tax consid-

erations. In particular, they measure progress

toward goals associated with revocable commit-

ments, with gifts with uncertain outcomes like

qualified retirement plans or insurance gifts and with

gifts from intermediary organizations like donor

advised funds or supporting organizations, all of

which can easily be overlooked or even lost if IRS

guidelines alone are used as the counting standard.

A complete fundraising operation focuses on all of

these gifts, as well as irrevocable outright and

deferred gifts. The only way to recognize and

encourage such gifts is to set goals and report

progress toward those goals. All gifts should be part

of any campaign and all should, therefore, be

reported. This is true whether the organization is

looking at an annual fundraising plan or a multi-year

campaign.

These guidelines improve the ability to report

clearly the results of fundraising activity.

One of the most difficult tasks for development

offices in recent years has been to report results

clearly to boards, to others within the organization

and to the public. By trying to force all development

activity into a single number, fundraisers have faced

a challenge of credibility by either oversimplifying

These guidelines reinforce the methodology

that many charities already use to count gifts

and keep records of their activities.

These guidelines build on the successful record of

charities that already use these methods, although

they have generally been used only to articulate and

measure personal or collective staff activity for

internal evaluation purposes. The Partnership

believes that charities will be more successful if they

measure their activities and set public goals for both

annual and multi-year fundraising efforts using these

categories.

These guidelines will report a gift only once as

a campaign commitment. Organizations may

wish to report the maturation of commitments

counted in a previous campaign, not as new

gifts, but rather to articulate the total impact

of the development effort on the

organization.

We all recognize that gifts sometimes come to a

charity through a series of steps: bequest intention

to matured distribution or charitable trust to trust

maturation, etc. The report of activity should reflect

each gift only once in a given campaign.

Organizations will wish to note changes in gift

character within a campaign, but if a gift that is

committed in one campaign acutally matures after

the campaign has ended, the matured gift should

not be counted as a new gift in a new campaign.

Our reporting worksheet allows charities

differentiate in their reports between new

commitments and commitments from previous

campaigns that have changed in character (see

page 22). In this way, charities will convey all the

information about the ways development activity

affects the financial state (both present and future)

of the institution without appearing to count the

same gift twice.

These guidelines are designed to focus on the

character of the commitment,

NOT

on the source of

the commitment (individual, corporation, foundation,

etc.) or on the purpose of the commitment (annual

operating costs, endowment, buildings renovation,

program support, etc.). We recognize that most

charities will also want to track these characteristics

of their gifts and commitments, as most do now.

These guidelines acknowledge the perspective

of the donor.

While donors are clearly interested in the IRS value

for tax purposes, most donors focus more on the

dollar value of their gift at the time they make it than

on the ultimate net present value to the charity.

There are exceptions, but most donors would not

make gifts if they did not intend the gifts to be of

value to the organization. All gifts, revocable and

irrevocable, current and deferred, should, therefore,

be reported.

These guidelines aid charities in establishing

public goals for fundraising, and provide the

maximum opportunity for charities to offer

giving options to donors.

Many charities currently employ what has become

known as the “triple ask” in their regular interaction

with major donors. These guidelines offer a sound

institutional foundation to present such a giving

opportunity. By establishing three interlocking but

separate goals—for outright gifts, for deferred

irrevocable gifts and for revocable gifts—the “triple

ask” becomes part of the charity’s regular appeal.

Donors are less likely to feel harassed by multiple

appeals, and more likely to understand the ways in

which these three methods of giving complement

rather than compete with one another.

These guidelines clarify that both valuation

and crediting processes are related to, but

separate from counting.

The Valuation Standards for Charitable Planned Gifts

offer one method for determining the future

purchasing power that a planned gift will have when

it is received and used for its charitable purpose.

Crediting is the way each organization recognizes its

donors. Counting is an arithmetic activity—the

numeric summary of activity, results and progress

toward goals. Charities should be clear on what

methodology they are using, and for what purpose.

Specific Counting

and Reporting

Guidelines

FUNDAMENTAL PRINCIPLES OF CAMPAIGN

COUNTING

These principles apply specifically to organizations

planning comprehensive multi-year campaigns. All of

these recommendations follow from the paradigm

set forth previously in this report.

1. The following basic principles for counting

gifts should be used for the campaign:

a. Only those gifts and pledges actually

received or committed during the period of time

identified for the campaign should be counted in

campaign totals.

b. The advance-gifts phase is part of the

designated campaign period, and commitments

reported for this phase should actually have

been received or pledged during this specified

period within the campaign timeframe. Defining

the advance-gifts phase as part of the campaign

period will also help ensure that so called “reach

back” gifts are not counted. Gifts made in

contemplation of a campaign (i.e., gifts for

specifically defined campaign priority projects

committed before the advance gift phase) must

be acknowledged on all campaign reports.

c. Gifts and pledges may be counted to only

one campaign. Organizations may also wish to

note maturations of commitments made to a

previous campaign, but these should not be

confused with new commitments secured during

the campaign (see the sample reporting form

on page 22). The value of canceled or unfulfilled

pledges should be subtracted from campaign

totals when it is determined they will not be

realized.

d. If a commitment recorded in Category C

(revocable commitments) in a previous

campaign without a dollar figure or with only a

nominal figure attached to it is realized in a

current campaign, it should be recorded in

Category A (outright gifts) as a current gift.

2. Campaign Period: All gifts and pledges to the

campaign and affiliated entities acting on its

behalf during the campaign period should be

counted in accordance with these Guidelines.

The “campaign period” refers to the total time

encompassed by the active solicitation period for

the campaign, including the advance-gifts

phase. The normal length of a campaign is

suggested to be no more than seven years.

Should the campaign period exceed seven

years, the expanded period should be noted on

all campaign reports, news releases and

marketing materials.

3. Pledge Payment Period: The pledge

payment period should not exceed five years for

commitments counted in Category A, and if

exceptions are approved by the Oversight

Committee, the exceptions should be

enumerated in campaign reports.

4. When to Report Gifts: Outright gifts should

be reported only when assets are transferred

irrevocably to the institution. Deferred irrevoc-

able gifts should be reported only when assets

are transferred to the gift instrument. Revocable

commitments should be reported when the gift

instrument is executed and sufficient

documentation is received by the charity.

5. Annual Reporting within a Multi-Year

Campaign: Many charities “bundle” their

annual fundraising activities into a more

comprehensive multi-year effort. Just as

organizations now report annual results as a

subset in the midst of a multi-year process (and

thus keep two sets of complementary “books”),

so could charities use these guidelines to report

activities in both an annual “campaign” and a

multi-year “campaign.”

c. Earned income, including transfer payments

from medical or analogous practice plans.

d. Surplus income transfers from ticket-based

operations, except for any amount equal to

thatpermitted as a charitable deduction by the

IRS/Revenue Canada.

e. Contract revenues.

f. Government funds.

(1) We recognize that certain state and

federal government programs requiring

private matching funds bear a special

relationship to the encouragement of

philanthropy. Nevertheless, the difference

between public and private support is

profound within the American tradition.

Campaigns are clearly instruments of

philanthropy, while governments are usually

channels for the implementation of public

policy. There are instances, however, in

which government-funded agencies act like

private foundations in their competition and

award process (e.g., NEH, NSF, FIPSE).

Proposals to these agencies require

attention and effort by development

professionals in much the same way as do

private foundations.

(2) As a way of recognizing both the

potential slippery slope of counting

government generated funds of any kind

and the legitimate development work that

goes into generating grants from certain

government agencies as noted above, we

recommend that charitable organizations

include these qualified grants as an

addendum to their regular periodic report of

activity (similar to matured deferred gifts)

but that they not count them as part of the

report of private giving. Again, the key is

clarity and transparency.

8. What to Report: All gifts, pledges and

commitments falling into categories covered by

these standards may be reported. However, in

keeping with the spirit of these standards, it is

never appropriate to set a single overall

campaign goal or to report only one number

when announcing campaign results.

6. Reporting of maturations of previous

commitments: So often, development

programs receive little recognition for the

ultimate maturations of irrevocable and

revocable deferred gifts. Development staff

may not even know when these gifts have

matured. This is particularly true for life

income gifts—trusts, annuities and PIF funds—

but sometimes also for distributions from life

insurance contracts or qualified retirement

plans. These matured distributions, however,

have direct impact on the financial welfare of

the organization. While we do not recommend

that organizations count these matured

distributions in campaign totals if they had

been counted in a previous campaign, we do

recommend that development operations

report to boards and other key constituents

when these distributions occur (see page 22

for the recommended procedure).

All too often, executives and board members

see the numbers when commitments are

made, but lose track of the ultimate benefits

when distributions take place. Closing the

circle by reporting these results separately

from new commitments will provide a more

well-rounded picture of the impact of the

entire development program on the institution

and reinforce the understanding of those

outside of the development office about the

three dimensional and long term benefits of

the work they are doing.

7. Exclusions: The following types of funds are

excluded from campaign totals.

a. Gifts or pledges, outright and deferred, to

the extent that they have already been counted

in previous campaigns, even if realized during

the campaign-reporting period. (Matured

commitments from previous campaign are

tracked separately on the campaign reporting

form; see page 22).

b. Investment earnings on gifts, even if

accrued during the campaign reporting period

and even if required within the terms specified

by a donor (the only exception permitted to

this exclusion would be interest accumulations

counted in guaranteed investment instruments

that mature within the timeframe of the

campaign, such as zero coupon bonds).

CATEGORY A: OUTRIGHT GIFTS

1. Definition: Gifts that are usable or will become

usable for institutional purposes during the

reporting period, whether one or more years.

Examples include:

a. Cash

b. Marketable securities

c. Other current gifts of non-cash assets

d. Irrevocable pledges collectible during the

reporting period

e. The gift portion of bargain sales

f. Lead trust distributions received during the

reporting period

g. Cash value of life insurance owned by the

charity (net of policy loans)

h. Realized life insurance or retirement plan

benefits in excess of the amounts reported

in previous campaigns

i. Realized bequests in excess of the amounts

reported in previous campaigns

2. Pledges: Pledges are counted upon receipt of

the written pledge, provided the pledge is in

accord with these guidelines.

a. Pledges to make outright gifts: Such

pledges should be written and should commit to

a specific dollar amount that will be paid

according to a fixed time schedule. The pledge

payment period, regardless of when the pledge

is made, should not exceed five years.

Therefore, a pledge received even on the last

day of the campaign is counted in campaign

totals and may be paid over a five-year period.

b. Oral Pledges: Oral pledges should not be

reported in campaign totals. On the rare

occasion when an exception is warranted, the

organization should write to the individual

making an oral pledge to document the

commitment, place a copy of the confirmation in

the donor’s file and gain specific written

approval from the oversight committee.

3. Guidelines for reporting specific types of

assets

a. Cash: Report cash at full value as of the

date received by the institution.

As a minimum, the following results should be

available for reporting:

a. The total of outright gifts and pledges

received, reported at face value, and payable

within the campaign period and post-campaign

accounting period, as specified in the campaign

plan.

b. The total of irrevocable deferred

commitments, which will be received at an

undetermined time in the future, reported at

face value.

c. The total of revocable deferred

commitments, which will be received at an

undetermined time in the future, reported at

estimated current value or, if the campaign goal

so stipulates, reported as the number of new

revocable commitments regardless of estimated

value.

shall be counted at their fair-market value.

(2) Caution should be exercised to ensure

that only gifts that are convertible to cash or

that are of actual direct value to the

institution are included in value are treated

like other gifts-in-kind, but so called mega

gifts of software and hardware may require

special care. These types of gifts can be

especially complex, and institutions should

exercise extreme caution in counting these

gifts in campaign totals.) Gifts with fair-

market value exceeding $5,000 should be

counted at the value placed on them by

qualified independent appraiser as required

by the IRS for valuing non cash charitable

contributions. Gifts of $5,000 and under may

be reported at the value declared by the

donor or placed on them by a qualified

expert.

e. Nongovernmental Grants and

Contracts: Grant income from private,

nongovernmental sources should be reported;

contract revenue should be excluded

. The

difference between a private grant and contract

should be judged on the basis of the intention of

the awarding agency and the legal obligation

incurred by an institution in accepting the

award. A grant is bestowed voluntarily, without

expectation of any tangible compensation. It is

donative in nature. A contract carries an explicit

quid pro quo relationship between the source

and the institution.

f. Realized Testamentary Gifts: All

bequests realized during the defined duration of

the campaign should be counted at full value in

campaign totals, insofar as the amount received

exceeds commitments counted in a previous

campaign. If a revocable testamentary

commitment made during the current campaign

and counted in Category C matures during the

same campaign period, it should be removed

from Category C and included as an outright gift

in category A.

g. Realized Retirement Plan Assets: All

gifts of retirement plan assets realized during

the defined duration of the campaign should be

counted at full face value in campaign totals to

the extent the gift was not counted as a

commitment in a previous campaign.

b. Marketable Securities: Marketable

securities should be counted at the average of

the high and low quoted selling prices on the gift

date (the date the donor relinquished dominion

and control of the assets in favor of the

institution). If there were not any actual trades

on the gift date, the fair-market value can be

computed using the weighted average of the

mean of the high and low trading prices on a

date before and a date after the gift date, if

those dates are a reasonable number of days

before and after the actual gift date. If there

were no actual trades in a reasonable number

of days before and after the gift date, then the

fair-market value is computed based on the

average of the bid and the ask price on the gift

date. Exactly when dominion and control has

been relinquished by a donor depends on the

method of delivery of the securities to the

donee. These reporting standards do not

address the multitude of tax rules regarding the

delivery of securities by the donor to the donee.

c. Closely Held Stock:

(1) Gifts of closely held stock exceeding

$10,000 in value should be reported at the

fair-market value placed on them by a

qualified independent appraiser as required

by the IRS for valuing gifts of non-publicly

traded stock. Gifts of $10,000 or less may

be valued at the per-share cash purchase

price of the closest transaction. Normally,

this transaction will be the redemption of

the stock by the corporation.

(2) If no redemption is consummated

during the reporting period, a gift of closely

held stock may be credited to campaign

totals at the value determined by a qualified

independent appraiser. For a gift of $10,000

or less, when no redemption has occurred

during the reporting period, an independent

CPA who maintains the books for a closely

held corporation is deemed to be qualified

to value the stock of the corporation.

d. Gifts of Property:

(1) Gifts of real and personal property that

qualify for a charitable deduction should be

counted at their full fair-market value. Gifts-

in-kind, such as equipment and software,

retains the right to change the commitment and/

or beneficiary. Examples include:

a. Estate provisions, either from a will or a

living trust.

b. Charitable remainder trusts in which the

donor retains the right to change the beneficiary

designation. When additions are made to gifts

that have been counted in previous

campaign(s), the additions can be counted in

the current campaign.

c. IRAs or other retirement plan assets

in which the charitable beneficiary’s interest

remains revocable by the donor

d. Life insurance in which the donor

retains ownership (face value less any policy

loans) and in which charity is owner but

premiums remain due.

e. The portion of Donor Advised Fund

assets due to the charity in which the charity is

the owner of the DAF program.

f. Other revocable pledges

2. It is difficult to put specific numbers on certain

revocable commitments whose ultimate

maturation value is uncertain. The numbers

reported in Category C may at best be estimates

and should reflect both conservative and

realistic understanding of each donor’s

circumstances. Commitments counted nominally

in category C (for example, at $1, because the

charity had no information about the value) can

be counted at full value in category A if they

mature in a later campaign.

3. Age Minimums:

a. Some organizations have set a minimum

age limit (often 65 or 70) for counting revocable

commitments in a formal campaign. The age

limit was considered necessary due to the lack

of transparency in campaign counting and the

fear that inclusion of revocable commitments

unlikely to mature within a “reasonable” time

after the end of the campaign could mislead the

public about the current benefits derived from

campaign activity. We recognize the importance

of this issue and organizations should exercise

discretion to determine if age limits are more

comfortable for their circumstances.

CATEGORY B: IRREVOCABLE DEFERRED GIFTS

1. Definition: Gifts committed during the

reporting period, but usable by the organization

at some point after the end of the period.

Examples include:

a. Split interest gifts such as charitable gift

annuities, pooled income fund shares and

charitable remainder trusts in which the

beneficiary designation is irrevocable.

b. Life estates

c. Death benefit of paid up life insurance

in which the charity is both owner and

beneficiary.

d. Irrevocable testamentary pledges or

contract to make a will

e. Lead trust distributions to be made

after the reporting period

2. Charitable Remainder Trusts, Gift

Annuities and Pooled-Income Funds:

Gifts made to establish charitable remainder

trusts (including charitable remainder trusts

administered outside the institution) where the

remainder is not subject to change or

revocation, gift annuities and contributions to

pooled income funds should be credited to

campaign totals at face value. When additions

are made to gifts that have been counted in

previous campaign(s), the additions can be

counted in the current campaign.

3. Remainder Interest in a Residence or

Farm with Retained Life Estate: A gift of a

remainder interest in a personal residence or

farm should be counted at the face value.

4. Charitable Lead Trusts:

Charitable lead trusts are gifts in trust that pay

an income to the charity over a period of time.

These payments should be counted in Category

A for amounts received during the campaign

period. The remainder of the income stream to

be received by the charity should be counted in

Category B.

CATEGORY C: REVOCABLE DEFERRED GIFTS

1. Definition: Gifts solicited and committed during

the reporting period, but which the donor

binding document, tested in the courts of

several states, that places an obligation on

the estate of the issuer to transfer a certain

amount to the institution. Under such

agreements, the executor of the donor’s

estate is held legally responsible for

payment of the specified amount from the

estate.

c. The campaign will carefully investigate the

actual circumstances underlying the estate and

be conservative in counting such commitments

toward campaign totals. If any circumstances

should make it unlikely that the amount pledged

by bequest will actually be realized by the

organization, then the commitment should be

further adjusted according to specific

circumstances, or not reported at all.

5. Retirement Plan Assets:

a. The organization may be named as the

beneficiary of retirement plan assets. A

testamentary pledge of retirement plan assets

shall be included in campaign totals if the

following requirements have been satisfied:

b. There must be a means to establish a

credible estimate of the value of the retirement

plan account at the time the commitment is

made.

(Note: The decision about whether or not these

types of gifts should be given campaign credit is

often based on the value of the retirement plan

assets at the death of the donor. At best, this

requires a judgment call to be made by the

campaign managers after conversation with the

donor and his/her advisor.)

c. Have verification of the commitment in the

form of a letter from the donor or the donor’s

advisor affirming the commitment.

d. The campaign will investigate carefully the

actual circumstances underlying the plan and be

conservative in counting such commitments

toward campaign totals. If any circumstances

should make it unlikely that the amount pledged

will actually be realized by the organization,

then the commitment should be further adjusted

according to specific circumstances, or not

reported at all.

b. However, setting age limits is not deemed

necessary in these guidelines for two reasons.

First, setting initial goals that differentiate

revocable deferred commitments from other

immediate or irrevocable deferred gifts provides

a level of transparency sufficient to eliminate the

need to explain the uncertainty of timing, nature

and extent of the commitment. Second,

revocable deferred commitments are often only

the first major commitment a donor makes to a

nonprofit organization. Those who make such

commitments, no matter what their age, rarely

remove a charity if they are properly stewarded.

And those who make such commitments often

make additional commitments that are irrevoc-

able and frequently immediate. Accordingly,

campaigns should recognize all who make such

commitments. These guidelines allow charitable

organizations to be clear about the nature of a

revocable deferred gift and differentiate such

commitments from gifts that have more

immediate impact on the institution.

4. Estate Provisions: To include estate

provisions in campaign totals, the following

requirements must be satisfied:

a. The commitment should specify an amount

to be distributed to the organization or, if a

percentage of the estate or a trust, specify a

credible estimate of the value of the estate at

the time the commitment is made.

(Note: The decision about whether or not these

types of gifts should be given campaign credit is

often based on the value of the estate. At best,

this requires a judgment call to be made by the

campaign managers after conversation with the

donor and his/her advisor.)

b. Have verification of the commitment through

one of the following forms:

(1) A letter or agreement from the donor or

donor’s advisor affirming the commitment.

(2) Copy of will

(3) Notification form provided by the

charity, signed by donor or advisor

(4) Charitable/Deferred Pledge Agreement.

A deferred pledge agreement is a legally

similar in that sense to an endowment fund, it is

created as a freestanding entity.

b. The fair-market value of the assets, or a

portion of the assets, of such a trust admin-

istered by an outside fiduciary should be

counted in Category A, in the “gifts and pledges”

section of campaign totals, for the year in which

the trust is established,

provided

that the

institution has an irrevocable right to all or a

predetermined portion of the income of the

trust. If the trustee retains or is awarded the

right to designate or alter the income

beneficiary, only the income should be reported

and then only as it distributed.

c. In cases where less than the entire income

of the trust is to be distributed to the institution,

the amount to be reported is the income to be

distributed to the institution over the total

income (or the stated percentage to be distrib-

uted, if the trust terms spell this out as a

percentage) multiplied by the value of the trust

assets. The income of the trust, thereafter, is

reported as a gift.

d. Community and Private Foundations:

Gifts to community foundations, the income

from which is irrevocably designated, in whole

or in part, to the organization, and private

foundations established solely to benefit the

organization or where the organization is to

receive a specified percentage of the annual

income each year, are two examples of wholly

charitable trusts administered by others. (Gift

recognition credit will generally be given to the

foundation, although the original donors or their

families should certainly be kept apprised of the

distributions if at all possible.)

e. Donor-Advised Funds: Donor-advised

funds are IRS-approved public charities

generally managed by investment companies

and community foundations that serve as

conduits for gifts. The donor’s contribution is

made to the fund. The donor reserves the right

to suggest which charities should receive the

annual income. Funds will be counted like any

other gift as received. If a charitable organ-

ization is entitled to receive a certain percent-

age of the annual distributions of a DAF, it may

count the value of that percentage as if it were

an irrevocable trust administered by others.

GIFTS THAT MAY BE COUNTED IN MORE THAN

ONE CATEGORY, DEPENDING ON THE

CIRCUMSTANCES

1. Life Insurance: To include commitments of

life insurance in campaign totals, the following

requirements must be satisfied.

a. Ownership:

(1) The organization should be made the

owner and irrevocable beneficiary of gifts of

all new policies, paid-up policies and

existing policies that are not fully paid up.

(2) If the organization is the beneficiary

only and not the owner of a policy, gift

credit will be given but only in Category C,

in the same way as credit is given to any

other revocable gift commitment

(3) The remainder of these guidelines

assume that the charity is the owner of the

policy.

b. Paid-up Life Insurance Policies: Counted

at face value in Category B.

c. Existing Policies/Not Fully Paid Up: A life

insurance policy that is not fully paid up on the

date of contribution, which is given to the

institution during the campaign, should be

counted at face value only in Category C.

d. New Policies: Face amount of these

policies should be counted in Category C.

e. Realized Death Benefits. The insurance

company’s settlement amount for an insurance

policy whose death benefit is realized during the

campaign period, whether the policy is owned

by the institution or not, should be counted in

campaign totals, less amounts previously

counted in former campaigns.

2. Wholly Charitable Trusts Administered by

Others:

a. A wholly charitable trust is one that is held

for the irrevocable benefit of charity, where the

principal is invested and the income is distrib-

uted to charitable organizations. All interests in

income and principal are irrevocably dedicated

to charitable purposes (as opposed to a

charitable remainder or lead trust). While it is

GIFTS THAT CHANGE CHARACTER DURING A

CAMPAIGN PERIOD

1. All campaigns, even those with twelve month

duration, face the dilemma of reporting

commitments that change character during the

campaign period. The important point of these

guidelines is that a commitment should, at the

end of the campaign period, be reported only

once and should reflect the final (or most

recent) form of the commitment.

2. Example: It is possible for a donor to establish

an irrevocable deferred gift or a revocable gift

commitment that would be reported in

Categories B or C, and then, for that gift to

mature within the same campaign. In such

cases, we recommend that the cumulative

campaign report recognize the gift only in

Category A, and that any previous interim

report of the gift in Categories B or C be

deleted. The annual report would note this

change as well.

3. A donor creates a charitable remainder trust

but retains the right to change the remainder

beneficiary. That commitment would appear in

Category C. If, later in the campaign period, the

donor made the remainder beneficiary

irrevocable, the commitment would shift in the

cumulative campaign report to Category B and

be removed from Category C. The annual

report would note the shift as well.

4. Example: A charity receives a 20-year

charitable lead trust paying $10,000 per year

($200,000 in total) in the first year of a five-year

comprehensive campaign. The annual report in

year one will note $10,000 (the amount actually

received that year) in Category A and $190,000

in Category B. The cumulative comprehensive

campaign report (covering all five years) will

report $50,000 in Category A (the amount

committed and to be received during the

campaign period) and $150,000 in Category B.

In years two through five, the annual report will

again count a $10,000 cash gift with a note that

this commitment had previously been reported

in Category B. There would be no further

reporting in the annual report for the Category B

portion of the gift, since there had been no new

commitment in year two. This example is

illustrated in the following chart:

20-YEAR LEAD TRUST PAYING $10,000/YEAR

Year 1: Annual 5-Year Campaign

$10K in Cat A $50K in Cat A

$190K in Cat B $150K in Cat B

Years 2-5: Annual 5-Year Campaign

$10K in Cat A Same as before

with note

$0 in Cat B

5. Finally, we should note again that we

recommend charitable organizations report the

cash distributions from commitments counted in

previous campaigns, but that they not count

these distributions toward “new” campaign

goals. We do believe, however, that completing

the cycle by noting to boards and internal

managers the ultimate cash benefit of deferred

commitments is an important part of the

development reporting process. See page 22 for

recommendations regarding the reporting of

matured commitments from previous

campaigns.

These guidelines recommend a method for

reporting gift planning activity and results more

clearly and more effectively than in the past. We

recognize that the real test for these or any set of

guidelines will be how this reporting structure

operates in practice. Therefore, we encourage

charitable organizations to share with the

Partnership their experiences in using these

guidelines.

Conclusion

Exceptions

An appropriate campaign oversight committee will

have the authority to make exceptions to the

foregoing for good cause on a case-by-case basis.