Sizeable Gift Enhances Museum's Plans and Programs

On Monday I blogged about trends in planned giving.  So it was à propos that on Wednesday night I found myself at the Chairs’ Reception and Exhibition Preview of the Bollywood Cinema Showcards exhibit at the Royal Ontario Museum

During dinner, the Donor of Merit Award was presented to the trustees of the Louise Hawley Stone Charitable Trust.  The award is presented annually to a donor whose gift of $1 million or more has significantly advanced the museum’s goals and programs. 

In 1998, the ROM became the recipient of the largest legacy gift it has ever received from the estate of Louise Hawley Stone.  Mrs. Stone had been a supporter of the museum for over fifty years. 

Mrs. Stone had been an avid collector of Asian art and had served on the ROM’s board of trustees for a number of years in the late 1960s and early 1970s.  She also helped to establish the museum’s textile committee in the mid 1970s.    

Over the years Mrs. Stone donated many of the ROM’s major pieces of Chinese and English Furniture.  Additionally, she donated more than 1000 artifacts to the museum’s textile collection.

Mrs. Stone died in 1997.  The terms of her last will and testament established a charitable trust of almost $50 million for the ROM’s benefit.  It is the largest cash gift the ROM has ever received.  The terms of the trust specified that the income shall be applied by the museum for its "own publications relating to its collections or any part of them and for purchases of artifacts."

The Louise Hawley Stone Charitable Trust currently generates more than $2 million annually for the ROM.  Since its inception, the trust has granted more than $25 million to the ROM in support of acquisitions and publications.

Tips and Traps for Successful Planned Giving Programs

It’s not uncommon for people to want to benefit charities in their wills.  While sometimes it can be as easy as simply leaving a bequest, many charities have formal planned giving programs designed to facilitate gifts to their organizations.  Given the unprecedented intergenerational transfer of wealth that is occurring and that is expected to continue occurring for several decades, many charities can be expected to reap the benefits.         

CharityVillage.com and Give Green Canada recently released the International Gift Planning Survey, which aimed to assess the readiness of charities and non-profit organizations to respond to increased opportunities for legacy fundraising.  The survey involved more than 900 gift planning professionals from 25 different countries (with most respondents coming from North America). 

The survey results indicated that 88% of respondents had budgetary resources in their organization allocated to bequest fundraising.  The age of the programs varied.  34% reported that their organization’s planned giving program was more than 15 years old while 31% reported that their organization’s program had existed for five years or less. 

The efforts of those with planned giving programs in place appear to be yielding positive results.  36% of respondents said their organizations had seen an increase in the number of bequests they received since 2005, with 77% of respondents indicating that their organization’s average bequest size was more than $25,000 and 36% indicating that it was more than $50,000. 

The most frequently listed secret to a successful planned giving program was saying “thank you” to donors.  Other frequently successful enabling conditions were devoting a dedicated staff and budgetary resources to the giving program, actively marketing the program, and creating and engaging with a “legacy circle” of donors. 

The most commonly named barrier to a successful program was a lack of human resources in the organization.  Another stumbling block that arose was competition from short-term revenue generation sources within the organization. 

$800 Million? Now That's A Legacy!

May is national Leave a Legacy month in Canada.  Leave a Legacy is a national public awareness organization aimed at encouraging people to leave gifts to charity or other non-profits in their will (or through some other gift planning mechanism). 

Throughout May, Leave a Legacy has a number of events scheduled across the country.  The list of events in Toronto can be found here

One family in the United States that is certainly committed to leaving a legacy is the Waltons (of Wal-Mart fame).  The Wall Street Journal reports that the Walton Family Foundation has pledged to donate $800 million to the Crystal Bridges Museum of American Art, a museum founded by Alice Walton (daughter of Wal-Mart founder Sam Walton). 

The 201,000 square foot museum is encyclopedic in nature and aims to chronicle the history of American art from the late 1600s to the present. The museum is located in Wal-Mart’s rural Arkansas hometown of Bentonville (population 35,301) and set to open on November 11, 2011. 

The gift by the Walton Family Foundation is being heralded as the largest cash donation ever made to an American museum – exceeding the $660 million in oil stocks donated to the Getty Museum in Los Angeles by Paul Getty in the late 1970s and the $500 million cash donation made by Caroline Weiss Law to the Museum of Fine Arts in Houston.

The Los Angeles Times has pointed out that while the Waltons’ donation might be the biggest cash gift ever, the actual value of Getty’s donation was larger – when adjusted for inflation, his donation in 1976 is worth almost $2.5 billion in today’s terms. 

Art Investing...With the Help of a Friendly Canadian Bank

Art investing, generally the provenance of cities like London, Paris, and Hong Kong, is becoming increasingly popular amongst wealthy Canadians.  As a result, a number of Canadian financial institutions are starting programs to encourage their wealthy clients to collect art. 

Art is not a traditional investment and can be a very risky one.  It can be very difficult to predict future values of art, particularly contemporary works, and historical data is not necessarily useful.  Additionally, for older pieces, there is always the concern of forgery.

The Bank of Montreal has recently launched the BMO Harris Private Banking Art Series which is designed to teach the bank’s high net work clients (who have at least $1 million in cash/investments) about the finer points of art collecting.  The series has been so successful in Toronto that the bank is planning to expand to other cities, such as Montreal, Calgary, and Vancouver. 

So far the sessions have attracted an average of 50 to 60 clients and topics have included auctions, corporate art collections, advice on collecting, and the administration of private collections. 

The Bank of Montreal isn’t the only one offering services of this nature.  The Bank of Nova Scotia offers advisory services to its clients and the Scotiabank Group Fine Art Collection offers consulting services covering topics such as negotiating purchases and dealing with insurance issues.  For its part, Royal Bank of Canada has its own art curator who is available to discuss collecting strategies with clients at various art events. 

Presumably, the banks will benefit if their clients ask to borrow money to finance their newly developed collection obsession!

While the various banks might be encouraging others to collect, they’re not doing a bad job of it themselves.  The Bank of Montreal’s collection includes 6,600 works by Canadian artists and its gallery on the 68th floor of First Canadian Place in Toronto is open to the public by appointment.  TD Bank’s contemporary Canadian collection includes about 6,000 works and its Toronto Dominion Gallery of Inuit Art is open to the public at no cost.  Royal Bank of Canada Art Collection and Scotiabank Fine Art Collection are also impressive, consisting of 4,000 pieces and 1,800 pieces, respectively.

Another Billionaire Dies, Avoids U.S. Estate Tax

American broadcasting mogul and noted philanthropist John Kluge died a couple of weeks ago at age 96, leaving behind an estate worth approximately $7 billion.  

It’s not clear how his estate was to be divided on his death – and given the popularity of trusts amongst the wealthy (which, amongst other things, can keep the distribution of assets shielded from public view) we might never know. 

One thing we do know, however, is that his estate will avoid U.S. estate tax (at least for now – but more on that in a minute). 

While the estate planners down south probably can’t open a business section without reading about 2010 estate tax issues, I’ll briefly fill in those in the audience who aren’t familiar with the topic.

In the United States, the government imposes an estate tax.  Basically, when someone dies with assets valued over a fixed exclusion amount, a specified tax rate is applied to the value of their taxable estate (i.e. their gross estate, minus certain allowable deductions) – as you can probably guess, the specifics are more complicated than that, but you get the picture. 

From 2001 to 2009 the maximum tax rate declined from 55% to 45%, while the exclusion amount increased from $675k to $3.5 million.  However, for 2010, the US Congress let the estate tax lapse – meaning that this year there is no federal tax payable.  The exemption is for one year only – in 2011 the tax returns with a rate back at the 2001 level of 55% and an exclusion amount set at $1 million.

Above I noted that estate tax was being avoided “at least for now” – that’s because there has been a lot of talk that Congress may enact a law imposing a tax rate for 2010 and make it retroactive to the beginning of the year.    

Kluge isn’t the only billionaire whose estate will be able to avoid the tax: Texas oil tycoon Dan L. Duncan died in March leaving an estate worth approximately $9 billion and New York Yankees owner George Steinbrenner died in July leaving behind approximately $1.1 billion. 

I guess we’ll have to wait and see if, in the last 3 ½ months of the year, the estates of any other billionaires manage to dodge the estate tax – not to be morbid but David Rockefeller Sr. (son of oil baron John D.) is 95.