Previous Newsletters: January, 2006 April, 2005 February, 2005 November, 2004 September, 2004 April, 2004   January, 2006 In this issue… President's Message NCPG Virtual Seminars in the East Bay (for FREE!) January 26, 2006 Luncheon Meeting February 15, 2006 Masters Program 2005 Phil Hoffmire Service Award Recipient Member Profile - Susan Shain Philanthropist of the Year - June Berry Annual Conference Update California Senate Bill 271 Becomes Law New Members 2006 NCGPC Calendar

NCPG Virtual Seminars in the East Bay (for Free!)

An NCPG Virtual Seminar is similar to a large conference call with online visuals. These 90-minute seminars will take place at the East Bay Community Foundation, starting at 10:00 a.m. The Mechanics Bank is underwriting the cost of the seminars, so the $179 attendance fee is waived. The 2006 dates and topics for the virtual seminars are listed below. Information about the upcoming virtual seminars is on the National’s website at www.ncpg.org.

March 15 – Complex Charitable Real Estate Gifts: Issues & Solutions
May 17 – The Good, Bad, and Ugly: Insights Into Your Marketing From Insiders
July 19 – Getting to Yes! A Guide to Understanding and Communicating with Our Elder Citizens
September 13 – Managing Donated Life Insurance Policies
November 15 – Is Your Gift Annuity Program Sick or Healthy? Diagnosing and Treating Gift Annuity Risk

The East Bay Community Foundation is located at 200 Frank Ogawa Plaza in downtown Oakland, approximately one block from the 12th Street BART station. Please visit www.eastbaycf.org for directions and parking information. Want to register for one of the seminars? Questions? Email cnicholson@eastbaycf.org.

January 26, 2006 Luncheon Meeting

“Latest Developments from DC with Respect to Nonprofit Regulations”
Luncheon Program - 11:30 a.m. to 1:30 p.m.
Featuring Janne G. Gallagher, Vice President & General Counsel, Council on Foundations

What’s happening with charity reform? Two key Congressional committees -- the House Ways & Means Committee and the Senate Finance Committee – are considering the most sweeping reforms since 1969. Many other players from Joint Committee on Taxation to the Independent Sector Panel on the Nonprofit Sector have stepped up the pace of charity audits. Janne will provide attendees with the latest developments in Washington and her thoughts about what might happen in 2006. Registration available via credit card through January 24 at www.NCPGCouncil.org or take a check or cash to the door.
 

February 15, 2006 Masters Program

What is a Masters Program?

The Masters Program is designed to provide in-depth review of the pertinent issues facing today’s experienced planned giving officer; please join us to discuss this important subject. This is a members only program, open only to members of the Northern California Planned Giving Council. Space is limited and will not be available at the door. Reservations via credit card only.

Wednesday, February 15, 2006 - 9:00 a.m. to 12:00 p.m.
8:45 Registration & Coffee, The World Trade Club, One Ferry Plaza
“Can Bad Influence Undue That Planned Gift Your Charity Expects?”
Speakers: Benjamin K. Riley, Esq., Howrey LLP and Sandra B. Price, Esq., Cooley Godward LLP

Undue influence from family, caregivers, neighbors, etc. can unwind that bequest or other planned gift that you thought was coming to your organization. The neighbor who convinces an elderly homeowner to deed the elder’s house to him or her; the caregiver whose name appears in a handwritten will dated shortly before death; the relative who suddenly appears on the scene with a deathbed will after no family contact for years and years; the caregiver, relative or friend that suddenly has jewelry, crystal, etc. in his or her possession after a visit to the donor’s home; the long-estranged and disinherited child who becomes conservator of the donor and petitions the Court to change the existing will or trust in favor of the child before death.

Learn about the problems that fundraisers and their charitable organizations face in making sure that the donor’s intentions are carried out and that the donor has not been taken advantage of in his or her later years. Come prepared to learn about the law, litigation strategies and practical hints to avoid or minimize the effects of undue influence. The speaker biographies are on the website.

$40 Northern California Planned Giving Council Members. To register, visit www.NCPGCouncil.org.
 

2005 Phil Hoffmire Service Award Recipient - Erik Dryburgh
 
 Congratulations to Erik Dryburgh for his selection as the Phil Hoffmire Service Award recipient in 2005. This special award honors an individual whose professional accomplishments have made a significant and lasting impact on the field of planned giving in Northern California, and whose life and character have earned the respect and admiration of their professional colleagues.

Erik is a principal in the law firm of Silk, Adler & Colvin, a law firm specializing in representing nonprofit organizations and their donors. He has an undergraduate degree from the University of Wisconsin at Madison, and earned a J.D. at U.C. Berkeley’s Boalt Hall. Erik is also a Certified Public Accountant.

Erik specializes in charitable giving, charitable estate planning and nonprofit organizations. He is a frequent speaker in these areas and has done presentations for the National Committee on Planned Giving, the Northern California Planned Giving Council where he was previously a member of the Board of Directors, as well as presentations for Continuing Education of the Bar and the State Bar of California. He is currently a member of the Board of Directors of the San Francisco Estate Planning Council.

An accomplished author, Eric is a co-editor of The Charitable Gift Planning News and has written a variety of chapters and articles on charitable remainder trusts, wills and trusts, stock options and charitable reverse split-dollar insurance. When you see him ask him about his own unique opinion about the recently adopted charitable remainder trust spousal waiver requirement.

Eric is also an avid cyclist and rumor has it that as a result of carpooling he decided to change his career from being a CPA to the charitable gifts specialist he’s known as today. Congratulations, Erik!
 

Member Profile - Susan Shine

Name: Susan Shain

Title: Principal

Organization: State Street Global Advisors

Background of planned gift work: After completing masters degree, obtained a certificate in accounting, worked for various financial institutions leading to a position with UCSF in trust administration and ultimately to State Street Global Advisors

Education: UC Berkeley, undergraduate degree in Chinese Studies; S.F. State, Masters Degree in
Chinese Studies & Languages

What do you enjoy most about your work? Problem solving while working with clients/donors.

Tell us your philosophy of work: Generally to do the best job I can and definitely am proactive

Note one of your best planned gifts stories – Dealings with a wealthy real estate donor who was a self-made businessperson. It was difficult for him to let go of control. After many meetings and gradually creating a sense of security for him, he ultimately relinquished control. He was pleased with the way everything worked out and we continue to maintain a good working relationship as well as a friendship.

What are your special interests? Yoga, World Music, Travel

Do you have a favorite restaurant? BayWolf, Piedmont Avenue, Oakland

Your best resource people? Internal dedicated teams of State Street Global Advisors

Advice to new planned giving professional: Make contacts in the community. Also look for help when you need it. It’s a very supportive community. Realize planned giving can be overwhelming at times including all the acronyms but don’t let them bother you!!
 

Philanthropist of the Year - June Berry

The Northern California Planned Giving Council has chosen June Berry, 90, founder and chair of the Buy-Out Club at The Redwoods, a nonprofit retirement community in Mill Valley, as its Philanthropist of the Year. She was honored in November on Philanthropy Day at an annual luncheon in Oakland and was the guest of the NCPG Council sponsored table.

Six years ago, Mrs. Berry, a Redwoods resident and charter member of its planned giving committee, suggested forming a residents-only legacy society to honor those who would include The Redwoods in their estate plan. She raised a few eyebrows with her “Buy-Out Club” title, but no one could argue with the Club’s success—42 members in a community of 350 whose average age is 88.

The title had a logic and appeal that rang true to the residents. The Redwoods requires no initial buy-in, charging instead a monthly rent for four levels of care that range from independent living to twenty-four-hour skilled nursing. Mrs. Berry promoted the Club through quarterly parties that featured hearty hors d’oeuvers, champagne, speakers and residents sharing personal histories.

She pitched Buy-Out Club membership tirelessly, reminding fellow residents that joining did not require parting with funds now, and plugging bequests inverse in her Buy-Out Club application form:

You can’t take it with you Of that’s there’s not doubt. You didn’t have to buy in. So why not buy out?

The going was slow at times. “Everybody says, ‘But what about my family’,” she told a full meeting of The Redwoods Residents Council. “Well, we’re not asking anyone to disinherit their children, just to share a bit with The Redwoods. It’s our family too.”

Many Club members want their bequests to help fellow residents if they run out of funds; others support The Redwoods’ general purposes. Mrs. Berry also helped found “Mill Valley Seniors for Peace,” which became vividly present to Mill Valley commuters when the group, with handmade signs, a few walkers and some musical instruments in hand, began protesting the war in Iraq at the corner of Miller Avenue and Camino Alto on Fridays in January, 2003. They’re still at it.

A documentary on the group by filmmaker David Brown, with many of its members recalling the horror of battle from their experiences fighting in World War II, was shown at the 2004 Mill Valley Film Festival.

Another verse on her Buy-Out Club application summarizes The Redwoods’ case for planned gifts and much of Mrs. Berry’s personal philosophy:

You didn’t have to buy in So why don’t you buy out? Isn’t helping each other What life’s all about?

Note: A special thanks to Phil Murphy for helping identify June Berry and taking responsibility for getting June and her guest to the Philanthropy Day luncheon. Phil also authored the above article.

Annual Conference Update

The 14h Annual Northern California Planned Giving Conference is set for Monday, May 15. Starting February 1, visit the Council’s website at www.NCPGCouncil.org to get the latest information on the Conference. The CFO Section was so successful last year that it is being offered again in addition to the popular Fundamentals Track and Masters Track.

California Senate Bill 271 Becomes Law

Earl Blauner, (KQED, Inc.)
Chair, Legislative Committee, Northern California Planned Giving Council

California Governor Schwarzenegger signed Senate Bill 271 into law on September 22. This bill's passage culminates a three-year effort to change the investment constraints on gift annuity reserve accounts imposed on charities by statute, as regulated by the California Department of Insurance (CDI). The effort was led by the Northern California Planned Giving Council and was supported by other California planned giving councils and charities nationwide.

We are especially gratified that SB 271 was supported by CDI. This occurred only after extensive discussion and meetings with CDI representatives and inclusion in the bill of the negotiated administrative changes described below. We are pleased with the working relationship we now have with CDI staff.

You can find the new law on the California State Senate Web site at:
http://info.sen.ca.gov/pub/bill/sen/sb_0251-0300/sb_271_bill_20050922_chaptered.html.


Use of Mutual Funds and Exchange-traded Funds

Last year, the Governor signed into law California Senate Bill 1088, which increased the cap on the equity exposure in reserve accounts from 10% to 50%. While this was a good first step, the CDI still required charities to get approval to invest in specific mutual funds and such approvals were not generally being granted. This administrative requirement was an impediment to implementing asset allocation changes to take advantage of the new higher cap.

Senate Bill 271 addresses this issue by adding mutual funds and exchange-traded funds to the list of approved securities that charities can hold without prior CDI approval—up to 50%. (The other approved securities are stocks listed and traded on the NYSE, AMEX, or NASDAQ.) Note that the law does not distinguish between equity mutual funds and bond mutual funds; the 50% applies to both. This change is effective immediately.

The legislation also includes a statement of legislative intent that gift and annuity societies invest their reserve accounts in a manner that is generally consistent with California’s Uniform Prudent Investor Act, subject, of course, to the various restrictions relating to charitable gift annuities outlined in the Insurance Code.


Administrative Provisions

The bill includes some administrative provisions requested by CDI, which are effective January 1, 2006. In the future, all annuity agreements must show the following information:

 Value of the property transferred
 Amount of the annuity
 The manner in which and the intervals at which the annuity is to be paid
 Age, in years, at or nearest the date of the agreement, of the annuitant
 Effective date of the agreement
 Signature of each donor

Charities are no longer required to include the Reasonably Commensurate Value (RCV) in contracts. In addition, charities must certify annually, in a manner to be determined by the Commissioner, that all of the annuity agreements entered into during the filing period show all of the required information.

The bill requires licensed charities to file information regarding each agreement in a manner prescribed by the Commissioner. In practice, this means that charities are no longer required to file individual gift annuity agreements with the CDI when they submit Form FAD 600. The form includes all of the relevant facts about each contract. I am advised by CDI staff that after January 1, 2006 the form will no longer require the RCV calculation. I am also told that further instructions will be mailed in mid-November, 2005 and will be posted on the CDI web site.


New Disclosure Language Required on Contracts

Starting January 1, 2006 gift annuity contracts will have to include the following clause, similar to clauses required in other states, in 12-point boldface type located on the same page as and near to the donor’s signature line:

Annuities are subject to regulation by the State of California. Payments under this agreement, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association.

Next Steps

Investments
As a result of the passage of SB 271, charities have the opportunity to revisit the asset allocations of their gift annuity pools. Carefully applied, the new law should, over the long term, result in significant additional funds available for charitable purposes. For some institutions, this will mean that the asset allocation for their overall gift annuity pool will more closely resemble the portfolios for their other charitable assets, including charitable trusts and endowments.

Investment Caveat
This legislation is not intended in any way to recommend an appropriate asset allocation. Any asset allocation changes should be carried out, if at all, only after considerable study, taking into account the gift annuity account profile, including its effective payout rate, and the number and concentration of contracts, among other factors.

Contracts and Filings
By January 1, 2006, charities will need to make changes to their California contracts, specifically adding the new disclosure language, removing the reference to the RCV, and, depending upon previous practice, adding an “effective date.” Also, beginning in the new year, charities will stop submitting copies of the individual contracts with their quarterly filings.

Kudos
Our continuing thanks go to the bill’s author Senator Jack Scott (D, Pasadena), ably assisted by his legislative consultants, first Alison Merrilees and then Lisa Matocq. Senator Scott thoroughly understood the complexities of charitable gift annuities and that passage of the bill would mean more money in the long run for California charities. Senator Scott very effectively conveyed the message to his Senate and Assembly colleagues.

Special thanks to attorney David Wheeler Newman of Mitchell, Silberberg & Knupp LLP for his drafting of the bills and advice, and to Frank Minton and Edie Matulka (ACGA and Planned Giving Services) for their support and advice. Jonathan Brown of the Association of the Independent California Colleges and Universities in Sacramento provided invaluable legislative advice. Most of all, thanks to the NCPGC Legislative Committee members and advisors for their hands-on work and masterful strategizing over the three year period: Heidi Strassburger (NCPGC/UCSF), Jeff Shields (NCPGC/Offit Hall Capital Management), Abby Mason (Kaspick & Company), and Paula Blacher (US Trust Co.).

Finally, we thank the many organizations state-wide and nationally who supported the bill. Support from the Planned Giving Roundtables of Southern California, Orange County, the Inland Empire, and San Diego enabled the Northern California Planned Giving Council to speak on behalf of our professional colleagues statewide. Letters of support from dozens of prominent charities were crucial. We particularly caught the legislators’ attention with the active involvement of the University of California, the California State University, and the Association of Independent California Colleges and Universities. California’s non-profit community truly showed its tenacity and strength. Thanks to all!

New Members

2006 NCPGC Calendar

Thursday, January 26
Luncheon Meeting, item #3 in this issue

Wednesday, February 15
Masters Program, item #4 in this issue

Thursday, March 9
Luncheon Meeting, 11:30 to 1:30, featuring Jane Peebles on “International Giving”

Friday, April 7
Masters Program, 8:45 a.m. to Noon, featuring Fred Marcus, Esq. of Freeman, Freeman & Smiley, LLP and Erik Dryburgh, Esq. of Silk, Adler & Colvin on "Gifts of Real Property".

Monday, May 15
14th Annual Planned Giving Conference at The Palace Hotel, SF

Thursday, June 8
Luncheon Meeting, 11:30 to 1:30,featuring Claudia Sangster on “Having a Conversation about Philanthropy with Donors.” Ms. Sangster is the Director of Philanthropy Services at Harris myCFO, Inc. and the President and Executive Director of the myCFO Foundation.

Thursday, Sept. l4
11:30 a.m. Luncheon Meeting – speaker to be determined

Thursday, Nov. 9
11:30 a.m. Luncheon Meeting – speaker to be determined

Council meeting information is uploaded to the website as soon as it becomes available. Check the site often for the latest information on Council Meetings & Events at www.NCPGCouncil.org.

Luncheon Meetings, Primer Programs, and Masters Programs are held at The World Trade Club, One Ferry Plaza, San Francisco. Valet parking ($12) is available directly in front of the Club. Amtrak, Ferry Service, BART, and MUNI are within one block.

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