Charitable Gift Planning in America

A Brief History by Ronald A. Brown

Charitable Gift Planning in Early America

When did American gift planning begin?

Written records are basic materials for historians.  Unfortunately, no records of charitable giving by Native American populations before European settlement have survived. 

America’s earliest immigrants brought with them a long tradition of providing a bequest to charity: four Mayflower Pilgrims made gifts to their churches through their written wills in the 1600s. Grateful trustees renamed their new college in honor of John Harvard’s bequest in 1638. From 1636-1712, Harvard College received three times as much money from bequests as from lifetime gifts.

Top American leaders gave personal examples of charitable bequests. Benjamin Franklin made generous testamentary gifts through charitable trusts to support young tradesmen in Boston and Philadelphia. George Washington never attended college, but wrote a will in which he made bequests to several colleges and trade schools. James Madison made a bequest to the Princeton University Library which was the largest to that library until after the Civil War.   

In settings very different from their many countries of origin, donors in the thirteen British-run colonies in America found innovative ways to make gifts using charitable trusts, financial contracts, real estate, crops, livestock, books, artworks, and other tangible property.

American ingenuity in charitable gift planning was already a long tradition when John Trumbull gave his best paintings of the American Revolution to Yale in exchange for a life annuity in 1831. His annuity payments were financed by selling tickets for admission to the Trumbull Gallery. 

Philanthropy was baked into the nation’s character from the start.  Freedom to worship as they chose, including freedom from persecution by an official state church, attracted many immigrants to America. Drafters of the Constitution assumed that people would form private churches and synagogues, schools and colleges, craft guilds, libraries, and other voluntary associations independent from the federal government.

In 1788, the Constitution of the United States became the legal foundation for charitable gift planning through three co-equal branches of government: laws affecting charitable giving are enacted by Congress; tax regulations and rulings are issued by the Treasury Department and its Internal Revenue Service (IRS); and judicial review is provided by a federal court system, including the Supreme Court.


Charitable Gift Planning in the 20th Century

For 300 years after the colonies at Jamestown and Plymouth began, charitable gift planning was not driven by tax considerations. Our modern federal income tax system was enacted in 1913; the estate tax in 1916; and a tax deduction for gifts to qualified charities was introduced in 1917.

A wave of life income gifts in America began in 1919, when the American Bible Society ran a gift annuity campaign based on mass advertising in national religious publications, issuing 4,615 annuity contracts in 11 years.  Hundreds of churches, colleges, and social welfare organizations started gift annuity programs in the 1920s.

Beginning in 1921, Alfred Williams Anthony championed collaboration among nonprofit organizations and professional advisors to support gift planning programs. His Committee on Financial and Fiduciary Matters organized a gift planning conference for financial institutions in March of 1927 which called for emergency action to reduce the risks taken by nonprofit organizations in their gift annuity programs.  

As a result, a conference on gift annuities for nonprofits was held on April 29, 1927George Augustus Huggins, a prominent actuary, introduced practices that have become fundamental in charitable gift planning: statistical measurement of average beneficiary longevity; calculating payment rates by targeting a charitable residuum; and valuing charitable and beneficiary interests using financial projections grounded in investment experience. This actuarial revolution in gift planning requires nonprofits to hire and train specialists to understand, promote, and manage complex programs.

Cornell University’s influential bequest program, based on the engagement of nearly 1,000 attorneys and estate planners, began in 1924. Stanford University first published its R-Plan binder of gift planning resources in 1937. Pomona College launched the first of its “Pomona College Gift Plans” in 1944.

By 1968, a full toolbox was available for gift planners: bequests, life income trusts, pooled income funds, lead trusts, gift annuities, gifts of complex assets and life insurance, retained life estates, private and public community foundations, donor-advised funds, and supporting organizations.

In the 1960s charitable gift planning was encouraged by the National Council of Churches, the Association of American Colleges, the Committee on Gift Annuities (now the American Council on Gift Annuities, ACGA), tax attorneys and consultants specializing in gift planning, banks, life insurance and trust companies, alumni associated with many college bequest and trust programs, and a growing number of reference publications


Tax Reform Acts in 1969 and 1986 Shaped Gift Planning

The Tax Reform Act of 1969 is America’s first comprehensive national policy on charitable gift planning. To counter abuses, and to protect the charitable remainder interest for which life income gifts qualified for favorable tax treatment, these gifts were limited to four standardized arrangements: charitable remainder unitrusts, charitable remainder annuity trusts, pooled income funds, and charitable gift annuities. Charitable lead trusts also were limited to annuity and unitrust arrangements.

Charitable remainder trusts and private foundations became subject to rules against self-dealing, prohibiting certain interactions with disqualified persons, retaining excess business holdings, and participating in jeopardy (high-risk) investments. These reforms continue to protect the public interest today as private foundations, trusts, and donor-advised funds receive mega-gifts and bequests worth billions of dollars.

In the 1970s a pressing need for more and better professional training and support led to the founding of local and regional planned giving councils. National Round Tables on Deferred Giving sponsored by the Northwest Area Foundation in 1982 and 1984 underscored the opportunities for increasing gifts through bequests, trusts, annuities, and complex assets; the need for raising standards for professional education; and encouraging ethical behavior.   

The Tax Reform Act of 1986 enacted fundamental changes that had a powerful, unintended impact on charitable giving. The Act eliminated popular tax preference items (“loopholes”), leaving charitable remainder trusts (CRTs) as one of the few opportunities for successful investors to avoid paying high capital gains taxes on the sale of appreciated stock. Many for-profit investment advisors, life insurance agents, and attorneys added CRTs to their practice in the 1980s.

A few misguided planners lost sight of charitable intent by promoting CRTs as “the last great tax shelter.”  Nonprofits that could not afford to hire gift planning specialists felt disadvantaged, and vulnerable to disreputable salesmen who offered a remainder interest in CRTs in exchange for the payment of “finders fees.”  It became increasingly clear that gift planners needed to spell out ethical guidelines for professional conduct in this and other areas.


Founding and Early Years of the National Association of Charitable Gift Planners

Charles Johnson of the Lilly Endowment, Michael Boland of Harvard Business School, and Dick Wilson of the National Society of Fundraising Executives (NSFRE) became the leading advocates for a national organization with a decentralized structure: a federation of local and regional gift planning councils called the National Committee on Planned Giving (NCPG), now known as National Association of Charitable Gift Planners (NACGP).  From 1985 through 1987, the founders of NCPG convened gift planners from across the country to develop organizational plans.

NCPG was founded in 1988, dedicated to improving the performance of people whose work is critical for American philanthropy. Two immediate goals for the  new national association were to provide more and better professional training, and to adopt new standards for professional ethics, so that well-qualified gift planners would find appropriate and effective ways for people to support the charitable causes close to their hearts.

NCPG Board members and volunteers accomplished quite a lot in its early years, with support from a part-time staff. Here are a few highlights, ending around the year 2000 in order to keep this brief history to a manageable length.

In 1987, leaders of NCPG identified 14 planned giving councils with 1,100 members. By 1991 there were 47 councils affiliated with NCPG, with 4,100 members; one year later there were 58 councils with 4,600 members.  (In July 2019 there are roughly 8,000 members of local gift planning councils, and 3,000 planners affiliated with NACGP.)  Professional networking was facilitated by publication of the NCPG Directory of Council Members (1989).   The NCPG Gift Planner Profile (1992) was based on a survey of 600 practitioners, providing data on compensation, experience, gender, and other career aspects.

NCPG has held major conferences every year since its founding. Many leaders in the broad field of gift planning met one another at the first public conferences in Indianapolis in 1988 and 1989.

For years, gift planners debated whether and how to create a national program for professional training and certification. At the 1989 conference there was a strongly negative reaction against an ambitious proposal to fund NCPG through providing  courses leading to professional marks. As an alternative, NCPG published a study guide titled Syllabus for Gift Planners (1992), “a detailed outline of professional knowledge and skills” in five major areas: philosophy and practice, donor relations, understanding and designing charitable gifts, management, and financial and estate planning.

The NCPG Bibliography and Resource Guide (1989) highlighted current planned giving books, periodicals, audiovisual works, software, and other professional associations. An NCPG Speakers Bureau Directory (1991) provided councils with a useful roster of qualified presenters.

Ethical controversies over finders fees, commission-based fund raising, and the primacy of charitable motivation led members of the CANARAS gift planning council to issue the CANARAS Convention (1989) and CANARAS Code (1990). NCPG President Frank Minton led a drafting process resulting in the Model Standards of Practice for the Charitable Gift Planner (1991), which were based on these earlier codes.  The Model Standards were approved by a new Assembly of Delegates representing planned giving councils affiliated with NCPG.

Survey reports on pooled income funds (1990) and charitable remainder trusts (1992) provided timely data on those gifts.  NCPG conducted its first donor survey of 150,000 households in 1992, gathering data on the use of bequests, life income gifts, and noncash gifts. The NCPG report on Planned Giving in the United States 2000: A Survey of Donors (2000) focused on the use of three types of gifts: bequests, gift annuities, and charitable remainder trusts.

Much more could be written about the NCPG newsletters, Journal of Gift Planning, government relations, research, advocacy, policy guidelines, work with allied professionals, the Leave a Legacy© program, and many other important activities in subsequent years.

Copyright © 2020 by Ronald A. Brown.  All rights reserved.  Used by permission.

Our History

Coming together
During the late 1970s and early 1980s, groups of professionals involved in gift planning began to have think tank meetings to discuss the feasibility of a national organization to act as a coordinator and facilitator for networking the various professionals and organizations involved in planned giving.

A meeting to study the needs and possibilities of a national organization for planned giving was held on October 29-30, 1985, in Chicago. Those in attendance agreed that there was a need for a significant number of services for planned giving officers that might be provided by some type of national organization. Its mission would be twofold: to provide quality educational opportunities for gift planning professionals and to unite the growing number of local planned giving groups already forming in larger metropolitan areas.

Getting started
In late January of 1988, the National Committee on Planned Giving opened its office in Indianapolis, Indiana. NCPG was formed as a 501(c)(3) public charity whose mission was to facilitate, coordinate, and encourage the education and training of the planned giving community, and to facilitate effective communication among the many different professionals in this community. The organization functioned for the first 10 years as a federation of planned giving councils, and then added a membership category for individuals in 2001.

A new direction
In 2006, NCPG formed the Strategic Directions Task Force, charged with assessing the state of planned giving and how NCPG might best help charities, fundraising and financial professionals, and donors make more and better charitable gifts. The work of the task force resulted in a new mission, strategic plan, and brand for the organization. The rebranding included a name change to the Partnership for Philanthropic Planning and a new mission: Charitable giving made most meaningful.

2016 and beyond
A changing landscape
The economic downturn that began in 2007 proved to be a turning point for charitable planning. During this period, we championed the importance of a planned gift pipeline to sustain organizations through tough times, and "blended giving" strategies that combine current and future gifts. As the economy improved, we also looked forward to meeting members' needs for developing new skills and reaching a broader community.

In October 2016, to keep pace with the changes in our field, and in response to member feedback, the organization became the National Association for Charitable Gift Planners and unveiled a new platform. Community, education, advocacy, standards and support of councils are at the center of the platform, which gives members easier access to resources, new opportunities for online learning and greater connectivity with each other.

As it has been in the past, CGP remains dedicated to its essential core value: To support the professionals who practice the art and science of charitable gift planning.