Both Sides Now: The Charity/Advisor Partnership

Both Sides Now: The Charity/Advisor Partnership

Article posted in Ethics on 8 February 2000| comments
audience: Partnership for Philanthropic Planning, National Publication | last updated: 18 May 2011


The Planned Giving Design Center was created on the premise that professional advisors and charitable organizations can better help clients and donors accomplish their philanthropic objectives through collegial working relationships with one another. In this edition of Gift Planner's Digest, former nonprofit CEO and current for-profit financial services executive Craig C. Wruck examines the corporate cultures of the for-profit and non-profit gift planning worlds in "Both Sides Now: The Charity/Advisor Partnership."

by Craig C. Wruck

Two years ago, after some 20 odd years working as a gift planner strictly in the employ of nonprofit organizations, I moved to the for-profit sector. And not just to the fringes of the for-profit sector either, but rather to a large super regional banking company.

Before making the move I was told-indeed warned repeatedly-to carefully consider the differences between the nonprofit and for-profit worlds. In fact one nonprofit colleague (meaning to be sincere I presume) wished me well by saying that my move was, "a terrible loss for the sector." However I had no plans to "leave the sector." In fact, I didn't even leave town!

One of the founding principles of the National Committee on Planned Giving is that good gift planning requires collaboration and cooperation between all of the various professionals involved. In fact, NCPG has grown up as a hybrid organization representing different interests that are sometimes competing, but recognizing that each brings an important element to bear in the creation of charitable gifts that benefit society and are advantageous to the donors and clients.

Nevertheless, there are differences between the roles of the for-profit gift planner and the nonprofit gift planner. The purpose of this article is to explore these differences and see if they are real or if they are just "life's illusions after all." The goal is to arrive at a better understanding of how to work more collaboratively together for the benefit of our clients and donors.

To begin, let's look at the differences from three points of view: First the Model Standards of Practice for Gift Planners, several of which hinge on our differences; next the different purposes of for-profit and nonprofit gift planners and the different ways in which they are compensated and managed; and, finally, a series of questions that might be answered differently by and statements that might have different meanings for a nonprofit gift planner and a for-profit gift planner.

Whether we are for-profit or nonprofit, our primary objective ought to be to see to it that our clients and our donors have the most fulfilling charitable giving experience possible, that their charitable gifts make the most sense for them, for their families, and for the community. In the end, the only way to realize this ideal is for the nonprofit gift planner and the for-profit gift planner to work together in close collaboration with the interests of the donor and client foremost. We must recognize in the practice of charitable gift planning each of us, both for-profit and nonprofit, will be called upon to behave differently than others in our respective professions.

Model Standards of Practice for the Charitable Gift Planner

The Model Standards were first adopted by the National Committee on Planned Giving in 1991. Early in the history of NCPG it was already obvious that a statement of guidelines was needed to help define acceptable behavior for all of those calling themselves "charitable gift planners." During the past year the Model Standards received an extensive review and, with only a few adjustments, they were re-affirmed in 1999.

It should also be noted that the Model Standards differ from NSFRE's "Donor Bill of Rights" and other similar statements that attempt to define norms from the donor's point of view. The Model Standards were written as a code of conduct for all gift planners, be they nonprofit or for-profit.

Since the Model Standards have a direct impact on the charity/advisor partnership, they bear discussion here, particularly the areas in which they may be interpreted differently by the nonprofit gift planner and the for-profit gift planner.

I. Primacy of Philanthropic Motivation
The principal basis for making a charitable gift should be a desire on the part of the donor to support the work of charitable institutions.

II. Explanation of Tax Implications
Congress has provided tax incentives for charitable giving, and the emphasis in this statement on philanthropic motivation in no way minimizes the necessity and appropriateness of a full and accurate explanation by the Gift Planner of those incentives and their implications.

III. Full Disclosure
It is essential to the gift planning process that the role and relationships of all parties involved, including how and by whom each is compensated, be fully disclosed to the donor. A Gift Planner shall not act or purport to act as a representative of any charity without the express knowledge and approval of the charity, and shall not, while employed by the charity, act or purport to act as a representative of the donor, without the express consent of both the charity and the donor.

IV. Compensation
Compensation paid to Gift Planners shall be reasonable and proportionate to the services provided. Payment of finders fees, commissions or other fees by a donee organization to an independent Gift Planner as a condition for the delivery of a gift are never appropriate. Such payments lead to abusive practices and may violate certain state and federal regulations. Likewise, commission-based compensation for Gift Planners who are employed by a charitable institution is never appropriate.

V. Competence and Professionalism
The Gift Planner should strive to achieve and maintain a high degree of competence in his or her chosen area, and shall advise donors only in areas in which he or she is professionally qualified. It is a hallmark of professionalism for Gift Planners that they realize when they have reached the limits of their knowledge and expertise, and as a result, should include other professionals in the process. Such relationships should be characterized by courtesy, tact, and mutual respect.

VI. Consultation with Independent Advisers
A Gift Planner acting on behalf of a charity shall in all cases strongly encourage the donor to discuss the proposed gift with competent independent legal and tax advisers of the donor's choice.

VII. Consultation with Charities
Although Gift Planners frequently and properly counsel donors concerning specific charitable gifts without the prior knowledge or approval of the donee organization, the Gift Planners, in order to insure that the gift will accomplish the donor's objectives, should encourage the donor, early in the gift planning process, to discuss the proposed gift with the charity to whom the gift is to be made. In cases where the donor desires anonymity, the Gift Planners shall endeavor, on behalf of the undisclosed donor, to obtain the charity's input in the gift planning process.

VIII. Description and Representation of Gift
The Gift Planner shall make every effort to assure that the donor receives a full description and an accurate representation of all aspects of any proposed charitable gift plan. The consequences for the charity, the donor and, where applicable, the donor's family, should be apparent, and the assumptions underlying any financial illustrations should be realistic.

IX. Full Compliance
A Gift Planner shall fully comply with and shall encourage other parties in the gift planning process to fully comply with both the letter and spirit of all applicable federal and state laws and regulations.

X. Public Trust
Gift Planners shall, in all dealings with donors, institutions, and other professionals, act with fairness, honesty, integrity, and openness. Except for compensation received for services, the terms of which have been disclosed to the donor, they shall have no vested interest that could result in personal gain.

Purpose, Compensation, And Management

There are clear and obvious differences between the compensation systems and management structures of for-profit and nonprofit organizations. However, in the end these differences may be less important to the donor and client than they are to the gift planner.

  • To secure new and increased gifts for the organization.
  • To build relationships on behalf of the organization.
  • To secure new and increased revenue for the organization.
  • To build relationships on behalf of the organization.
  • Salaried or hourly but never commission based.
  • Independent of specific gift transaction.
  • Salaried, hourly, incentive, commission, or combination.
  • May be tied to specific gift transaction.
  • Gift planners who fail to produce increased or new gifts for the organization are not successful.
  • Time expectations may be more relaxed.
  • Gift planners who fail to produce increased or new revenue for the organization are not successful.
  • Time expectations may be shorter.

Fundamentally, the nonprofit gift planner and the for-profit gift planner share a similar purpose: they are employed by their respective organizations to generate gifts or revenue and to build relationships with donors and clients. In addition, gift planners who fail to produce will not succeed in either the for-profit or the nonprofit sectors. The real differences are in the compensation systems, the greater time urgency the for-profit gift planner feels to conclude the gift, and the drive of the nonprofit gift planner to secure the gift for his or her organization only.

The compensation question has been the fuel for many a long and contentious debate over the years. It may well be that the compensation systems are entirely appropriate for each sector. Since the overall objectives of the nonprofit sector are different than the overall objectives of the for-profit sector, it is reasonable to expect different compensation mechanisms. In all candor, much of the debate over compensation seems to be based upon a misunderstanding of the degree of compensation-a "grass is always greener on the other side" mentality. In fact, nonprofit gift planners do not simply collect fat salaries regardless of their productivity, as some for-profit gift planners suspect. And, conversely, while a for-profit gift planner may be paid a substantial sum upon completion of a specific transaction, nonprofit gift planners often have little understanding of the economics of an incentive-based compensation plan.

For the for-profit gift planner, the potential that compensation may be directly tied to completion of the gift provides significant incentive to move the gift forward or to disqualify low potential prospects. This sense of urgency can also work in favor of the nonprofit to make the gift development process more efficient.

A more subtle difference lies in the desire of the nonprofit gift planner to make certain that the gift is made to his or her organization and in a form that is most advantageous to the organization. For the for-profit planner, the selection of charitable beneficiary may well be immaterial.

The significant issue for gift planners should not be on these differences, but rather on how to ensure that these differences do not lead to undue pressure on the donor or client. The best way to ensure that the interests of the donor or client come first is for the for-profit gift planner and the nonprofit gift planner to work in close collaboration.

Questions And Answers

In the course of charitable gift planning there are a number of common questions that are frequently asked by donors and clients and certain statements and representations are made as a matter of routine. Upon closer reflection, however, some of these questions might be answered differently, and some of the statements might have different meaning depending upon whether the gift planner is for-profit or nonprofit. Following are a few examples, some are obvious, and some are subtler:

Is it true that I can avoid capital gains taxes if I contribute appreciated property to a charitable remainder trust? Yes. There are no capital gains taxes at all when you transfer appreciated property to your charitable remainder trust. Not exactly. Although there is no capital gains tax on the transfer to the trust, your income beneficiary will probably pay capital gains taxes over the years if the trust distributes its gain.
Can you write the trust (or other gift plan document) for me? Is there a charge? We can provide a document for you although we urge you to take it to your own advisor. No, there's no charge. We can arrange for an attorney to draft the appropriate documents for you and the cost will be included in your fees.
I'd like to have three (or maybe more) organizations benefit from my trust. Will you still work with me? Yes, we'll be happy to advise you and provide you with calculations and sample documents, but we need to be a major beneficiary. It doesn't matter to me which charity benefits from your trust so long as you are helping causes that matter to you.
Will you work together with the charitable organization (or with my advisor)? Sure, of course we will work together. Of course we'll work with the charitable organization, but you can remain anonymous if you'd like. In fact, that might be part of the reason you came to me first. Besides, what if you want to change your mind? This way you won't be embarrassed. And don't forget, if we tell the charity they might start pestering you.

Paradoxically, there is more than one right answer to these questions, which reinforces, for the best interests of the donor and client, the importance of close collaboration between the nonprofit and for-profit charitable gift planner. In order that the donor and client make an informed decision, it is critical that he or she has the benefit of multiple points of view.


Charitable gift planning has come a long way since the Tax Reform Act of 1969. Indeed, we may well be on the verge of becoming a profession. If so, it is a curious profession, one that does not value specialists as much as collaboration among colleagues. In fact, our differences may well be the source of our greatest strength.

As we become more professional and more visible, we will attract more public attention, and it is critical that we work to improve our ability to work with one another with mutual respect. A key is to remember one's point of origin, one's reason for being involved in a given relationship. As a nonprofit gift planner, my natural objective is to gather new gifts for my organization. I must do this ethically and honestly, but in fact, a charitable gift to an organization other than mine is not success. And as a for-profit gift planner, my natural objective is to create revenue by gathering assets, or by billing hours.

There is a natural tension between us, but what mediates this tension is our shared interest in the donor. If charitable gift planning is to realize its full potential, then we must pledge ourselves to putting the interests of the donor first. We must agree to collaborate toward making sure that the donor experiences charitable gift planning positively, even if it means that the gift is not made to my organization or that the assets are managed elsewhere. However, if we can really place the donor and his or her experience at the center, we will inevitably generate more charitable gifts for the good of the community and our society.

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