Personalized Philanthropy and the Four Donors - Part 4 of 6

Personalized Philanthropy and the Four Donors - Part 4 of 6

Parables for Radically Rethinking Your Philanthropy
Article posted in Values-Based on 9 September 2014| comments
audience: National Publication, Steven L. Meyers, Ph.D. | last updated: 9 September 2014


In Part 4 of his series, Steve Meyers explains the concept of "umbrella" gift agreements and virtual endowments and demonstrates the applicability to various age groups.

by Steven L. Meyers, Ph.D.

Key Points:

  • How can an umbrella advance philanthropy-your-way?
  • How might you begin to mesh your compelling interests with your institutions compelling needs?

Give the Spending Rate or Give the Endowment, or Both. Then repeat.
The Simple Truth.
(Virtual Endowment)

Simple Straightforward, uncomplicated, sincere, trusting, direct

Uncomplicated, yes – Simple, never! Sylvia built her classic virtual endowment on the certain knowledge that she was going to make a significant bequest through her estate. I suspect she always knew this was her way, yet she was anything but a simple donor - she always was curious.

Many donors will “put a toe in the water” choosing early and simple gifts, but become curious about how to do more. Sylvia Initially was providing the “maintenance” spending rate, an annual gift that provided scholarship support for a single student. In her will, she had a commitment for the minimum amount that would ultimately be needed to endow that scholarship upon her demise.

Sylvia was so satisfied with this approach and pattern of giving over the years that she duplicated it several times, such that her annual gifts have been covering the maintenance of several students. She also added and increased her bequest as well, to create full endowments for each of “her students,” in effect creating a “scholars” program of her own through combining both her lifetime and estate gifts. Thus, a seemingly "simple" bequest combined with a pattern of modest annual gifts was able to establish a gift of great moment and impact.

What was the arrangement that enabled this program to come about initially, and to be scaled up so significantly? It was the classic personalized gift arrangement called the Virtual Endowment.

The Importance of Umbrella Gifts – Each of the three “killer apps” of personalized philanthropy is an “umbrella” gift agreement. Each is comprised of separate gift commitments, where the elements have a separate function, but all serve a common purpose.  For illustration here, the common purpose is to establish a scholarship whose impact is recognized and begins immediately. The aim is for impact and recognition to begin now and grow over time. Below is a useful chart to summarize the elements and how they may be used flexibly and creatively to achieve the goal.

Sample Personalized Gift Designs Matched to Donors’ Life Stage, Needs and Goals

Donor age

Personalized gift design


of gift



“Classic” Virtual endowment

Annual gift for life; expendable; maintains program. Bequest for endowment secures the program for the future

Two Irrevocable pledges toward one program goal

Program starts up right away; recognized; counted in campaign


Testamentary pledge

Bequest commitment.

Donor pledges portion of larger total gift they have in mind and are comfortable

Irrevocable pledge. Not payable until death of donor; may be paid early

Program cannot start up until donor’s passing, but irrevocable gifts can be recognized immediately


Equity-building philanthropic mortgage

Annual gifts which are greater than the spending rate; excess of annual need goes to build endowment. May include a down payment or a balloon payment at end of term

Irrevocable pledge for a term of years; builds equity while program operates from start-up.

Program impact and recognition start now. Allows younger donor to benefit from modest spending rate gifts while they build legacy endowment over time.


Limited virtual endowment.

Annual gift expendable for a certain number of years

Irrevocable pledge

Younger or older donor. Spending rate gifts “as if” endowed.


Hybrid bequest plus annual gifts

Testamentary pledge for bequest; revocable annual gifts. Irrevocable bequest pledge

Revocable annual gifts

Program begins and operates as long as annual gifts; assured by bequest


Hybrid annual gifts plus bequest

Donor pledges annual gifts for number of years. Revocable intent for bequest. Irrevocable pledge of annual gifts.

Revocable bequest intent

Program assured for a number of years; possible bequest

Variations on a theme. There are many variations on this theme of creating multiple scholarships. Robert took a similar approach to creating a program with multiple scholars, through his foundation. Rather than matching a bequest to each annual scholarship, as Sylvia did, he decided to create fully funded scholarships with each gift to create a much larger “scholars” program. How did this come about? His uncle had funded a single scholarship in memory of his father many years ago, and over the years some very impressive students had come through that program and become professors in their own right. Robert ultimately determined to make a long-term commitment from his foundation, such that each year’s pledge payment would establish its own fully funded new scholarship in the name of his family.

Previous Articles:

1)  Why Isn’t All Philanthropy Personalized Philanthropy?

2)  Bringing Change to the World Through Personalized Philanthropy

3) The Grail of Fundraising – Personalized Philanthropy for the Four Donors Within You

Upcoming Articles:

5) The Cross-Fertilization of Finance and Philanthropy

  • The one who does not know how to ask

6) Lessons Learned: Three Pillars of Personalized Philanthropy

  • Thought questions

Resources and Fruitful Speculation

  • The Passover Haggadah and Philanthropy, by Rabbi Steven Steinberg

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