By: Dan Perla
Allow me to tell you a great fundraising story.
A donor to the Federation of Greater Washington was interested in giving Federation a legacy gift using universal life insurance. He agreed to a $1 million policy on his and his wife’s life (called “second to die” policies), of which he would agree to fund an annual premium of $35,000 for three years subject to a match from the Federation itself. In other words, the donor contributed $17,500 per year toward the premiums, and the Federation contributed $17,500 per year toward the premiums. The donor’s share of the premiums amounted to $52,500 and was at least partially tax deductible. But what is really great about this story is that he and his wife are now considered million-dollar donors to the Federation of Greater Washington.
This example illustrates the dual power of creativity and matching grant programs, of which AVI CHAI has long been a proponent. Most recently, AVI CHAI announced its fourth MATCH program in partnership with the Kohelet Foundation, designed to induce new or increased gifts to day schools (www.dayschoolmatch.org).
Most matching grants programs are for cash gifts, but the benefits of matching grants can extend beyond. Matching grant programs can be used to induce six- and seven-figure legacy gifts, most notably gifts of whole life or universal life insurance. Let’s imagine that a local Federation, day school or synagogue wishes to solicit a life insurance bequest from a donor. One way to induce the donor to make such a gift is to offer to match the donor’s annual premium payments on such a policy, as was the case in the above story. Many Federations, day schools or synagogues have existing endowment funds or savings accounts and are in a good position to do this. After all, those monies need to be invested in a conservative fashion anyway. What better product to invest those monies in than a life insurance policy? Whole life or universal policies typically have long term expected rates of return in excess of 5% and are triple A-rated. The local Federation, day school or synagogue may therefore be in a good position to co-fund, or “match”, the insurance premiums which the donor is making.
The Federation of Greater Washington effectively used $52,500 of its own endowment money to raise a $1 million life insurance gift. At the same time, it was able to invest its own money in a triple A-rated policy with an expected return of at least 5% annually. As they say on Wall Street, a million dollars here and a million dollars there and before you know it, it’s real money!
Dan Perla is AVI CHAI’s program officer for day school finance.
AVI CHAI concluded its general grant making on December 31, 2019.
The Power of Match: Using Endowment Dollars to Induce Legacy Gifts
Posted by: dperla
October 11, 2012
By: Dan Perla