Five for Five at Five

17 Oct Five for Five at Five

Posted at 05:03h in Donor Cultivation, Planned Giving by

 

By David Allen, Development for Conservation

 
“Mary” was 92 years old when I met her. She was giving the land trust $25,000 each year and was the largest donor by far. And she knew it.

She was naturally worried about what would happen to the land trust when she passed away.

So I suggested that she endow her annual gift.

“Five for five at five,” I told her.

“Give five times your annual gift – $125,000 – each year for five years. The land trust will pull the first $25,000 each year as a continuation of your annual gift. And they’ll invest the rest. After five years, they will have a $500,000 endowment fund – just the right amount to endow your annual $25,000 gift assuming a five percent return.”

Mary loved the idea. She even updated her will such that if she should pass away before the five-year pledge was completed, her estate would honor the pledge.

The strategy we created for Mary is scalable. You can use it to endow anyone’s annual gift.

Five times their annual gift for five years invested at five percent endows any size annual gift.

  • Annual gift = $1,000? $5,000 invested for five years invested at five percent secures the $1,000 annual gift forever.
  • Annual gift = $250? $1,250 invested for five years invested at five percent secures the $250 annual gift forever.

Five for five at five.

Got a great endowment idea? Share it here.

 

Cheers,

 

-da

 

Photo by Felipe Lopez Ruiz courtesy of Stocksnap.io.

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2 Comments
  • James Smillie
    Posted at 05:07h, 19 October

    A great idea but what type(s) of safe investment can give you a guaranteed 5% return per annum as donors’ funds need to be protected?

    • David Allen
      Posted at 07:40h, 20 October

      That’s the rub, isn’t it? Anything you say, of course, would need to be softened in writing so that you don’t kill yourself making up for down markets. In the end, we all need to let the marketing be the marketing and the fiscal reality be the fiscal reality. And donors understand that.

      How about “Six for Five at Four?”

      Thanks for the comment!

      -da