PLANNED GIVING

1. General Statement
   These guidelines are designed to guide the planned giving program of the Eastern Oregon University Foundation (referred to in this document as the Foundation), and to help representatives of the Foundation, donors and their advisors to become aware of how the Foundation handles various types of planned gifts. Planned gifts include those gifts, the completion of which require the assistance of a professional staff person or the donor's advisors. A planned gift requires careful consideration by the donor in light of estate and financial plans.

2. Cultivation and Solicitation of Gifts

   Priority of the Donor's Interest

   In soliciting, planning and administering charitable gifts, the donor's interests shall come before those of the Foundation. No charitable gift plan shall be urged upon any donor which would benefit the Foundation at the donor's expense. No agreement shall be made between the Foundation and any agency, person, company or organization on any matter which would knowingly jeopardize the donor's interest.

   Promotion of Planned Giving

   Planned gifts are becoming more widely used in the community. The Foundation encourages its representatives, members of the community, professional advisors and volunteers to discuss planned giving with potential donors. The Foundation seeks to provide general information that will assist potential donors considering a planned gift.

   Authorized Representative of the Eastern Oregon University Foundation

   Only the authorized representatives shall negotiate agreements on behalf of the Foundation. Authorized representatives are those members of the Foundation Board or staff empowered by a resolution adopted by the Foundation Board.

   Pressure Technique

   Foundation representatives will exercise extreme caution to avoid pressure techniques or undue persuasion when dealing with potential donors. The representative's role is to inform, advise and assist with the donor's estate and financial planning concerns in achieving the donor's charitable objectives. The Foundation desires that all its representatives (including staff and volunteers) exemplify the highest standards of personal and professional conduct. They shall not grant or accept favors for personal gain, or solicit or accept favors in violation of a public interest.

   Provision of Materials to Prospective Donors

   Foundation representatives may from time to time provide written materials to prospective donors to describe the effectiveness, from a tax planning and financial standpoint, of planned giving techniques. These materials may include spreadsheets and other illustrations demonstrating the financial impact of a given technique. The Foundation must avoid even the appearance of providing tax planning, financial or any other type of advice to potential donors. Therefore, any written materials describing the effectiveness of a given technique to a potential donor should include some form of disclaimer regarding the actual results the donor may achieve.

   Adherence to Laws

   Foundation representatives will not accept any gift which violates Internal Revenue Code requirements or any other Federal or State laws.

   Tax Exempt Status

   The Foundation shall not accept any gift or enter into any agreement that would improperly inure to the benefit of any individual or would jeopardize the Foundation's tax exempt status.

   Confidentiality

   All donor information will be kept strictly confidential by the Foundation and its representatives unless the donors grant permission to release such information.

   Legal Counsel and Other Advisors

   Prospective donors shall be advised to consult their attorney in all matters related to deferred gift instruments such as wills, trusts, agreements, contracts, etc. If the donor requests a referral to any attorney or other advisors, the attorney or advisors shall be retained to represent the donor-client's interests, not those of the Foundation.

   Tax Advice

   Prospective donors will be encouraged to seek independent tax counsel regarding the completion of planned gifts. Although the Foundation representative may not give tax advice, it is highly desirable that donors be informed of potential consequences relating to their gifts. For example, donors should be given information regarding the appraisal requirements for certain non-cash contributions exceeding $5000 on IRS Form 8283, and the notification requirement to the IRS if the donated item is sold, exchanged or otherwise disposed of within two years of receipt (on IRS Form 8282).

   Forms and Agreements

   The Foundation may provide suggested language for wills, trusts or other gift documents to a donor, his/her counsel or professional representatives for review or use by donor's counsel. Donor's legal counsel shall review or prepare appropriate formal and legal documents.

   Administration and Gift Procurement Costs

   In all cases, Internal Revenue Code requirements and any other applicable Federal or State laws shall govern how costs are allocated. Gift related costs, such as those associated with buying or selling real estate, will normally be charged against the balance transferred to the Foundation. Where appropriate, the operating budget will cover such costs. The Foundation may assume costs incurred in the administration of trusts and other deferred giving instruments, or the Foundation may charge such costs against those agreements if it becomes unreasonable for the Foundation to bear them. The policy of the Foundation will be reflected in a specific trust agreement and addressed with the donor prior to establishing the agreement. Ongoing management costs associated with property or trust assets will be borne by the property or trust involved. Legal fees and expenses associated with a trust will be borne by that trust.

   In accord with IRS mandates, the Foundation will not fund the initial property appraisal used to establish the value of donated property for the donor's report to the IRS. The Foundation will fund those appraisals appropriate for its own purposes. The cost of any appraisal necessary for trust purposes to establish the fair market value of trust assets will be borne by that trust.

   Finders Fees and Commission

   The Foundation does not pay a "finder's fee", a commission or other compensation for procuring planned gifts, and does not pay its employees involved in soliciting planned gifts a fee based on the amount of funds raised. The Foundation may reimburse for the preparation of documents, appraisals and other fees directly related to professional services performed in the context of creating a gift, as long as such reimbursement is not indirect compensation for the sales or a "finding" effort. The Foundation will pay normal and customary fees and commission for the sale, transfer, or management of property in which the Foundation acquires and interest.

   Gift Planning Relationships

   Whenever the Foundation contracts for tax, legal, estate planning or investment advice regarding gift planning proposals, document preparation, appraisals, or the actual completion of gift agreements with Foundation donors, such contracts will be fully disclosed, and the Foundation will pay appropriate fees for professional services. Since the Foundation is the client, it will make all decisions regarding professional assistance and third party interest in the various proposals and gift planning agreements.

   Gifts Brought by Financial and Legal Advisors

   Existing client relationships held by an advisor who introduces a donor or brings a gift to the Foundation will by honored by the Foundation to the extent possible. Those directly involved with such gifts will maintain confidentiality and will protect other client-professional concerns if information is shared with the Foundation.

   Sale of Contributed Assets

   The Foundation must avoid even the appearance of a conflict of interest in the sale or disposition of assets. Any sale to an employee or party affiliated with the Foundation must be disclosed fully, approved by the Foundation Executive Committee, and have a sale price not less than the fair market value as determined by accepted appraisal methods appropriate for the asset. Assets being considered for such sale must have been offered for sale first to the general public.

GUIDELINES FOR PLANNED GIVING VEHICLES

Bequest

Estate plan distributions have contributed significantly to the Foundation. Encouraging bequests is one of the Foundation's highest priorities. Development staff will work with attorneys, donors and their representatives in preparing documents to ensure that assets or funds intended to be transferred to the Foundation are appropriate and properly directed to benefit the intended program. Staff will make available sample bequest language for restricted and unrestricted gifts, including endowments. The Foundation would prefer to obtain a copy of the bequest designation to ensure that the devise is properly describe and directed, but the provision of such documentation is solely at the donors discretion.

Distributions received by the Foundation through a person's estate plan may involve a devise by will (commonly called a bequest) or a distribution from a trust. In many cases, the Foundation is not aware of a bequest or trust distribution until notice is received from the personal representative or trustee. The Development Office will monitor the procedures associated with estate plan distributions and assist personal representatives, trustees or legal counsel where appropriate. During the probate of estates containing a devise to the Foundation and during the post-death administration of revocable trusts containing dispositive provisions benefiting the Foundation, the Development Office, in consultation with legal counsel, shall represent the Foundation in all dealings with the attorney and personal representatives of the estate.

Under no circumstances will the Foundation act as a personal representative of any decedent's estate.

In some cases, the Foundation should disclaim a bequest. Concerns of liquidity, marketability, holding costs, environmental contamination and livability may be valid reasons for disclaiming, in a timely manner, a bequest. If the bequest involves securities, real estate or personal property, the Foundation will follow the appropriate policies for those items.

If the Foundation is named as trustee of a testamentary trust, the Foundation must examine the assets and its ability to economically manage them. If the Foundation decides it is unable to manage the assets or perform its duty as trustee, the Foundation will work with the appropriate representatives to reach a solution satisfactory to all parties. In no case will the Foundation accept appointment as such a trustee without prior approval of the Board of Directors.

Revocable Trust

Revocable trusts may be established for various reasons. A trustor usually will establish a revocable trust, retaining the ability to gain access to those funds in the future when emergencies or extraordinary costs are encountered. Since the property may be returned if needed later, there are no current income tax advantages to a revocable trust plan. At the trustor's death, title passes under the terms or the trust agreement.

Under no circumstances will the Foundation serve as trustee for a trust that may be amended or revoked during the trustor's lifetime.

Charitable Remainder Trusts

Charitable Remainder Trusts are irrevocable, separately administered trust established by the donor. Trust payments are provided to the named beneficiary(ies) for life or a term of years (not exceeding twenty), after which the remaining assets are distributed to one or more charities. A charitable remainder annuity trust pays a fixed amount each year. This distributed amount cannot exceed an amount that would likely exhaust the trust assets during the anticipated term of the trust. The amount payable from an annuity trust does not change. A charitable remainder unitrust pays a fixed percentage (at least 5%) of the fair market value of trust assets as valued annually. Because the value of assets can be expected to change from year to year, the unitrust payment will vary in amount each year. Additional contributions may be made to the trust after it is established.

Three variations of the unitrust are possible. A standard unitrust pays the fixed percentage, even if it is necessary to invade principal to do so. A net income with make-up provision unitrust is similar to the net income unitrust except that excess earnings can be applied to cover accrued deficiencies resulting from the income being less than the fixed percentage in any given year.

Cash and marketable securities are excellent funding sources for charitable remainder trusts. Appreciated real estate is often placed into a charitable remainder trust. A trust could also be funded with a certificate of indebtedness, life insurance, personal residence (the donor must move) or tangible personal property. Trusts funded with real estate, collateralized mortgage obligations (CMO), closely held stock, subchapter S stock, and other illiquid or difficult to value assets present special challenges. In particular, contributing mortgaged property to a charitable remainder trust can cause the trust to lose its tax-exempt status.

The trustee of a charitable remainder trust should be a bank, trust company or an individual chosen by the donor. The Foundation ordinarily will not serve as trustee of charitable remainder trusts in which it is an irrevocable remainder beneficiary. This is true even when it is a major beneficiary of the trust, but not the sole beneficiary. In order for the Foundation to consider acting as trustee, it must be the major or significant beneficiary--59% or more. Any approval of the Foundation acting in this capacity must be given by the Executive Committee after careful review of the instrument and after securing professional advice.

Charitable Lead Trust

In many ways, the lead trust is the opposite of the charitable remainder trust. A charitable lead trust pays out a percentage amount to the Foundation for the life or lives of persons living when the trust is created or for a specified term of years. At the end of the term, the trust assets revert to the donor, the donor's estate, or specific beneficiaries named in the trust document. The amount paid to the Foundation during the trust term may be either a fixed sum (an "annuity trust" interest) or a percentage of the trust assets as valued each year (a "unitrust" interest). Unlike the charitable remainder trust, there is no 5% minimum payout rate with the lead trust. Again, the Foundation will not ordinarily act as trustee of a charitable lead trust. Any approval of the Foundation acting in this capacity must be given by the Executive Committee after careful review of the instrument and after securing professional advice.

Charitable Gift Annuities

The Eastern Oregon University Foundation does not currently issue charitable gift annuities. It will, at some time in the future, investigate the feasibility of doing so.

Pooled Income Fund

The Eastern Oregon University Foundation does not currently have a pooled income fund arrangement.

Life Insurance Gifts

Gifts of insurance policies can enable a donor to provide ultimately a much larger gift than one of cash. Life insurance comes in many types: term, whole life, interest sensitive life, universal life, variable life, etc. While most life insurance gifts are desirable and easily administered, the Foundation must carefully review those policies that require co-payments from the Foundation, have substantial indebtedness or have assignments of interest or beneficiaries other than the Foundation. Policies close to self-funding require little administration, contain a cash value and provide a guarantee of ultimate value of the gift. Donor premium payment plans should be monitored as to the options available if the donor is unable or unwilling to continue premium payments. Term insurance provides few options if the donor is unable to continue paying the premiums. Life insurance also may be used to benefit heirs when assets are contributed to the Foundation through an irrevocable life insurance trust.

Life insurance can benefit the Eastern Oregon University Foundation in three primary ways:

1. Transfer of an existing policy to the Foundation as owner/beneficiary, in whole or part (because this is simply an investment by the Foundation, like any other, serious attention should be given to the advisability of this arrangement.)

2. Purchase of a new policy with the Foundation as applicant, owner and irrevocable beneficiary (again, this is simply an investment by the Foundation and serious attention should be given to the advisability of this arrangement). Under this scenario the donor gives cash to the Foundation, which in turn makes the premium payments to the insurance company. The donor pledges to make regular gifts to cover the premium payments.

3. Retention of a policy by the donor designating the Foundation as a beneficiary or contingent beneficiary of the policy. In this case, the donor retains ownership of the policy, so there is no immediate tax deduction available for the donor. The Foundation encourages beneficiary designations of insurance policies and is very grateful for such thoughtful donors.

Some insurance techniques involve co-payments, outright purchases of insurance or partial assignment of life policies. These and other sophisticated uses of life insurance will be carefully reviewed on an individual basis.

Under no circumstances will the Foundation engage in charitable split-dollar arrangements.

Life Estate Agreements (Gift of the Remainder Interest in a Residence or Farm

A life estate agreement involves a transfer of an interest in a personal residence, vacation home or farm by deed to the Foundation during a donor's lifetime, generating an immediate income tax deduction. The donor uses the property for life; upon the donor's death, the Foundation receives any income that the property produces and, unless specific terms are agreed upon before making the agreement, the donor remains responsible for the upkeep and maintenance costs, property taxes, and insurance associated with the property.

Since a life estate agreement involves a gift of real property, the real estate guidelines must be followed. Each life estate agreement is unique, and there may be times when it is appropriate for the Foundation to assume costs in light of the overall benefit of the property. The Foundation may also consider assuming these costs if necessary to protect its interest in the property. At a later time, the donor may wish to move from the property or terminate the life estate. At the time, the Foundation may consider purchasing the remainder interest.

The following guidelines govern life estate agreements established by the Foundation:

1. The Foundation will accept such gifts if they produce a positive gift value.

2. Such gifts must be conditioned on the donor remaining obligated for the property's maintenance costs, repairs, property taxes, mortgage payments and insurance, unless alternative arrangements are approved by the Foundation's Executive Committee.

3. Properties being considered for inclusion in a life estate agreement are governed by the Foundation's guidelines for accepting real estate.

[Responsible for Accuracy: Mindi McAllaster, Development Director - Last Verified: 7/19/00]