http://www.foxbusiness.com/personal-finance/2015/02/19/how-elderly-heiress-lost-her-300-million-fortune/

I read this story about Huguette Clark, the copper heiress and philanthropist, last month on Fox Business and it really struck a chord with me. There are a variety of “issues” in the piece, but the Huguette Clark Gowerpart that I want to discuss today are the concepts of communication and donor intent. As small nonprofit organizations, it is critical that we not only communicate to ascertain donor intent, but that we do everything we can to honor it.

You can read the whole article by following the attached link, but in summary, a very wealthy heiress died without leaving a suitable plan for her assets to be distributed according to her wishes. She received some bad advice and her estate was tied up in courts so that the attorneys were the real historiccourtwinners. Ms. Clark wanted to leave money to some of her favorite charities but the legal challenges and resultant costs have made that unlikely to happen.

Many people in life aim to do something great, but things get in the way. In the end, despite our best efforts, we are sometimes unable to accomplish our goals. Sometimes the things that challenge us are completely outside of our control. Other times, we simply took a wrong turn that got us off track and we were not able to recover.

Ms. Clark was worth over $300M. She had enough money to accomplish her philanthropic goals but other forces got in the way. This situation was entirely preventable, and that makes this situation all the more unfortunate.

As leaders in small organizations, it is critical that we communicate with our donors. This article does not tell us if the charities that Ms. Clark wanted to support knew that they were in her will. The fact is, most of the time organizations do not know. But when we do know, it is important that we do what we can to have conversations that help donors to put appropriate measures into place so that their wishes will be carried out. Sometimes these conversations can head off problems when a donor wants an outcome that is not consistent with the organization’s mission. In some instances, such discussions can avoid violations of the law.

There was a situation where a donor wanted to make a difference in the community while also helping to support his family. He advised the local community foundation that he had “remembered them in his will.” The CEO of the foundation reached out and set up a lunch appointment, during which he asked about the estate gift. He came to learn that the donor had placed in his will that he wanted a fund set up that would be used to help the needy in the community until such time as his grand children were college-aged, at which point the fund would pay for their tuition. Unfortunately such a fund would violate Federal law, and so the CEO worked with the donor to restructure the gift to accomplish the different objectives that the donor had. If no one from the charity ever spoke to the donor before he died, there is a chance that this problem would not have been corrected and it could cause a potential problem in the future.

In another scenario, a donor left a sizable estate gift to a local charity, and they thanked her for it. The inexperienced development officer failed to ask the right questions of the donor regarding the gift. Unfortunately, the donor wrote the name of the charity incorrectly in her will. Another organization with a similar name made claim to the funds. A court battle ensued and a judge was made to interpret the wishes of the donor and she passed away and the estate was being settled. The fact is that this could have been solved by including the Tax ID of the intended charity as a part of the will.

It is a good idea to always communicate with donors to ensure that you understand their intent when they are making a gift. This is especially critical in the area of gift planning, as the gifts often arrive after it is too late to discuss matters with the donor. As the saying goes, ‘an ounce of prevention is worth a pound of cure.’

Have a great day,

KLM

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