Charitable organizations often rely on a relatively small group of generous donors to finance their endeavors.  Often these donors are interested in creative donation programs that can enhance their gifting and potentially create a legacy to the charity that would be memorialized at the institution.  From the charity’s perspective, the eventual loss of some of their most generous long time donors through death could well erode the growth of the charity over time.  In addition, any program that would create and legitimize the systematic pattern of giving to the charity would enhance overall contributions.

The Charitable Legacy Program offers a unique combination of life insurance with premium financing to create an opportunity for a charity to dramatically enhance charitable contributions over time, while imposing minimal cash flow obligations to the institution in the present.  Donors are offered the opportunity to create a significant legacy to the charity of their choice upon their death with minimal donations.

Premium financing works very much like any other personal loan.  A charity may borrow funds in the amount of the premiums from a third party lender, such as a bank.  The charity would be required by the lender to guarantee the loan by providing collateral requirements, typically in the form of a letter of credit.  Loan interest may be paid to the lender from the cash flow created by current contributions or may be accrued until death of the insured.  Ultimately the charity will receive the life insurance proceeds net of the loan repayment, as long as the death benefit exceeds the cumulative loan balance.

The steps involved in the implementation of the Charitable Legacy Program are as follows:

We anticipate that charities will enjoy tremendous benefits by participating in the CCS Charitable Legacy Program.  The following are advantages to implementing the program:

PROGRAM DESIGN – The ultimate life insurance model for charities, the Charitable Legacy Program offers the following advantages:

• Pre-approved from major carriers and lenders.
• Designed to maximize the ultimate financial benefits to charities, most models show 50-70% of initial death benefit netting to the charity under current assumptions.
• Reduced collateral requirements and loan balancers.
• Customized case design to maximize benefits for specific charity conditions.

LOAN ARRANGMENTS– Our unique loans arrangement allows for deferral of interest payments for 15 years and extremely competitive loan rates.

DONOR LEVERAGE –Donors can anticipate substantial enhancement of their donations by committing to this program, from 2X to as much as 5X the results of standard donated life policies.

INCREASED DONOR ACTIVITY – The program has a natural design to entice more donor activity as the greater the number of participants in the program, the more likely a favorable outcome will be reached.

MINIMAL EXPENSE – The Charity should have minimal initial expense in the establishing and maintaining the program, such costs would include line credit charges (generally 0-1% of loan balance) and administration costs.

There are several key long-term factors that may improve or detract from the results of this program, in order of significance, the main elements are:

• Loan Rates – an increase in rates over the long term erodes program results and any decrease in rates would improve the results of the program.
• Mortality – an early death among the insured would greatly enhance the results, while long life among the pool of insured would decrease value.
• Charitable Donations – lower than anticipated donations will reduce results and greater donations will enhance program results.

CAVEAT – We have taken great care to demonstrate the durable financial nature o this program.  While we have every expectation that this program will result in greater financial reward to the Charity, we would be remiss if we did not conclude this summary with the caveat that it is possible, however unlikely, that this program could result in a negative financial impact of the Charity.  If any or all three of the key long-term factors listed above reach and maintain certain negative thresholds the program may result in an overall expense to the Charity.