HOW INVESTING IN PILOT SCHOOL S ENDOWMENT PROGRAM CAN BENEFIT YOU AND THE SCHOOL

Transcription

1 HOW INVESTING IN PILOT SCHOOL S ENDOWMENT PROGRAM CAN BENEFIT YOU AND THE SCHOOL

2 The Director s Perspective At a certain point in the development of a well-managed, non-profit educational institution, that institution s leaders must take definitive steps to ensure their school s longterm financial viability. Even if there are one or more endowment funds already in place, the most significant action trustees can take is to initiate a serious, proactive plan to increase and diversify those endowed funds. Those special, long-time friends of Pilot who want to make a generous investment to increase tuition aid or assist with our operating needs or even to support faculty education, expect Pilot to have a professionally managed planned giving program in place. We now have one, and are hopeful that the generous individuals who have supported us for so many years will consider both Pilot s priority needs as well as the many tax advantages available to them by establishing a planned gift. What is an Endowment Fund? An endowment is a fund that is restricted by a non-profit corporation s Board of Trustees. Only the fund s interest income and earnings can be spent, not the principal, as it is the principal which generates the interest on an ongoing annual basis. Usually only a portion of interest or earnings is spent, ensuring that the fund s assets can increase over time through reinvestment. Professional money managers oversee the actual investment of Pilot s endowment funds but these managers are guided and directed by the Board s Investment Policy and its Investment Committee. Kathleen B. Craven Director

3 Strengthening its Endowment... For The Pilot School, Now is the Time for Future Generations In 1957 Mary Kaye Carpenter, the mother of an elementary school student, and educators Doris LeStourgeon and Jo Myers founded The Pilot School. These enlightened women shared the belief that consistent, hands-on learning experiences that took advantage of a child s special strengths and interests would unlock their ability to learn. Today, some 53 years later, their years of dedicated work have resulted in Pilot School s recognition as a respected school for intellectually capable youngsters experiencing learning problems. Over five decades the lives and the families of thousands of Pilot students have been changed by the foresight and determination of the school s founders. The purpose of an education at The Pilot School is to prepare each student for eventual return to a regular educational setting. Serving 155 children aged from five through fourteen, Pilot offers an ungraded, individualized program designed for children with normal intellectual potential who have not been successful in traditional classrooms. Pilot s successful approach to education is characterized by developing self-esteem in each child, hiring experienced, highly-credentialed educators, involving parents in every aspect of their child s education, and utilizing physical education as a teaching and learning tool. In the last five years Pilot School s two top financial priorities have been to raise millions of dollars to build a new, state-of-the-art school while still maintaining a strong annual operating budget. Pilot s Capital Campaign Committee has accomplished the first goal while the Board of Trustees and School Director have consistently achieved the second goal. As a result, to now ensure the school s future for another 50 years, Pilot s leaders are initiating two of the most important endeavors non-profits can undertake in today s economic environment: the development of a planned giving program which will encourage prospective donors to consider Pilot in their long term charitable planning and, as a result the expansion and diversification of its current endowment to help underwrite both Pilot s current and future needs.

4 Why Consider The Pilot School in Your Charitable Planning? The Pilot School is a respected, stable institution with a demonstrated history of responsible financial management and educational quality. Over the years, it has earned the confidence and the generosity of hundreds of donors, including many six and seven figure donations to the school s capital campaign, who have viewed their gifts as a meaningful investment in a respected and successful educational organization. There are numerous reasons for considering a gift to Pilot s endowment. You, your child, or a member of your family may have attended Pilot and benefitted from the school s individualized programming. You are genuinely grateful to Pilot School and want to support it in a special way. Your child s life was changed dramatically by his or her relationship with one very special teacher. Now you would like to honor that exceptional educator by establishing in his or her name a scholarship fund for deserving youngsters. You have a genuine appreciation for Pilot s mission and how it has uniquely improved the quality of life for thousands of children in our area. You now want to create a legacy to help other children and families by establishing a named fund memorializing your family s appreciation or perhaps honoring a loved one. You want to ensure that one or more of Pilot s programs that have been especially meaningful to you such as the scholarship fund or the athletic program will have a stable stream of funding in the future. You want to generate reliable, recurring income for your and your family s current needs and receive favorable tax considerations while also benefitting Pilot in the future. You can achieve one or more of these goals through a simple bequest in your will or through a trust agreement. Pilot School s professional advisors are familiar with planned giving tools and techniques that can: provide current income and a significant charitable gift at a later date reduce income taxes, capital gain taxes and / or estate taxes establish in your name a philanthropic legacy that will continue in perpetuity. A diverse educational foundation is required if Pilot s children are to learn and prosper as they take on their life s work. Pilot School provides that foundation but, unfortunately, tuition only covers about 70% of our actual per-child costs, thereby making a strong endowment a prerequisite to a successful and financially viable school. We hope that Pilot s planned giving program will appeal to those who want to strengthen Pilot s endowment while also benefitting from the program s attractive tax considerations. David T. Blake President, Board of Trustees

5 Key Considerations Regarding Pilot s Endowment Fund and its Donors When I brought the circus to town for a Pilot School benefit, my vision was to create an endowment fund for tuition aid. I had a son who was fortunate to be able to attend Pilot. When I saw what Pilot s devoted faculty had done for him, I wanted to ensure that others less fortunate would be able to receive the same experience. The Pilot School is definitely in my planned giving. Tory Kitchell Parent and Trustee Pilot School has four principles by which it manages its endowment funds and the gifts contributed to them. 1. Pilot and its professional advisors will always consider the best interests of its donors as the first priority in helping to plan or in accepting any prospective gift. 2. Pilot will adhere to an industry standards Gift Acceptance Policy that delineates the bases on which the Board will accept or not accept, and value a potential gift. This document is available to any prospective donor or their professional advisors. 3. Pilot will adhere to an Investment Policy that protects the interests of its donors and the institution. This document is available to any prospective donor or their professional advisors. 4. Pilot will develop the priorities for which it will seek and accept funds. (See following.) While the creation of other funds will certainly be considered, in general, Pilot prefers to accept gifts that will benefit its alreadyidentified priority programs and projects.

6 Types of Endowments That Will Most Benefit ThePilot School The Board of Trustees and School Director have established the following six priorities for which they seek endowment gifts. There are already-existing general funds for two of the six priorities: financial aid and general operating support. Contributions in any amount to augment those general funds are both needed and genuinely welcomed! The Board of Trustees will establish and name restricted funds in recognition of the exceptionally generous donors who want to help underwrite the ongoing costs of the school s six most important needs. Financial Aid Endowment $10,000 to establish a named fund $25,000 to begin distributions Pilot s mission includes a commitment to serve a socio-economic cross-section of children, regardless of their family s ability to pay. Over the years Pilot s leaders have increased the availability of financial aid by successfully securing many generous gifts. Pilot s leaders welcome charitable investments by additional friends who may want to make Pilot s unique education available to other youngsters of families with limited means. These individual / named funds would be included within and invested with Pilot s existing Financial Aid Endowment. General Operating Support Endowment $10,000 to establish a named fund $25,000 to begin distributions This exceptionally important endowment fund generates interest income on an annual basis to help pay for the many expenses associated with managing Pilot as a successful school. Individuals who appreciate the costs of running an educational institution of the magnitude of Pilot School are encouraged to establish a fund to help subsidize Pilot s ongoing operations. As with the Financial Aid Endowment, these individual / named funds would be included within and invested with Pilot s existing General Operating Support Endowment. Faculty Fund $10,000 to establish a named fund $25,000 to begin distributions Pilot s mission, reputation and cutting edge therapeutic programming are key motivations for educators who value the opportunity to change students lives. While Pilot does attract high caliber teachers, the school still

7 has the obligation to motivate and retain these exceptional educators by compensating them at a level competitive with peer schools. Interest income from one or more of these named funds would provide supplemental revenue for the School Director to allocate to recognize teachers across the board for their commitment to Pilot and its students. The Faculty Enrichment Fund $10,000 to establish a named fund $25,000 to begin distributions Pilot wants to encourage and motivate its faculty by providing continuing education opportunities on a regular basis. Keeping dozens of special educators proficient in the newest, most effective ways to teach challenged learners is a year-round priority at Pilot. So, additional named funds established by individuals or families who wish to show their appreciation to Pilot s faculty will allow the School Director and Division Heads to offer faculty members additional professional development opportunities. The Athletic Activities Fund $10,000 to establish a named fund $25,000 to begin distributions Participation in team sports by students of all ages is a vital part of the Pilot learning experience. But the constant wear and tear on the school s extensive inventory of equipment by 155 students every day, ten months a year, make Pilot s athletic programs an expensive aspect of the school s programming The School Director would welcome the creation of named funds to help underwrite the ongoing costs of this multi-faceted program. The School Director Chair $1,000,000 (e.g., The John L. Reed School Director) Establishment of this unique, high visibility fund will help the Board of Trustees attract and competitively compensate exceptional educational administrators to lead Pilot School. Other special circumstances regarding the endowing of other than the aforementioned priority funds may be presented to Pilot s School Director and Board of Trustees for review and determination of acceptance. While I approached my retirement with joy and trepidation, the actual day brought the most meaningful gift my husband could have ever honored me with. After 28 years as Pilot s school psychologist, I know that my husband s establishment of the Christiane Shields Tuition Aid Endowment will enable the continuation of my caring for the special children with whom I so loved to work. Christiane Shields School Psychologist

8 When I think of The Pilot School, I remember our son Teddy receiving the Al Wentz Citizenship Award, holding up the trophy, exuding self-confidence, pride and happiness. It s very fulfilling to know that our planned gift will allow other children to experience this same high quality of learning. Gail Sezna Parent and Former Trustee I found that a Charitable Remainder Unitrust was not only the right vehicle to facilitate a gift to Pilot but to also give income to persons of my choosing for the life of the trust. This is certainly one very beneficial type of trust for everyone to consider in their estate planning. Charles P. Schutt, Jr. President Board of Trustees, Simple, Beneficial Ways to Make a Planned Gift There a number of ways to contribute that will help you achieve your goals of assisting Pilot School while generating tax advantages for you and your family. While the advice of your financial advisor will help identify the most advantageous way for you to contribute, some of the most popular ways to make a deferred gift include the following: 1. Bequest Through a bequest in your will, you may contribute to an existing fund at Pilot School or establish your own named fund. Bequests are typically in the form of a fixed dollar amount or a percentage of the estate after taxes.

9 2. Charitable Remainder Trusts This type of trust provides for you or your designated beneficiaries - children, parents, or even a friend - to receive income for life. When the trust ends at your death, that of the beneficiaries, or at the end of a term of years, the remainder assets will establish a fund at Pilot School for the purpose you select: financial aid, faculty enrichment, and so on. You will also receive an immediate income tax deduction in the year the trust is created. 2a. A Charitable Remainder Annuity Trust pays the donor or their beneficiary a fixed dollar amount based on a percentage of the fair market value (at least 5%) of the assets placed in the trust. The payout amount remains constant, regardless of the increase or decrease in the trust s assets. 2b. A Charitable Remainder Unitrust pays a percentage of the fair market value of the assets in the trust as revalued annually. If the value of the assets increases, trust payments increase. If the trust value declines, so will the payout. 3. Charitable Lead Trust This type of trust will provide interest income to Pilot School for a fixed number of years. At the end of this term, the remaining assets in the trust are returned to you or your heirs. 4. Retirement Accounts Qualified retirement plan accounts, including IRAs, have long been subject to state and federal income tax as well as estate tax. However, recent changes to federal law have made it easier for individuals to use these assets to benefit their favorite charities. 5. Life Insurance You may contribute to Pilot a policy that is no longer needed, take out a new policy, or name Pilot School as a beneficiary of an existing policy. Depending on the arrangement, an immediate tax deduction and / or estate tax deductions may be available. Premium payments may also be tax deductible.

10 The Pilot School Board of Trustees has established The Key Society to honor and recognize those individuals or couples who have finalized a planned gift to Pilot School. All planned giving donors are invited to be members of this distinguished group. The wishes of those who prefer to remain anonymous will be respected. Building the membership of The Key Society is a high priority of the school s Trustees as part of their efforts to secure a strong financial foundation for Pilot s future. We hope you will consider joining with us as we endeavor to build this legacy of excellence for generations to come. The Pilot School recognizes the importance of your professional advisor s expertise. We would welcome the opportunity to work with them to help achieve the goals most important to you and your family. For additional information, please contact School Director Kathy Craven at After my father died in 2005, our family had strong feelings about establishing a lasting foundation honoring not only his name and his giving nature, but also his pride in his grandsons achievements at The Pilot School. Our goal in establishing the James M. Quinn Tuition Aid Fund was to provide families who were struggling financially with additional support to lessen the strain so that they could spend more time enjoying their child as my father did with his children. Colleen Quinn Parent