Case Study: Faith-Based Organization

by | Jul 14, 2021 | Blogs

faith-based organization

Faith-based organizations, deal with many of the same issues encountered by other non-profit entities when it comes to retaining and rewarding their senior staff members.  Limited planning alternatives leave these organizations searching for answers and finding only dead ends and complexity. Further, maintaining the long-term financial viability of the organization is essential, making the decision strategically important.

The Client

Several years ago, TriscendNP assisted one such organization in designing and implementing a plan that was designed to achieve the following objectives that were deemed important by its leadership:

  1. Retain the services of a key senior staff member;
  2. Provide retirement cash flow for this staff member and benefits for his family in the event of premature death;
  3. Allow the organization to recoup its capital, including a rate of return when the staff member passed away.

The Solution

Working with organization leadership, TriscendNP was able to structure a split-dollar arrangement that achieved these objectives.  Due to changes in the organization’s financial conditions, the split-dollar arrangement was funded with a combination of organization capital and the senior staff member’s permanent compensation reduction. The arrangement was designed with two life insurance policies intending to perform two specific functions:

  • Repay the organization
  • Provide retirement cash flow and death benefit for the senior staff member and their family

The Result

In 2020, this staff member passed away suddenly.  With his death, both the organization and his beneficiaries received a portion of the death proceeds.  This allowed the organization to continue pursuing its mission and provided much-needed, long-term cash flow for his family.

A funding and return summary is provided below:

Total Plan Funding $960,000
Organization Death Benefit $1,115,000
Beneficiaries Death Benefit $345,000
Beneficiaries Annual Cash Flow (30 years) $105,000

Determining the Right Fit

While split-dollar plans can be a viable solution, it is not a fit for all organizations or employees.  TriscendNP finds that the following characteristics are a good indicator that a split-dollar arrangement could be a good choice:

  • Strong balance sheet and cash flow
  • Focus on long-term investments
  • Desire to reward and retain essential leadership

Learn More

To discover more about TriscendNP and how we help non-profit organizations retain key leadership, make informed decisions and rest easy, contact:

David Wright, Chief Strategy Officer

dwright@triscendnp.com

(972) 410-3740

(214) 995-9022

For more information, call (972) 318-1110 or contact us.

About the Author: David Wright

Mr. Wright is a co-founder and serves as Chief Strategy Officer with primary responsibility for strategy and business development and has served in this capacity for 20 years. Areas of expertise include business development, compliance, business transactions, and financial and accounting topics. Contact or learn more about David >>
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