Do you guys do this?

[OSUAggie]

http://www.okstate.com/ViewArticle.d...&ATCLID=810832


Innovative Fundraising Initiative Secures $250 Million in Insurance Commitments for Oklahoma State University Athletics

STILLWATER - Oklahoma State University (OSU) announced today that it will benefit from more than $250 million in life insurance commitments to support athletic department initiatives through an innovative program entitled “Gift of a Lifetime.”

The announcement was made by OSU Athletic Director Mike Holder, who also serves as president of Cowboy Athletics, Inc. He said the money will be used to endow athletic scholarships, facilities and operations and will significantly advance the school's effort to be competitive in the Big 12 Conference.

The $250 million is in addition to the more than $200 million given recently by alums T. Boone Pickens and Sherman Smith to fund the construction of new athletic facilities.

OSU's “Gift of a Lifetime” program involves selected alums in a broad age spread who have qualified for $10 million individual life insurance policies and agreed to name Cowboy Athletics the beneficiary. Cowboy Athletics is paying the premiums. So far, 25 alums have qualified for the program, which is a form of testamentary giving.

The idea for “Gift of a Lifetime” came from Pickens, one of the nation's most generous philanthropists and founder and chairman of BP Capital, a Dallas, TX-based energy investment fund.

It is believed to be the first time collegiate athletics has used a life insurance program on such a grand scale, Holder said.

Pickens, a pioneer in the field of corporate health and fitness, said that “Gift of a Lifetime” gives participants the ability to monetize good health. “It is an easy way for qualified individuals to give, with the proceeds from life insurance policies secured with a pool of like-minded colleagues who share a common commitment to their institution.”

“Our initial discussions with Boone on this subject quickly shifted from a 'what if?' to a 'why not?' conversation,” Holder said. “One thing led to another and we sought guidance of top insurance experts to research the idea. This program is evidence of our loyal supporters willingness to embrace new ways to help their university by leaving a lasting legacy that will benefit OSU Cowboys and Cowgirls for generations to come.

“We have a bold vision with OSU Athletics to build a championship-caliber program which will be self-sufficient and therefore benefit academics as well,” said Holder. “We have been behind the curve in the Big 12 in several of our sports and this helps address that problem long-term. Boone's donation and 'Gift of a Lifetime' are wonderful for longer term stability, but they do not address the current and projected budget deficit.”

“This program was an ambitious and creative undertaking by the athletic department and they are to be commended,” said Interim OSU System CEO and President Dr. Marlene Strathe. “We need to carefully review this and other initiatives to determine if they have application as we enhance our fundraising to provide essential support for scholarships, fellowships and scientific research.”

[SoonerStormchaser]

Yah, it's called "Boren's Annual 25% Tuition Hike."

[OUstudent4life]

OSU Athletics = Waiting for People to Die!


I'm reading that correctly, right?


OSU's “Gift of a Lifetime” program involves selected alums in a broad age spread who have qualified for $10 million individual life insurance policies and agreed to name Cowboy Athletics the beneficiary. Cowboy Athletics is paying the premiums.

They'll get the money when the donors...ahem...are no longer with us?

[SoonerRecon]

OSU athletics=give us all your money for tickets, and your family trust fund, and we may win a conference championship after you die. when will they start allowing fans to sponsor the urinals? replace the mint with a plaque

[RFH Shakes]

Something tells me that there will be a rash of unexplained osu alumni deaths.:D

[Spanish Sooner]

Maybe OSU alumni will now have a high suicide rate because they realize there death may be the only way to get them a championship..

[OklahomaTuba]

Usually our alumni give money for things like academics or art.

[piusbovis]

Usually our alumni give money for things like academics or art.

True dat. Because, see, our football team goes to things like BCS games that make money, so we don't have to kill off old people to get equipment.

[MamaMia]

Lets try to be nice. Maybe thats just how their people, make the most money.

[goingoneight]

Something tells me that there will be a rash of unexplained osu alumni deaths.:D


And even more empty seats in Booger Pickin' Stadium! :D

[Frozen Sooner]

I'm interested how the insurance company is sliding that one past the insurance commissioner. Typically a beneficiary has to have an insurable interest in the insured's life.

[1stTimeCaller]

maybe if they die they can no longer donate or otherwise provide financial assitance to the school?

I dunno.

[Frozen Sooner]

Yeah, typically it has to be more than that. Like an employer can be a beneficiary for someone vital to continued operation, or a child, or a spouse-but say a girlfriend isn't eligible.

[Frozen Sooner]

They do that, by the way, so I can't take out a policy on say 1TC's life and reap a financial windfall by having him offed-it's against public policy.

[Vaevictis]

Yeah, typically it has to be more than that. Like an employer can be a beneficiary for someone vital to continued operation, or a child, or a spouse-but say a girlfriend isn't eligible.

I've named a girlfriend as a beneficiary on a life insurance policy before.

(Mind you, we may have technically been common law...)

[Frozen Sooner]

I've named a girlfriend as a beneficiary on a life insurance policy before.

(Mind you, we may have technically been common law...)

Were you living together? They'll usually let you get away with it if you're living together and your finances are intertwined.

[Vaevictis]

Were you living together? They'll usually let you get away with it if you're living together and your finances are intertwined.

Yep, that was the case.

[Fraggle145]

Yah, it's called "Boren's Annual 25% Tuition Hike."

ITs not the tuition... we are one of the lowest in the nation. It is the FEES. as a current grad student who doesnt have to pay tuition, let me tell you that it is the FEES. we are among the highest in the nation in FEES and they went up again this year.

[wishbonesooner]

Reputable insurance companies frown on this type of deal. But, since there's so few reputable ones, I guess OSU thinks it's OK.

[OU4LIFE]

frown does not = illegal.

and this should be.

all this is going to do is drive up premium costs for everyone.

[badger]

osu will take money in any possible way it can... it will also take real property any possible way it can, like eminent domain... it will also be mediocre in any possible way it can.

it's the aggies, after all :)

[CobraKai]

The projected return on investment is 5%. OSU is not getting a $250 million windfall. The premiums on 25 $10 million life insurance policies are quite high. The insurance companies do the math, and the only way OSU really comes out way ahead is if several alums suffer untimely deaths. Otherwise, they are effectively paying into an investment that, given actuarials, projects to return 5% on their money. This is more or less a non-story to me. I don't see anything wrong with it, and it isn't a bad idea, but it is also not a story where they just got $250 mil...they didn't. They will spend $100s of mill of their own money paying into this investment instrument. I read a story where this kind of thing happens occasionally.

[OSUAggie]

The projected return on investment is 5%. OSU is not getting a $250 million windfall. The premiums on 25 $10 million life insurance policies are quite high. The insurance companies do the math, and the only way OSU really comes out way ahead is if several alums suffer untimely deaths. Otherwise, they are effectively paying into an investment that, given actuarials, projects to return 5% on their money. This is more or less a non-story to me. I don't see anything wrong with it, and it isn't a bad idea, but it is also not a story where they just got $250 mil...they didn't. They will spend $100s of mill of their own money paying into this investment instrument. I read a story where this kind of thing happens occasionally.

Here you go...


STILLWATER — Oklahoma State athletics director Mike Holder, on the advice of influential booster Boone Pickens, has devised a cutting edge method to raise funds.
OSU announced on Thursday its "Gift of a Lifetime” program will generate $280 million in life insurance commitments. OSU is the first NCAA program to use life insurance policies as a fund raiser.

Over the past nine months, OSU officials met with 55 alumni about participating in the program. After passing medical exams to qualify for a $10 million life insurance policy, 28 individuals were selected.

"The reason I believe this hasn't been tried before is the average tenure of an AD is three and a half years,” said Craig Clemons, vice president of athletic development. "Mike Holder has a long-term perspective 20 years down the road.”

OSU's participants range in age from 65 to 85 and are under no financial obligation. The only requirement is to pass a physical exam. OSU Athletics, Inc., formerly known as OSU Golf, Inc., took out a $20 million loan to pay the premiums.

Each time an individual in the program dies, OSU will be paid $10 million. When all 28 have died, OSU will have been paid $280 million.

"Our supporters need to understand we don't have this money today,” Holder said. "We borrowed $20 million and will pay interest on it. Down the road, our athletic department will be the beneficiary. But this does not address short-term needs. That has not changed at all.”

Clemons and executive director of major gifts Larry Reece, best known as OSU's public address announcer, have marketed the campaign since last spring.

"I've told people that have signed up for this that we're all going to go to that great Cowboy nation in the sky at some point, and we're not rooting for anyone's demise,” Reece said. "This is a way to leave a legacy.”

Pickens and Sherman Smith have donated more than $200 million being invested in Pickens' BP Capital fund, money being used to renovate Boone Pickens Stadium and help pay for an athletic village that will upgrade facilities in every sport.

The life insurance project is so unique that Brad Wolverton, senior editor for athletics at the Chronicle of Higher Education, an organization that monitors donations for universities, said OSU is the first school to use this type of fund-raising on this large a scale.

"Boone is very innovative,” Holder said. "He's an unusual individual. I predict we won't be the only ones to do it. It goes to show you if Boone Pickens has an idea you might want to listen.”

Texas Tech and Texas reportedly are making inquiries about following OSU's lead. But Reece said other charities have organized similar fund-raising programs.

The insurance company and OSU athletics both plan to profit. The insurance company takes an estimated $357,000 premium per individual paid by OSU Athletics, Inc., and invests it to where it becomes worth more than the $10 million policy.

"A number of churches have done similar programs,” Reece said. "To a layperson like myself, it's amazing insurance companies make money on this, too, but they know their business.”

The U.S. Senate Finance Committee has had concerns with abuse cases in charity owned life insurance policies.

Oklahoma Christian president Michael O'Neal investigated insurance fundraising during his 26-year tenure at Pepperdine.

"Congress has discussed whether these plans should be tax-free charities,” O'Neal said. "I think Congress is way off base. These are legitimate. A person can take out a policy and benefit whoever they want.

"One concern Congress has is brokers sometimes make huge dollars off the premiums. Congress doesn't like somebody making a profit off a charitable transaction. I personally feel these plans can work if a school looks at the fine print very closely.”

Since being named AD 18 months ago, Holder has stressed OSU's annual athletic budget is near the bottom of the Big 12. Texas leads the conference with a $100 million annual athletic budget. OSU is 10th at $40 million.

Holder believes this is another avenue to reduce the athletic department's debt and pay for operating costs in an attempt to compete with Big 12 peers.

Oddly enough, the "Gift of the Lifetime” program will benefit future OSU athletic directors, not Holder.

"I'm worried like heck about tomorrow,” Holder said. "But this is my school. I'm concerned about the future of the university and the athletic department. This particular program will be self-sufficient and therefore benefit academics as well.”

[sooner_born_1960]

This sounds fishy to me. What insurance company would insure a bunch of 65 -85 year olds to the tune of $280 million for only $20 mil. There is no way the insurance company can come out ahead on that.

[Seamus]

I can see the headlines now

Holder charged in murder-for-profit scheme

OSU athletic director ordered slaying of 8 alums

:eek:

[OSUAggie]

hell, that's 80-million... IN

[CobraKai]

Everyone is right here...OSU is making money on this...but that number will likely be in the single digits percentage wise. Any person on this board with a finance degree will tell you that there is no such thing as a risk free investment that offers double digit returns without high risk that you will lose it all. Period. No further discussion.

[Boarder]

An insurance guy was on the radio today. He said it was very common for this to happen with universities. Mostly for scholarship endowments and the like. Farbeit for me to say anything remotely positive about osu. I'm sure they'll find a way to aggy it. :D

[LoyalFan]

I'm interested how the insurance company is sliding that one past the insurance commissioner. Typically a beneficiary has to have an insurable interest in the insured's life.

Mike,

Any insured may designate ANY beneficiary he/she/it so chooses, so long as it is not an illegal enterprise. Many alums of various colleges and universities opt to purchase life insurance naming their alma mammys as beneficiary, thus providing a far greater gift than they could contribute during their lifetime.
Not all such benefactors are alums of the institution they so gift, and do so for other reasons, like maybe their child or grandchild did, or will, attend a particular school or maybe they just really like the marching band.
There's nothing illegal about it, and during my 35 years in the insurance industry, I wrote numerous such policies.

LF

[Frozen Sooner]

Mike,

Any insured may designate ANY beneficiary he/she/it so chooses, so long as it is not an illegal enterprise. Many alums of various colleges and universities opt to purchase life insurance naming their alma mammys as beneficiary, thus providing a far greater gift than they could contribute during their lifetime.
Not all such benefactors are alums of the institution they so gift, and do so for other reasons, like maybe their child or grandchild did, or will, attend a particular school or maybe they just really like the marching band.
There's nothing illegal about it, and during my 35 years in the insurance industry, I wrote numerous such policies.

LF

Cool, fair enough. I must have misunderstood something along the line somewhere. I coulda SWORN I've had policies rejected by insurance companies because the beneficiary didn't have an insurable interest. I bow to your greater experience, though.

[oufan1]

Everyone is right here...OSU is making money on this...but that number will likely be in the single digits percentage wise. Any person on this board with a finance degree will tell you that there is no such thing as a risk free investment that offers double digit returns without high risk that you will lose it all. Period. No further discussion.
That premium is annual i would assume.. they pay interest on the loan.. your right they make less this way then if they invested it in the stock market over a 10-15 year period.

[RedstickSooner]

Mike,

Any insured may designate ANY beneficiary he/she/it so chooses, so long as it is not an illegal enterprise. Many alums of various colleges and universities opt to purchase life insurance naming their alma mammys as beneficiary, thus providing a far greater gift than they could contribute during their lifetime.
Not all such benefactors are alums of the institution they so gift, and do so for other reasons, like maybe their child or grandchild did, or will, attend a particular school or maybe they just really like the marching band.
There's nothing illegal about it, and during my 35 years in the insurance industry, I wrote numerous such policies.

LF

Which is all cool, if you name the university AND PAY THE PREMIUMS YOURSELF. Then, it's a gift for the University, no different from leaving them your sofa, or donating your body to science. The difference here is that the UNIVERSITY IS PAYING THE PREMIUMS.

That means it's not a gift from the donors to the university. It's a gift from the university to itself, done in the donor's name.

There has to be some angle here, and the only thing that comes to mind is taxes. Aren't life insurance payouts tax free? Would this basically be a dodge for universities to get around having to pay any sort of capital gains tax?