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Essentials of Personal Financial Planning by Tom Tillery, Susan Tillery

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CHAPTER 18 APPLICATIONS IN INVESTMENT PLANNING

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CASE STUDY

Roberta Stephens of the Faraway Gap Food Pantry has reached out to you as a personal financial planner and investment adviser representative. Faraway is a 501(c)(3) charitable organization that provides groceries to county residents who have fallen on hard times. The charity was established more than 30 years ago by Jean Roberts, a local businesswoman who made it big selling reclaimed wood from old factories. Jean wanted to give back to her local community, and the charity was established to honor those who had given her a helping hand.

Sadly, Jean Roberts recently passed away. She left her entire estate, valued at $2 million, to Faraway, all in cash. It was a generous bequest—equivalent to more than 10 years of the nonprofit’s annual operating expenses. Having never dealt with this kind of money before, the board of directors is at a loss as to what to do with it. Already, there is a bit of contentiousness among board members. Some would like to purchase a building in order to save on rent. Some would like to create an ad campaign to encourage increased contributions. Others would like to increase the director’s salary and provide retirement benefits in order to attract a qualified replacement for Jean.

A delay in making a decision as to how to best manage the bequest has several disadvantages—losing investment earnings ...

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