When most people think of life insurance, they don't think of athletic department fundraising. But at Oklahoma State University, an innovative long-term fundraising plan built around life insurance policies is helping to ensure a bright future for Cowboy and Cowgirl sports.
Under a program called the Gift of a Lifetime, Oklahoma State's athletic department purchased life insurance policies worth $10 million each on 27 older alumni. The policy premiums totalled $20 million, so when the last death benefit is paid out, the department will have earned around $250 million.
"We've heard of churches raising money with this type of arrangement, but we believe we're pioneers in using it for athletics," says Larry Reece, Director of Major Gifts for Athletics at Oklahoma State. "You look at the numbers and say, 'Wow, how can $20 million turn into $250 million?' But it's not our business to figure out how the insurance company makes its money or writes its policies. Our lawyers performed due diligence to make sure everything was above board and legal, and our only job was to find individuals who met the criteria to be insured."
Per insurance company instructions, Reece sought out boosters between the ages of 65 and 85 who were in good health and had an established donating relationship with the school. That relationship was key, because it creates an "insurable interest" for the athletic department--OSU has a legitimate reason for insuring the person's life, because it's essentially protecting a source of income.
The donors simply had to pass a physical and answer some health questions, and the athletic department covered all costs associated with the policies. "Our participants loved having the chance to leave a legacy beyond what they could do with their own pocketbook," says Reece.