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NCF, the third major player in this case, is a section
501(c)(3) charitable organization based in Brentwood, Tennessee.
It receives money from both its own investments and donations.
One of the ways it receives donations is through “donor-advised
accounts,” also known as “individual foundations.” Donors to
these foundations contribute money or other property to a special
individual account, and they can direct NCF to contribute up to
75 percent of the principal and interest from that account to
other charities of their own choosing. The remaining 25 percent
of each account goes to the charitable programs of NCF, which
focus on Christian evangelical and humanitarian services.
Pippenger first became aware of charitable split-dollar life
insurance plans in 1997. A conscientious investment adviser, he
studied the arrangement by attending, at his own expense,
seminars put on by American Express; he also performed his own
due diligence independently. He came to see these plans as an
opportunity to benefit his clients who were interested in estate
planning: since proceeds of a life insurance contract that are
paid by reason of the insured’s death are excluded from income,
sec. 101(a)(1), sharing the cost of the premiums with a charity
in a way that created current tax deductions would obviously be
attractive. Sometime in early 1998 Pippenger met with the Roarks
to discuss the value of Mr. Roark’s business, and the potential
taxes that his estate would face upon his death. Pippenger told
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