Tag Archives: bequests

The Cost of NOT Doing Planned Giving

The cost of NOT doing Planned Giving
photo credit: JMR_Photography via photopin cc

What does it cost your charity to not have a Planned Giving program that promotes gifts in estate and retirement plans?

It costs you stronger relationships. When donors include you in their long-term plans, they’re putting you alongside husbands, wives, children and grandchildren. Among the bequests for loved ones, there’s a gift for your organization. 

That’s a pretty special relationship and a lot can come from it, as I suggest below.

Depending on how far you go with Planned Giving, perhaps into offering charitable gift annuities, donors will be counting on you to pay them income for life. They trust you that much. That’s a strong bond.

But you need not go that far into PG to feel the love from donors. Having a program that only encourages gifts by will gets you deeper, stronger relationships.

It costs you endowment growth. Many planned gifts are unrestricted. I routinely encourage clients to put as much of that undesignated revenue as possible into creating or growing an endowment. 

As you build that fund–by spending no more than its earned income each year–you’re assured of a steady, budget-ready stream of endowment revenue annually. (Well, “assured” is relative. Endowment funds are not guaranteed to have gains every year. It depends on how they’re invested.)

It costs you growth in other giving. It is common for Planned Giving donors to increase their giving in other ways, especially to your annual appeal. They feel the stronger relationship and want to show their love.

Sometimes, planned gift discussions result in outright gifts. I see it about 10% of the time. Donors get so moved by the potential good their gift can do that they decide to make their gift immediate, forgoing the gift they intended for their will or other estate plan.

It costs you fundraising ambassadors. Another example of planned gift donors showing love. Many act as willing spokespeople, encouraging others to give to your organization. 

They can sign a letter or an email or stand up at a lunch. I’ve witnessed testimonials that moved rooms full of potential donors to tears. 

Donors are so much more compelling than us pros. 

Sometimes, you just have to ask. Sometimes, they’ll act on their own.

It costs you time with elder folks. I love the company of older people. Don’t deny yourself the joy. I bared my heart in “I Love Planned Giving.” 

Clearly, I’m not objective about Planned Giving. I love it and I’m a proud evangelist!

Think about starting a Planned Giving program. I’d hate to see you take on these costs. They’re so unnecessary.  

Skip Wealth Screening For Planned Giving

Torn window screen

photo credit: quinn.anya via photopin cc

I consistently preach this to clients and audiences: small-and mid-size nonprofits need not spend money on wealth screening to find potential Planned Giving donors. You have all the data you need in your fundraising or CRM database.

Query your data for age and giving consistency and you’ll find your best Planned Giving prospects.

If you don’t have age info, consistency alone will work if you’ve been around for many years. Lots of my clients go back many decades, sometimes into the late 1800’s. But 20th century roots will be fine for you to rely on giving consistency as a proxy for age.

If a donor has been giving for 30 years, for instance, they’re probably in the age range you’re after.

If you don’t have giving data going back far enough to extrapolate age, then before you pay for an age overlay from a screening service consider this. Can you survey your donors with a reply card in your next mailing? If you don’t want to ask for date of birth, ask for age. It’s worth considering before you make the plunge into age screening.

An important word about giving consistency. Ignore gift size.

I literally mean if a donor has given you just $5 a year, and they’ve done it for 18 years out of the past 20, or 25 years out of the past 30, then they are an outstanding prospect for a charitable bequest, which is a gift to you in their will. (I said a lot about starting your PG program with bequests in this series for GuideStar.)

The students at Fairleigh Dickinson University’s Center for Excellence heard me say this just last week.

Age and giving consistency. That’s all you need to get started in Planned Giving.

Large shops will want to move beyond bequests, so they may wisely invest in wealth screening further down the road. But it’s not needed at the outset.

Small- and mid-size nonprofits can have very respectable PG programs that start and stop with gifts by will.

To launch any program–big or small–you can skip wealth screening.

“Planned Giving Saved Our Ass”

 

Image courtesy of Myxi, Creative Commons license
Image courtesy of Myxi, Creative Commons license

“Planned Giving Saved Our Ass.”

That’s what a client reminded me last week. I’ve been helping the college capture planned gifts since 2004, and Planned Giving saved them four times in the last six years.

Saved them from what? Shortages in unrestricted cash. Lots of planned gifts are unrestricted—especially bequests.

We’ve been promoting long-term planned gifts together for nine years. After several years the long-term arrives, and it comes in the form of immediate-term cash.

You see, people die irrespective of recession, unemployment and stock market values. When your charity is part of hundreds or thousands of estates, some of those donors will die each year. I guarantee it.

That’s the double-edged sword of Planned Giving. We don’t want our donors to die, but when they do there’s a gift for our important work.

How many will die in a year and how much cash will result, that’s uncertain. After you’ve got unrestricted Planned Giving income for three to four years, you can look to that history for your average and median, which isn’t skewed by very large gifts. Those numbers will give you an estimate of what you can look forward to each year.

Caveat: It’s enormously unwise—reckless even—to budget for planned gift revenue, unless you’ve got many years of history and fancy finance and actuarial pros looking over your data. It’s too speculative.

All you have is a rough estimate, which is some comfort. Not for accounting, but there are other forms of comfort than spreadsheets.

I’m only talking about unrestricted planned gift income. There’s restricted money too.

If you’re not promoting planned gifts, get started. The sooner you start, the sooner your long-term will arrive.

You Don’t Need The Fancy Stuff For Your Planned Giving

Fancy Schmancy courtesy of Brian Teutsch on Flickr
Small- and mid-size nonprofits take note: you need not get fancy and sophisticated to have a very respectable Planned Giving program. To force a metaphor because I’m quite pleased with myself for thinking of it while brushing my teeth: you don’t need the cool electric gadget when a toothbrush will do the job very well.*

Bequests (gifts in your donors’ wills) are the place to start every Planned Giving program, irrespective of your budget, mission and size. Everyone needs a will and the charitable bequest is simple to understand and execute. In every program, this will be the most popular alternative, so expect 75 to 80% of your gifts to be by will.

I’d like to see this become popular wisdom: bequests can be the place to stop your planned gift program.

If you don’t have a big fundraising budget, access to expertise and comfort talking about fancier possibilities with your prospects and donors, then stand proud with a bequest marketing program as your sole Planned Giving offering. That is a perfectly respectable and appropriate program for smaller shops. And bigger shops that have a smaller budget.

There are scores of ways to affordably promote bequests: newsletter sidebars; newsletter articles; mentions in one-on-one meetings; mentions in large events; event table tents; event invitations; website or blog pages; Facebook pages; envelope flaps; direct mail PS’s; direct mail inserts; gift reply devices; gift acknowledgement letters and annual reports.

If I’ve piqued your interest, you may find helpful five articles I wrote for GuideStar that are no less timely two years later: Make 2010 The Year YOU Start Planned Giving. Clicking will lead you to the fifth in the six article series, and you’ll find links there to the first four. (The sixth is about gifts beyond bequests that don’t require expertise to promote.)

Charitable trusts, life insurance, gift annuities, closely-held stock, real estate and all the rest are terrific gifts. But they’re not necessary for success in Planned Giving.

Bequests–standing alone–can be a terrific Planned Giving program for your nonprofit.

* My dentist reports identical outcomes in his practice. I’ve returned to the manual method.