Will all charitable entities
participate equally? Early indications are that those who have
actively encouraged gifts via estates are now experiencing sustained
growth rates of 15% or more annually, while others are receiving
little or nothing from this income source. Recent government
data indicates that as many as two-thirds of America’s
nonprofits report no income at all from legacies or bequests.
Participation in the wealth transfer is thus by no means assured
and should not be taken for granted. Effective efforts aimed
at encouraging estate gifts, on the other hand, can yield tremendous
dividends for charitable entities.
First things first
First, it is
important to examine the sources of planned gift income and
balance our efforts accordingly. In the field of higher education,
for example, according to the Council for Aid to Education (CAE),
planned gifts have averaged some 34% of individual gift income
over the last two decades, reaching figures as high as 40% in
1998. Of the total of bequests and other planned gifts, funds
realized from bequests have averaged 23% of gifts from individuals
while face value of completed trusts, gift annuities, and other
irrevocable deferred gifts have averaged 11%. In other words,
bequest income has averaged 67% of total planned gift income
to higher education over the past two decades. (See the July
issue of Give & Take for more information about planned
gifts to higher education.)
The base of many of the
most successful planned gift programs is the bequest via will.
This is true for a number of reasons, chief among them the fact
that the will is a plan that most donors can understand and,
perhaps more importantly, one that their advisors can easily
comprehend and implement without special expertise.
The will as “door opener”
Ironically, many charitable remainder trusts, gift annuities,
and other similar plans begin with interest expressed in a simple
will. Identifying existing bequest expectancies and those who
say they “would consider” a bequest can be the beginning
of a relationship that is based on solid donative intent and
ends with a more effectively planned gift as a result of the
contact initiated around the bequest concept. For this reason,
in the future, as in the past, mounting an effective bequest
communication effort will be one of the keys to maximizing participation
in the great American wealth transfer as it continues to unfold.
Who makes charitable
bequests?
Internal Revenue Service statistics and other studies indicate
that charitable bequests come from a relatively limited pool
of persons who are dispersed throughout the typical donor base.
Of persons who died with taxable estates in 1998, some 17.4%
used the charitable deduction for a total of approximately 17,000
persons. Other studies indicate that over 200,000 persons, or
5% to 10% of all decedents leave assets to charity at death.
This would indicate that the vast majority of those who leave
funds to charity come from the ranks of middle class persons
who are not particularly wealthy and is also instructive when
considering the possible impact on planned giving of elimination
of the estate tax.
What bequest donors tend
to have in common is a pattern of consistent involvement over
a relatively long period of time. Organizations that possess
the donor records and the capacity to target communications
have found that they can determine and reach the core of bequest
prospects using relatively limited target marketing techniques.
Others have found that data limitations and other factors necessitate
a broader scope of bequest marketing utilizing mass marketing
techniques. Regardless of scope, the goal of these efforts is
to encourage those who are planning to make charitable dispositions
in their estates to consider a particular organization, and
to discover those who have already done so in order to gain
an opportunity to cement a very valuable long-term relationship
with a person who may be a relatively modest gift prospect today.
How to encourage bequests
In considering how to approach the process of encouraging donors
to make charitable bequests, it is important to achieve a balance
between the “plan” and the “gift.” Too much
emphasis is sometimes placed on the “plan” and not
enough on the “gift.” It is easy to forget that the
“plans” are the same for everyone while the composition
of the gift is as unique as each individual donor and your organization.
Remember the same hammer can be used to build very different
structures. For this reason it is important that bequest communication
efforts emphasize not only the importance of prudent estate
planning but also why a donor should think of your organization
when considering the charitable dimension of their estate plans.
The most effective bequest
marketing efforts involve long-term, consistent communications
aimed at motivating constituents to keep their plans up to date,
while communicating the case for support and asking for gifts
via the estate. This can be accomplished in a variety of ways.
Most often it is done through targeted communication efforts
aimed at a relatively narrow segment of older, long-term donors
who are at the point in life where they are making decisions
regarding the final disposition of their assets.
It is also important to
devise ways to find such persons who may be missed in targeted
approaches. One example of an effective way to do so is through
enclosures in gift receipts that express thanks for a gift while
suggesting ways to include the organization in long-term plans
as well. This can be an effective, non-threatening way to reach
persons at a time when they have just made a gift, and may thus
be most receptive to your message. This “piggyback”
approach can also be a way to reach donors you may otherwise
miss without blanketing an entire file with additional communications.
In some cases, check-off boxes may be added to response devices
included with current gift appeals to the mass of the file.
Be careful as such references should generally be low-key and
avoid mixing current and deferred gift messages. Very different
considerations and mission focus may be involved, and commingled
messages can sometimes lead to confusion in the minds of donors
that can have an unintended negative impact on both current
and deferred gifts.
Coming full circle
Don’t forget that one of the secrets to success of
many major gift development efforts is an effective program
of follow-up with persons who say they “are considering”
including your institution in their estate plans. Especially
in the case of younger persons, this can be one of the most
critical indicators of a very high level of donative intent.
In fact, one of the best ways to find budding major donors among
the baby boom generation may be to periodically give them an
opportunity to tell you they are considering elevating you to
the status of a family member through inclusion in their long-range
estate and financial plans.
