 A “Golden Age of Philanthropy”
Americans will transfer at least $41 trillion between 1998-2052, according to a study by the Social Welfare Research Institute at Boston College. At least $6 trillion of that funding will be bequests to charity, according to authors Paul Schervish and John Havens, who wrote that “a golden age of philanthropy is dawning.”
With so many philanthropic dollars up for grabs, nonprofits need to position themselves to capture a share of the wealth. Research from the National Committee on Planned Giving shows that although 42 percent of Americans have wills, only about nine percent have included charities. But once charities are included, they stay: 97 percent said they had not revoked a charitable provision. An additional 14 percent of those surveyed said they had considered including a charitable bequest in their wills — even though no nonprofit has asked them to do so. This leaves a largely untapped market.
About Planned Giving
Planned giving, once called deferred giving, refers to any charitable gift that requires more thought and planning to execute than the average donation. Planned giving has traditionally been defined as the gift that an individual makes near the end of his or her lifetime. There are many kinds of planned gifts, from simple bequests in a will or an estate plan, to annuities, charitable remainder trusts, charitable lead trusts, pooled income, life insurance, and life estates.
Nonprofits often have trouble securing planned gifts. Why? The answer generally boils down to four basic factors: targeting the wrong prospects, sending the wrong appeal, asking too late, and soliciting planned gift prospects for major gifts instead so the organization can get the money more quickly.
Many charities assume that their major gift donors will be their best prospects for planned gifts. When these solicitations fail, organizations are left with the impression that planned giving is just not right for them. Other organizations send broad-based planned giving mailings to older donors, telling them about a multitude of planned giving vehicles and asking them to contact the organization for more information. In my experience, returns on such requests for information often average less than one percent. Moreover, little – if any – personal follow up is done with the prospects who do not respond.
The historical lack of meaningful research on planned giving has done little to help nonprofits rethink their strategies. It is often difficult to get reliable, accurate information on planned giving donors, as between 70-90 percent of all bequests are unknown to the charity until after the donor’s death. Add to this the fact that, for many groups, their small cadre of planned gift donors are trustees, board members, and others with unusually close relationships to the charity, and much of what researchers thought they knew about planned giving prospects has proved to be wrong.
Faced with poor responses to their planned giving solicitations, many organizations have focused on soliciting annual funds rather than expending resources to seek out future dollars. If you are doing this, however, you could be missing a major opportunity to strengthen the long-term viability of your charity.
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 Understanding how to ask for a donation is always critical, and research on planned giving offers useful guidance to steer the right message to the right person. Here are some tips to help you get started:
1. Keep your message simple.
When soliciting for a planned gift, simplicity is key. The most successful solicitations are clear, concise, and focus on only one type of planned gift at a time. Because we know that bequest prospects are different from annuities prospects, for example, there is no reason to send anyone information about both giving vehicles. And do not talk about a CRAT or a CRUT — eliminate the acronyms, technical language, and insider jargon in favor of plain English.
2. Make anniversary date solicitations.
The best time to ask someone for a donation is when he or she is most likely to make one. You should analyze your database to learn which donors faithfully give in a particular month or quarter. If you know when someone gives each year, then you can gear your solicitation to that time of year (and eliminate mailings they will never respond to and telephone calls that might annoy them). This will save you money even as you build a more meaningful relationship with your donors. In addition, research shows that anniversary date donors tend to be good planned giving prospects.
3. Adopt a segmented solicitation strategy.
No solicitation strategy will be effective if you do not ask the right way. Segmenting your database based on who responds to what type of solicitation (e.g., direct mail as opposed to telemarketing) will improve your response rates and save your organization money. Understanding who gives — and what solicitation different individuals will respond to — also offers you another way to target potential donors. Research shows, for example, that people who respond to direct mail solicitations have historically been more likely than telemarketing-responsive people to be good planned giving prospects.
4. Cultivate relationships with annual donors.
Once you understand that your best planned giving prospects will come from the ranks of your annual givers, the next step is to build an ongoing relationship with these individuals. Ideally, officers and other top representatives of your nonprofit should reach out to consistent givers once they reach age 40 to cement their relationships with the organization. While the personal touch is time consuming, the long-term payoff can be substantial.
5. Encourage your annual fund staff to collaborate with your planned giving team.
Successfully securing planned gifts is all about building relationships with donors. Make sure the staff managing your annual fund understands both the importance of promoting long-term relationships and how their work can help result in larger gifts to the organization over time. If a spot opens up on either team, make sure you place emphasis on hiring a good communicator. Technical expertise is abundantly available from financial planners and attorneys.
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