[Summary] Don’t Fear the Reaper! Planned Giving session
With many thanks to Pratik for this summary. Full recording available at https://joindpp.org/resource-library.
March 15 DPP Lunch Analysis Summary – Don’t Fear the Reaper with Ann Kolakowski
This month Donor Participation Project (DPP)’s Lunch Analysis – a monthly brainstorming session on how to increase donor participation in nonprofits – featured a discussion around the topic – Don’t Fear the Reaper or Planned Giving, presented by Ann Kolakowski, Director of Gift Planning Services at the University System of Maryland, and also, Chair of the DPP Group – Academic – Major / Principal / Planned Gifts.
Background of the Speaker
Prior to joining the University System of Maryland, Ann served as Senior Director of Planned Gifts at the Humane Society of the United States. Before that, she worked as Director of Major and Planned Gifts at Towson University. She has held planned giving, alumni, and communication positions at Johns Hopkins and Goucher College as well. Ann is a Chartered Advisor in Philanthropy as well as president-elect of the National Capital Gift Planning Council.
Planned giving is democratic
In the world of fundraising, planned giving is considered the most democratic form since anyone can make a planned gift, making anyone a planned gift prospect. These gifts are usually made from assets and are more thoughtful and considered compared to cash gifts. Legacy gifts, such as bequests or beneficiary designations, make up over 90% of all planned gifts. These types of gifts are major gift-sized donations that are usually made after a person’s lifetime, and stewardship is essential when dealing with legacy donors.
Despite a 7.3% decrease in 2022, planned giving still makes up 9% of donations given, amounting to $46.01 billion. It’s an area that deserves attention, and marketers should start promoting legacy gifts as soon as possible to reap the long-term benefits. While legacy gifts may be more accessible through beneficiary designations, it’s crucial to ensure that the form is filled out correctly, with the right information, such as the nonprofit’s official name, tax ID, and official address.
Long term benefits
Planned giving is a long-term game, and patience is essential. While it may not yield immediate money, it can bring significant benefits over time. Celebrity estate planning is an excellent example of how planned giving can go wrong when not given enough attention. The talk on planned giving can be further divided into tapping into wealth while a person is still alive or through legacy gifts after their lifetime.
Planned giving is an essential aspect of fundraising, and organizations should focus on promoting legacy gifts to their donors. It’s crucial to understand the different forms of planned giving, such as bequests and beneficiary designations, and the importance of proper stewardship when dealing with legacy donors. By starting early and being patient, organizations can maximize the benefits of planned giving over the long term.
The Great Wealth Transfer
Legacy gifts present a great opportunity for charities to receive donations, particularly from the baby boomer generation. With 10,000 Baby Boomers turning 65 in America every day, legacy giving is becoming increasingly important. Furthermore, as many baby boomers are not leaving inheritances to their children, the prospect of leaving money to charities is becoming more attractive. This is particularly true as charities have the opportunity to benefit from the Great Wealth Transfer, with $9 trillion expected to come to charity in the next 20 years. However, it is important to note that while some of this wealth will be donated outright, a significant portion will be given as legacy gifts.
Creating a legacy
It is crucial for charities to start promoting legacy giving to their donors, as it is a joyful and cost-effective way of fundraising. Legacy giving provides a way for people to create a lasting legacy and have their memory live on. With more people beginning to realize the importance of estate planning, now is an opportune time to discuss legacy giving. Additionally, as the prospect pool for legacy gifts diversifies, charities should broaden their sights to consider new prospects.
Marketing legacy gifts can provide an almost $60 return for every dollar invested, making it a very cost-effective fundraising strategy. There is also no minimum or maximum amount for legacy giving, making it accessible to anyone. It is important to remember that legacy giving is not about talking about death, but rather about creating a lasting impact and celebrating life. Overall, charities should start focusing on marketing legacy gifts to their donors to reap the benefits and take advantage of this unique opportunity.
Some examples of prospects
Ann cited the example of Carol Matthews who donated $10 a year for more than 20 years and then made a bequest of $1 million to create a scholarship for special education teachers. She was a widow and had a daughter with special needs. It is important to remind donors that their legacy can live on and for them to consider contingent gifts in case their heirs are not interested in continuing their support. More often than not the best prospects for legacy giving include retired teachers, nurses, and widows, amongst others. At the same time, it is important to remember that anyone can potentially be a prospect. Ann also shared her personal experience working with a high school English department head who set up scholarships for Towson University, his alma mater.
Research shows that earlier the number of charities in an estate plan used to be 8-10, but now that has come down to 2-3. Baby Boomers are becoming more involved in legacy giving and are choosing to leave bequests to charities that keep them involved and show impact, even if they are not their number one charity. Ann emphasized the need for nonprofits to value their donors as part of their community and to show the impact of their donations in order to encourage ongoing support.
Certain groups, such as loyal donors, widows/widowers, and retired faculty/staff, are more likely to give legacy gifts. The focus is on getting people to start thinking about leaving a small percentage of their assets to an organization, even if they plan on leaving most of their assets to their children or grandchildren. The goal is to get people to start thinking about legacy giving and to become part of a legacy giving society.
Ann also emphasized the importance of recognizing and celebrating volunteers and mid-level donors who have a special affiliation with the organization. These individuals are already giving of themselves and should be treated with importance.
Legacy donors are not motivated by calendar events such as giving day or the end of the fiscal year. Instead, they are motivated by triggering events such as retirement or the death of a spouse. Other triggering events include a new job, a milestone birthday, death of close family or friend, divorce, injury, serious illness, inheritance, travel plans, global pandemic, financial planning, or birth of grandchild/ren.
In terms of targeting potential legacy donors, it may be suggestible to focus on individuals 55 years old and older with a higher net worth score. However, Ann emphasized that anyone can make a legacy gift and encourages organizations to honor families with generations of alumni (for higher ed) and to celebrate volunteers. The ultimate goal is to get people to start thinking about leaving a legacy gift, even if it’s just a small percentage of their assets.
How to encourage legacy giving
The key to encouraging legacy giving is to provide easy, clear, and actionable information to potential donors. This can be done through a simple page on the organization’s website or by including a link in email signatures or multiple locations. Avoid using jargon and complicated terms, as many people are not familiar with planned giving and associated acronyms. Instead, use simple language that anyone can understand, as if explaining it to a grandparent.
Legacy giving marketing should be consistent and steady, with messages delivered in multiple ways, such as through email signatures, buck slips, or social media. Impact should be demonstrated by inviting potential donors to special events, such as scholarship luncheons, and creating a legacy society to recognize and treat these donors as special.
It is important to be readily available with information when donors are ready to discuss legacy giving, as many people may remember at the last minute and may need to access the information quickly. Making the information easily accessible can help ensure that the organization is at the top of the mind when potential donors are considering a legacy gift.
While there are costs associated with marketing legacy giving, simplifying the message and delivering it consistently can be effective in encouraging donations. Inviting potential donors to special events and recognizing them as part of a legacy society can help create a sense of belonging and motivate donors to give. Finally, word of mouth is the most powerful form of advertising, so treating donors well and creating a positive experience can help encourage future gifts and generate new donors.
Consistently stay in touch
Ann referenced a study on realized bequests – after a donor has passed away and their estate plan is examined. The study found that donors typically revisit their estate plan in the last 2-5 years of their life, and this is a critical time for nonprofits to stay on top of mind in order to be included in the donor’s bequest.
To achieve this, Ann suggests frequent and personalized communication with older donors, who often feel isolated and appreciate receiving cards and letters. Ann emphasized the importance of not going silent on donors, even if they are in their 80s or beyond. She cited a graph showing the exponential benefits of a legacy gift to a charity’s lifetime giving, which is significantly higher than without a legacy gift. Thus, maintaining contact with donors throughout their lives is key to securing these valuable bequests.
Ann concluded the presentation with a quote from Dolly Parton about the importance of creating a legacy that inspires others to do more and become more. We are all leaders and have the opportunity to make a positive impact on our organizations and the world at large.
The discussion was followed by an open Q & A session with questions and inputs from DPP members.