Posted December 1st, 2007

From the Field: Trend Watch 2008

This month Give & Take asked three gift planning professionals about what to expect and plan for in 2008. The group includes: Marilyn Schaffer, Director of Gift Planning for Advocate Charitable Foundation in Chicago; Judith Nichols, Ph.D., Senior Vice President for Development for Covenant House International in New York; and Mike McCormack, Associate Vice President, Planned Giving at Claremont McKenna College in California.

Give & Take: 2007 has been a year of wide-ranging economic conditions—housing markets in decline, oil prices rising, talk of recession, etc. How do you think these conditions will continue to affect giving in 2008?

Schaffer: I don’t really see an impact when you are looking at the very wealthy. For example, here in Chicago, there have been some very extraordinary gifts this year. So for the extremely wealthy, I don’t see these bumps in the economy affecting their giving very much. But when you look to the mid to lower end of the population of wealthy individuals, I think you do see an impact. They are more worried about the future and economic uncertainties, and that impacts not only their current outright giving, but also their decisions regarding future planned gifts. In this environment, bequests become more attractive because they don’t require a permanent commitment from individuals now. I think gift annuities continue to be of real interest to people in this kind of market as well. The idea of that fixed income that is not affected by the economy is attractive.

Nichols: I don’t think the overall economic conditions that we’re experiencing are going to coalesce into any specific pattern. I think things will continue to be somewhat chaotic until at least the end of 2008, when we see where the leadership in the federal government is going.

McCormack: We are already seeing a situation where the housing market is putting a damper on gifts of real estate. People are recognizing that the value of their property may be on a downward slope at this point and they are just waiting it out a bit. As far as the other economic uncertainties are concerned, I think current conditions will probably make people look closer at the good old fashioned life income gifts, such as the charitable gift annuity, that come with the guarantee of fixed payments. The gift annuity will represent a safe harbor to people.

Give & Take: Do you expect to see any particular trends in giving in 2008 based on recent giving history?

Schaffer: What I’m seeing is a real rise in the number of donors informing us of bequest intentions. We have been much more strategic over the last few years in our efforts to encourage our donors to notify us about bequest intentions. I am anticipating that will continue, and I look forward to the stewardship opportunities this presents.

Nichols: If we’re looking at major giving trends versus general giving trends, the major giving trend is that at least 95% of the gift funds are coming from 5% of the audience. A lot of that has to do with the size of current campaigns—organizations are redefining upward what a true major gift is. On the more general giving trend, we have been seeing the fact that increases in giving are not keeping up, in a sense, with inflation. Even though we have low inflation, we’re not seeing growth in philanthropy from the general public. On one hand, because we’re doing a better job of identifying, researching, cultivating, and asking for the larger gifts, the larger gift is becoming more significant. On the other hand, for any of us who are very strongly focused on unrestricted, flexible dollars, we find that we’re having to work much harder to stay even.

McCormack: The trend that I see is one that really began when the markets started going south in 2000, 2001, and 2002. At that time, the charitable gift annuity began to become the most popular gift agreement. That trend has continued. A lot of people have the memory of what went on a few years ago fresh in their minds. So I don’t see a new trend, just a continuation of the gift annuity trend that has been ongoing. It is probably our most popular agreement and will likely continue to be as long as the markets are volatile because older people want a little more certainty in their lives.

Give & Take: This fall the media focused attention on the first Baby Boomer filing for Social Security. What effect do you feel the Baby Boom generation will have on philanthropy as they begin to enter their retirement years in 2008 and beyond?

Schaffer: As planned giving officers, I don’t think you can keep doing what you’ve been doing when it comes to Baby Boomers. If you look at the generations that came before them, one of the things that defines them is loyalty. Baby Boomers may be less loyal, and perhaps more demanding and suspicious. As a generation they may be more likely to place restrictions on their gifts. Gift officers, both major and planned, need to work harder to keep them better connected to the organization. I think they are just as philanthropic as previous generations, but I believe they approach the giving process differently and we need to take that into consideration when developing cultivation and solicitation strategies.

Nichols: There is no doubt about it—Baby Boomers have been affecting giving all along. In organizations that have had the means of working with them since they were younger, especially universities and colleges, they have been seeing that Baby Boomers have made up a large percentage of their gift dollars, simply due to the generation’s size. Most Boomers are not retiring at age 60. Those who are are often redefining what they mean by retirement. So it is not necessarily that they’re cutting the economic costs, and therefore have more money to give to charity. In many senses, it is that they have less money because of what they view retirement to be. I think Boomers are incredibly great prospects for gift planning, especially some of the simplest vehicles such as bequests through their wills. A big part of this is a life expectancy that is significantly higher than earlier generations, and an awareness of that. We are dealing with a generation that is going to be very cautious about letting go of assets during their lifetime. And they should be. Whereas with their parents’ and grandparents’ generations we were able to appeal to their sense of duty, you can’t do that with Boomers. They’re not organizationally loyal the way the older generation is. They have different priorities. We need to work much more in partnership with them and learn what their goals are and show them how gift planning can help them reach their goals.

McCormack: I confess that I haven’t thought too much about the Baby Boomer generation, except in this regard: A lot of people are talking about the solvency of the Social Security system. Many Baby Boomers are going to be looking for alternative ways to ensure that they have a secure retirement. I think that will lead a number of them to look to planned giving for vehicles that might help them have a back-up in the event that there are some decreases in Social Security. I wonder myself if the Boomers are going to be as generous as the so-called Greatest Generation is now. But if they have their own self-interest on the line, they may begin looking at these life income gifts and the benefits that they offer as something that would shore up their own retirement, while helping their favorite charity.

Give & Take: What are your plans for communicating gift planning techniques and options to donors in 2008?

Schaffer: We are going to continue our mailings on specific topics, such as our newsletter and targeted mailings, such as gift annuities. Of course, we will continue with personal visits because nothing beats them. We also plan to reach out to professional advisors by continuing to host seminars for advisors and producing an advisor newsletter.

Nichols: We are in the process of reframing our strategy, and we are using what we call the “Three Rs.” R number one is renewal. Under that we are looking at gift planning as the logical next step for people who have demonstrated through their annual gifts to us that we’re a priority. So we will be communicating even more with people through newsletters, phone contact, and personal contact, asking them to make a real commitment to Covenant House and the kids we serve. The second R is replacement. We recognize that with an elderly donor base, we need to be finding people in their 60s and early 70s who share the values of our disappearing donors and can keep us stable. The third R is repositioning. We know we need to enhance our awareness with younger audiences such as Boomers and Generation X and Y, find out what it is about Covenant House that matches their values, and then do a better job of talking with them in effective ways.

McCormack: We take a shotgun approach to reaching people. We send a planned giving newsletter to our constituents to keep our name out there with our friends. We also plan to mail postcards to donors, and we hope to do some radio advertising on an AM news talk station. We have found that older people tend to listen to these types of stations. We usually run the radio ads twice a day for five weeks. The ads explain the benefits of our gift annuity program. The reason we like to tout the gift annuity is because it can be described fairly easily in the short amount of time we have. We also plan to run ads in The Wall Street Journal. Since we are a fairly young college, we like to reach out to people beyond our regular alumni body because we don’t have that many donors in the traditional age range for planned giving. But the granddaddy of all communications efforts is the donor visit. We like to try to see as many of our existing donors as we can. It is so much more effective to be able to meet with someone in person to describe what the College is doing and ask if everything is satisfactory with their agreement.

Give & Take: Do you have any advice for those who may just be starting a career in gift planning in 2008?

Schaffer: Get out of the office and meet with your donors and their advisors! Take advantage of the offerings of your local planned giving council.

Nichols: Go to as many educational seminars as possible. There is so much you need to know from both a technical and marketing standpoint. You probably won’t get it all in one course, so engage in multiple training opportunities.

McCormack: In my early years, I was overly enamored of the technical. You can get too wrapped up in the intricacies of gift planning. I think it is important that people just starting out be conversant in the technical, but they should never forget the importance of interpersonal skills. Listening to donors, knowing how to talk with them on the phone, making them feel at ease during a personal visit, etc. is so important.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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