Posted March 1st, 2002

The Gift for All Seasons

Whether your goal is to focus donors’ attention on ways to give through their long-range financial plans or to seek those who may have already made such plans or be interested in exploring such possibilities, a carefully planned bequest information program can form the basis of an effective gift planning effort.

Replenish endowment

The press has recently reported that many nonprofits have suffered significant declines in the value of their endowments as a result of investment market fluctuations in recent months. As a result, while many hope for market rebounds that will restore their value, others are turning their attention to efforts to replenish these endowments. In that case, the place to begin is with the source of much of today’s charitable endowment funds—the bequest. Many organizations can trace the bulk of their current endowment to bequests received over the years. One of the nation’s largest endowments, in fact, began with a bequest from John Harvard to a local college in Massachusetts in 1637.

What to do

Wills are written and revised every day. They are rarely prepared simply for the purpose of leaving a charitable bequest. Estate plans are made at different times and for different reasons depending on the individual involved, with events occurring in day-to-day life often serving as a catalyst for action.

Because different people are planning at different times, it is important to consistently let donors know you would like to receive charitable bequests. Experience indicates that those organizations that consistently inform and motivate their constituency are the ones that receive the most bequest revenue. And because studies show that wills that contain charitable bequests are completed on average from 6- to 48-months prior to death, efforts to encourage additional bequests can begin to show results within a relatively short time period.

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Increasing competition

As the average age of the donor population increases and lower interest rates and other factors impact the ability of some donors to make current gifts, we expect to see a greater emphasis on planned giving techniques, including the charitable bequest.

For that reason, in addition to motivating people to include charitable interests in their plans, now is the time to discover those who have already included your organization or institution in their plans, and take action to cement a relationship which could otherwise wane as time goes on. Discovery of bequests already planned is a welcome by-product of bequest communications programs. Remember also that substantial current gifts can sometimes also be developed as a result of discovering persons who possess the donative intent necessary to sustain a bequest and helping them carefully consider their charitable priorities.

A recent study by the National Committee on Planned Giving (NCPG) revealed that, of those who had included charitable gifts in their plans, more had learned of this method of giving from their charitable interests than from any other source. Only 12% said they were motivated by encouragement from legal or financial advisors. The nonprofit community may be the only one with an economic interest in informing donors about possibilities for giving through their wills and living trusts—the most common forms of planned gifts. There may be little or no economic incentive for professional trustees, asset managers, and others in the financial planning community to do so.

Back to basics

In initial approaches to planned giving communication, stick to the basics. The goal is simply to find those who are willing to consider the possibility of including charitable interests as part of their long-range financial and estate plans. You and/or their advisors or other staff members can then inform those who indicate interest about other, more advanced planning techniques.

The subject of estate planning is now on the minds of more Americans than ever before. Since the tragic events of last fall, the press has reported that record numbers of persons are now making or revising estate plans. Tax law changes in 2001 and the fact that over 70 million Americans (25% of the overall population) will reach age 65 over the next 20 years are fueling unprecedented interest in estate planning as well. The President’s call for more volunteerism and charitable giving may also have an impact on the numbers of persons who decide to include a charitable dimension in their planning.

Prosper in any environment

Efforts expended in bequest and other planned gift development can pay big dividends in any environment. If investment markets renew their growth, many residuary or percentage-based bequests and remainders from trusts and other plans will be even larger. If we continue in a period of economic stagnation, bequests may hold the key to balanced budgets if the volume of larger current gifts falls off.

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Evidence indicates, for example, that Americans shifted the ways they made their gifts during the Depression years. The New York Times reported on April 3, 1939, that giving to higher education, especially to the leading institutions of the time, held steady or actually increased during the Depression. Excerpts from The Times article entitled “Gifts to Colleges Hold During Slump” shed light on the predominant form of gifts during that time period:

“A survey of gifts and bequests to forty-nine American colleges and universities since 1930 indicated yesterday that gift receipts declined only 2.3 per cent for the nine years from 1930 to 1938, compared with the nine previous years of prosperity.

“The survey, made by the John Price Jones Corporation, showed a trend toward a concentration of gifts to fewer and larger institutions. Four of them received more money during the depression years than in the years of prosperity, while other colleges and universities received much less. Although [outright] gifts showed a decrease in depression years, the amount of bequests showed a sharp increase.”

Communication is the key

Ongoing communication is the key to reaching people as they make their plans. If your donors are more aware of the possibility of giving through bequests, they may be more likely to include you as a beneficiary when they revise their plans.

Mailings, articles in your donor communications, and informational meetings for people who give (where possible) are proven ways to build interest in gift planning.

If you have been consistent in promoting the message of bequest giving, keep it up. If you have been distracted by other priorities, consider a return to basics. If you have never had a bequest emphasis program, there may never be a better time to begin.

Click here for more information on materials specifically designed to explain to donors the benefits of estate planning and charitable bequests.

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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