Posted February 1st, 2002

Memorial Gifts: Linking Current and Deferred Giving

Memorial gifts are an integral part of many fund-raising programs. In some instances individuals will make a gift to an institution in memory of a friend or loved one only at the suggestion of the honoree’s family. Some refer to this type of memorial gift development program as the “gifts in lieu of flowers” approach. In other cases, donors care more deeply about the institutions to which they make memorial gifts and choose to trust the recipient of their gift to honor the memory of someone dear to them. This type of memorial gift program can often give rise to very close relationships with donors who have an interest in the long term viability of an organization or institution.

Is this the right time?

The unprecedented events of the last six months have changed the way many donors look at the world. Many people have re-examined their values and are making changes in their lives designed to strengthen ties to families and friends. For this reason, now may be a very fitting time to encourage memorial gifts, as donors may be more interested than ever in honoring their loved ones in special ways.

Memorial gifts come in all sizes. Experience has shown that memorial gifts of just a few dollars can be the foundation of much larger gifts. Over time, cultivation of regular memorial gift donors can lead to major outright gifts as well as future gifts earmarked for significant capital or endowment needs.

Just look around the campuses of most colleges and universities, hospitals, community centers, museums, etc. to see the names of people—living and deceased—who will long be positively remembered because their name “lives on” as part of that edifice. Or examine the academic catalogs of any college or university for endowed scholarship funds carrying the names of deceased individuals who will be remembered for as long as the college or university exists in the lives of students those funds benefit.

Bridging current and deferred giving

Given the purpose underlying memorial gifts, it is natural for them to be structured as planned gifts. In fact, planned gifts are very often used to fund significant memorial gifts. In every institution I have served, more funds have come into endowment from memorial and honor gifts than from any other source, with the overwhelming majority being bequests.

Recall that most planned gifts are funded from assets rather than income. Generally gifts of assets are larger than gifts from income. Planned gifts for memorial purposes typically come at the death of the donor—when he or she no longer needs the asset to assure personal financial security. These gifts typically come in the form of a bequest, but can also be gift annuities, charitable trusts, or other planned gifts.

Motivating factors

In a recent National Committee on Planned Giving (NCPG) study, the motivation to make a memorial gift (33%) was about equal to the motivation to reduce taxes or aid in estate planning (35%). In the case of charitable remainder trusts, the NCPG found that some 44% said they were motivated to create these trusts for memorial purposes.

Memorial gifts by their nature involve a strong emotional element and can serve as a powerful motivator for bequests and other planned gifts even when estate taxes are not a consideration. While there is little emotion in creating tax savings, there is a great deal of emotion in remembering one’s spouse, parents, child, or close friend by making a significant gift in their memory or honor. This is even more true now, since recent tax law changes have increased the amounts that can pass to others without incurring federal estate taxes.

Tips for success

02-2002-1

There are some practical steps one can take to help make a memorial gift program successful.

First, let your donors know your organization or institution accepts memorial gifts and encourages them. Keep the idea of memorials in front of donors in written publications, direct mail pieces, over the Web, and through the use of other communications means that may be available. If you wish to receive memorial gifts via bequests, get the word out in marketing efforts that feature testimonials from donors who have made planned gifts with a memorial element. According to the NCPG study mentioned above, the greatest number of respondents indicated they first learned of the need for making a gift by way of a bequest through the organization’s published materials. In fact, thirty-four percent of those surveyed said this was the first way they learned of making a bequest to the charity. This percentage has actually increased since 1992.

The idea of memorial giving can be “piggybacked” with other planned giving marketing initiatives. At every opportunity during personal contact, development officers should also remind motivated donors that memorial gifts can be meaningful gifts and that they can be made in the form of all sorts of planned gift arrangements as well as outright gifts.

Finally, carefully processing and acknowledging memorial gifts of all sizes and types is a must if the institution expects the memorial program to grow and lead to major gifts in the future. If the details of smaller memorial gifts are not handled with precision, donors will be less confident of the institution’s ability to handle the details of a larger gift. These details include prompt and complete notification of the gift to the surviving loved ones, receipting the donor in a timely manner, publicizing the gift appropriately, accounting periodically to those who are interested in how the gift is used, etc. Each detail is important!

A well designed, properly marketed, consistently executed memorial program—one that is well-coordinated with your planned giving efforts—can make the difference between an average development program and a truly outstanding one. It will require planning and constant promotion, but the results will be worth it.

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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