But these figures may not tell the whole story. After all, when was the last time your organization actually received a significant bequest from someone in their 40s, or even 50s? According to IRS statistics and studies, planned gift receipts from those age groups are relatively rare. The IRS information reveals that most charitable bequests come from the estates of people who are much older. In fact, the vast majority of charitable dollars are realized from the estates of those 80 and older. Past reports indicate that more bequests come from persons who die in their 90s than in their 70s.
Expectancies vs. maturities
These findings may not be as contrary to other reports as they seem at first glance. Most adults do not have wills. When people do first make their wills, certain circumstances usually have prompted such planning. Marriage and the birth of children are often events that trigger the need to initially formalize one’s plans.
Then, as the years pass, different events inevitably prompt further updates to long-range plans. Births of grandchildren, deaths, divorce, remarriage, changes in wealth, moving to another state, and other factors often result in a revision of those plans.
As time goes by, increases in income and wealth can have a gradual influence on charitable giving patterns. As discretionary income and assets grow, charitable giving increases, and more people find they can consider including charitable provisions in their estate plans—even if just a simple bequest. Charitable bequests of a specific sum have proven to be the most popular. Yet the largest bequests tend to be of a residual nature, where all or part of the estate is left for charitable purposes.
Planned giving donors go through various stages of estate planning. They consider their plans, act to put their plans in place, review and update their plans, and, in the final stage, their plans are realized. These stages can occur over decades; therefore, a well-conceived gift development effort must be crafted accordingly.
Much of the time and effort expended in a successful development program will be focused on where the returns on the investment will be best. This will obviously be different for the various components of a comprehensive development effort, whether donor acquisition, retention, upgrading, special and capital gift efforts, or planned gift development.
So who are bequest donors?
Those with limited time, budget, and other resources will likely find that efforts targeted to frequent, long-term donors in their late 60s and older will yield the best results. Most successful programs focus on persons who are at or approaching retirement age. After retirement, gross household income tends to fall, but discretionary income and the amount of disposable assets may be at or near their highest levels of one’s lifetime. In fact, the most recent figures from the Federal Reserve now place U.S. household wealth at a record $55.6 trillion. This rebound in household wealth in recent years may translate into additional disposable assets at death.
Singles and widow(er)s who are childless are particularly good prospects for estate gifts for several reasons. First, those with a number of children, grandchildren, or a spouse must naturally provide for family first and then charities and friends. Second, it costs a small fortune to raise every child. A recent Wall Street Journal article estimated the cost of raising a child from birth through high school at $300,000 to $1 million each! This does not factor in the cost of college, which could be another staggering figure. Therefore, childless persons may have been able to save, invest, and accumulate more resources over time in addition to having fewer non-charitable interests for which to provide in their estate plans.
There is also a tendency for more women to leave charitable bequests than men. One simple explanation for this is that women live longer than men. Most bequests from married persons come at the death of the surviving spouse. In the case of wealthier individuals, this generally happens because the first spouse to die leaves everything to the survivor under the marital deduction to postpone taxes. In the case of those of lesser means, this occurs out of necessity.
Older persons who have never married or who are widowed without children are also much more likely to give through gift annuities and other life income gifts. Why? Because the guarantee of a fixed income they can’t outlive may outweigh the irrevocable nature of such gifts, especially since they may not have to consider leaving a substantial part of their estate to non-charitable heirs.
Bequest donors and other planned giving prospects are an extremely diverse group. But, by taking the time to consider the age, gender, marital status, and family makeup of your constituency and targeting information appropriately, your investment of time and other resources may yield greater returns in both the near and long-term.
Editor’s note: This information is excerpted from “An Introduction to Planned Giving.” Visit www.sharpenet.com/seminars/intro/ for more information about this and other popular Sharpe seminars.