While there are any number of important actions you might consider now to help ensure success next year, here are 13 ideas that deserve special attention.
1. Monitor economic conditions.
With no guarantee investment markets will remain at current levels or continue to rise, donors who have been affected by market volatility may prefer gift plans that offer a greater degree of certainty. Gift planning tools such as unitrusts that are more affected by ups and downs in investment markets may be less attractive than gift annuities or other plans that feature a fixed, predictable source of income.
Lower interest rates will continue to have an impact on charitable giving. They affect the size of charitable deductions and reduce disposable income for seniors. As a result, there may be increased interest in gift annuities among older persons who wish to give while unlocking additional income.
2. Don’t forget about gifts of securities.
Gifts of publicly traded securities are a major source of philanthropic support for many institutions and the source of much of the increase in giving by individuals coming out of the Recession.1 Donors looking for the best ways to give should be reminded that gifts of appreciated securities and other assets can yield additional tax benefits. Donors who have newly appreciated or re-appreciated securities should be reminded that it may be best to make gifts using this property and use their cash to diversify their investments or rebalance their portfolios.
3. Maintain flexibility in marketing activities.
Don’t try to plan communications activities on subjects other than charitable bequests more than a year in advance.
While interest rates are low, emphasize plans that are more attractive in such an environment, such as gift annuities, charitable lead trusts and retained life estates. If interest rates rise, be prepared to shift your plans accordingly.
4. Review minimum age and gift amounts.
Make sure your minimum age and gift amounts still make sense in today’s environment. If you anticipate lower overall investment returns in coming years, it may be prudent to increase minimum ages and adjust the gift amounts accepted in order to reduce the risk of corpus or reserve fund exhaustion. Risks are generally higher in the case of younger donors receiving relatively high payouts or if you are managing large numbers of smaller gifts where costs may become too high a percentage of the aggregate fund and thus lead to increased risk.
5. Review all marketing and donor communications materials.
Consider current economic conditions and any changes you may decide to make in minimum gift or age amounts. Make sure that you are presenting examples that are still realistic in today’s environment. Prepare or purchase materials with a view toward shelf life. Look for materials that “write around” possible changes and avoid unnecessary detail that could render them obsolete in the event of economic fluctuations that lead to different payment rates, tax law changes and other factors.
6. Review gift acceptance policies to ensure yours reflect today’s reality.
How gifts will be used, what will be accepted, who is authorized to accept gifts, and provisions for named or restricted gifts are a few of the issues you must address. Time spent on solid policies today can prevent problems down the road.2
7. Stay on top of expectancies.
With increased gift planning activity in both the nonprofit and for-profit sectors, now may be an important time to check in with your bequest and other planned gift expectancies. Remember that wills, trusts and other beneficiary designations can be changed easily at any time. Scheduled and potential changes in the tax law in 2013 will lead to a flurry of estate planning activity. Take steps now to make sure you are top of mind when these changes take place.
Consider also that donors often retain the right to change the beneficiary in the case of most charitable remainder trusts they created with the help of their advisors.
8. Encourage repeat gifts and additional contributions.
As with bequest and other revocable gift donors, keep in contact with those who have already completed irrevocable deferred gifts. They can be among your best candidates for new gifts. Many have found it is easier to motivate an additional gift annuity or contribution to an existing charitable remainder trust than to complete a first-time gift. Also keep in mind that some donors may no longer need the income produced and could in some cases terminate the gift plan prior to their passing away.
9. Be consistent in marketing activities.
Keep in mind that it can take time for donors to become comfortable with planned gift concepts and that events in donors’ lives can determine their level of interest in a particular plan at any given time. That is why the quality and consistency of exposure to gift planning concepts is more important than the quantity. Take the time to determine the appropriate group to receive information on various topics and put in place programs that assure consistent exposure to the correct groups over time. Not only will this approach yield greater results, but it also may lead to a reduction in marketing expenses.
10. Align board and management expectations.
Over the past decade there has been an increase among senior management and volunteers in the awareness of the possibilities for planned gifts. To ensure this continues, make certain that your leadership has a realistic expectation for what planned giving may mean for your organization or institution.
Depending on the size of your constituency, age and wealth ranges and other factors, realistic expectations for bequests and other planned gift income and the timing of its receipt for various organizations may be very different. Be proactive in setting expectation levels so they may better reflect the success of your efforts.
11. Brush up on your understanding of the factors that motivate your donors.
Although tax and other financial considerations receive a lot of attention, they are rarely the primary motivation behind a gift. See “Why Do People Give?”.
12. Integrate development efforts.
The future belongs to those who continually strive to make certain that various development efforts complement each other whenever possible. In times when both competition for the charitable dollar and expectations for results are rising, unnecessary and internal competition and conflict will be more costly than ever.
13. Plan now for any training or development you or your staff may need in the coming year.
Sharpe seminars continue to be the top-rated and best-attended training opportunities for gift planners.
As 2013 inches closer, we may find we have come full circle to the point where mission and stewarding relationships are in the forefront. Knowledge about and availability of gift plans will be assumed as a starting point to a comprehensive development program.
A minimal amount of time invested in careful planning and coordination of your activities now can help assure success in 2013 and result in abundant dividends in coming years.
1. See “Will Things Ever Be the Same?” at sharpenet.com/resources.
2. Well-crafted gift acceptance policies can help you consistently address issues and questions when they arise. Sharpe Group consultants are well versed in customizing guidelines your organization or institution needs to serve your donors most effectively.