Posted May 1st, 2009

The Road to Mismarketing May Be Paved With Good Intentions

It is well known among marketing professionals that statistical reports and research surveys can lead to dangerously flawed conclusions. Statistics can be used to prove almost any point, depending on how a question is asked.

For this reason, professional market researchers strive for total objectivity when conducting a survey or study in order to keep the research from becoming tainted by any bias or preconceived conclusion. Such biases can be almost impossible to detect in the final report because the numbers, printed starkly in black and white, invariably support the conclusions presented in the summary.

For this reason, it is important to approach marketing studies with a critical eye, including understanding whether the research measures statements of intent or measures of actual behavior. One might compare this to pre-election polling versus election results. This “Marketing 101” rule is perhaps the most commonly violated in all of market research, often without any conscious decision on the part of the survey sponsor.

Intentions vs. behavior

The goal of much market research is to predict future behavior, which can differ significantly from statements of intent. Ideally, researchers should take care to identify and examine relevant behavioral data to see if it aligns with statements of intent, then qualify the research results accordingly. Sometimes, however, relevant behavioral data is not readily available. In such cases, clearly explained surveys of intent alone can be very useful. Fortunately for those involved in planned giving, there is a long, well-documented history of planned giving activity that we can look to for guidance.

Over the past few years, several well-publicized surveys and research studies have claimed to have “discovered” that the best planned giving prospects are between the ages of 40 and 60. These studies focused primarily on giving through bequests or, more specifically, on survey respondents’ reported intentions regarding preparing a will and the likelihood of including a charitable bequest.

Let’s put aside for the moment, as the surveys did, that planned giving can encompass many philanthropic behaviors in addition to bequests. We’ll focus our attention on those people who actually leave bequests to charity that are ultimately realized by the charity. As mentioned above, there is a great deal of reported history on this specific behavior to which leading programs look when constructing their fund-raising plans.

A look at bequests

While some bequests are realized from donors who die before age 60, these bequests normally represent a relatively small portion of the total number of bequest donors—fewer than 3% of bequests reported by the IRS from 2001 through 2005, in fact.

However, the surveys suggest that what’s really important is getting mentioned in the first will, which is sometimes prepared well before the age of 60 or even 50. Or, at the very least, the surveys indicate that it may be worthwhile to take extra care to communicate with those who are age 40 to 60 who report they would consider a charitable bequest when they make a will.

Reality check

Let’s go back to examining what is actually being presented here. These surveys indicate that a majority of people between 40 and 60 do not have a will, a fact that pretty easily passes the reality test, and go on to state that a large percentage of this group would consider making a charitable bequest when they prepare a will.

At this point, it is critically important to understand that this statement reflects intent, not behavior. We’ve all heard someone say, “I’m going to lose weight (or stop smoking or own my own company or buy a Ferrari).” The people making these statements may be completely sincere, yet the statements alone cannot predict their future behavior. They reflect an intention at a given moment in time, but one which could change due to any number of unpredictable occurrences.

Furthermore, these survey respondents report that they would consider adding a charity to a will they may prepare at some point in the future because they would be motivated to do “good” or “what is expected.” While it is uncertain how the original survey question was phrased, it’s clear from the answer that the respondents wanted to give the “right” answer.

Consider the “stopping smoking” example above: “As a current smoker, with the full understanding of the health dangers to you and those around you caused by your smoking, would you consider stopping at some indeterminate time in the future?” While that’s an exaggeration, you get the point. This is a classic case of mistaking intentions for behaviors, as few persons in this situation actually follow through on their stated intentions.

For example, a recent survey reported that over 50% of wealthy Americans said they had included charities in their will. Year after year, IRS reports show that on average about 20% of wealthy individuals actually leave bequests to charity when they die. Perhaps these respondents were attempting to give the “right” answer by claiming to have followed through on what was only a noble intention. Regardless, many of the people were either misstating the contents of their will to surveyors, did not disclose contingencies that later invalidated the bequest, or chose to remove charities later in life when they completed their final wills.

Back to the facts

Fortunately, there are many facts that are beyond dispute that can help us identify actual bequest behaviors. Consider the following information from bequest records supplied by numerous nonprofit groups, large and small, and examined in the course of planned giving consultation work by The Sharpe Group over the past 46 years. While there is a small amount of variation by type of organization—for example, ages tend to be two to three years younger for educational organizations than for health organizations—the figures as a whole paint a consistent picture. Listed below is the median age of those who leave a bequest to a charity, in which the bequest is ultimately realized by that charity upon estate settlement:

  • Age when the final will is written: 79
  • Age when the final current gift during life is made: 81
  • Age when bequest is realized: 84

Another fact is that over two-thirds of charitable bequests and other gifts that are completed at death come from women who make the final decision to give after the age of 70. Why? Women tend to live longer than men, and family assets are typically distributed by the second spouse to die. Furthermore, many donors who ultimately leave charitable bequests do not make their first gift to that charity until after the age of 60. In most cases, these donors are unknown to the charity until that time in life or even later in some cases.

And finally, from a report compiled by the Internal Revenue Service, we learn that over half of bequests reported to the IRS in 2004 were left by widows or widowers, the large majority of whom were in their 80s when they died. Does anyone for an instant believe that in most cases these bequest instructions were not reviewed and either confirmed or changed upon the death of the first spouse?

What to do

If you are tasked with building bequest expectancies for your organization, how should you focus your communication resources? If you are in the fortunate position of having access to an unlimited budget, you might answer, “Everyone on my file over the age of 40!” However, faced with the reality of finite resources, there are probably better prospects than someone who, statistically speaking, has over fifty years to live and probably won’t be preparing their final will for over forty years.

This is not to say that it is unwise to take steps to encourage donors to include their charitable interests in the wills they prepare early in life. For those with large numbers of younger donors, it can be important to begin communicating with them earlier in life using the Web and other age-appropriate media.

For most, however, the key to increasing income from bequests and other age-sensitive gifts in the relatively near term is to focus the majority of your time and resources where there is likely to be a more timely return on investment.

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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