Sharpe Group generally encourages its clients to seek out residuary estate gifts instead of gifts of specific dollar amounts.
Is this always a good idea? Let me share a story of two charities, one that requested a residual gift and one that requested a specific amount from the same donor, and how things unfolded.
After launching a capital campaign, a development officer for one of our national clients went to an older, very philanthropic donor and asked him to include a campaign gift in his estate plans. He was a long-time supporter of the charity—making a number of $1,000-$5,000 annual gifts. He also contributed $20,000 to a previous campaign. He quickly agreed to make an estate gift.
He asked the development officer to give him a number. Following Sharpe’s long-standing advice, she declined.
Rather than giving him a number, she suggested he consider making a gift of a percentage of whatever remained in his estate after family and specific dollar gifts.
He pressed her on this several times, and each time she declined to provide a specific amount.
Within a few weeks, the same donor was approached by a different national charity that was also mounting a capital campaign. They asked him to make a pledge by including them in his estate plan. He agreed and asked how much they were looking for.
At the suggestion of their capital campaign consultant, they asked him to consider a $500,000 gift pledge. He agreed and confirmed the adjustment in his estate plans.
Both charities were pleased with the result, but which approach was more successful?
The very thoughtful donor and his spouse passed away within a few years. Both gifts came to fruition. The charity that requested the $500,000 gift announced the pledge in its campaign and then again when the donor passed away.
In fact, my client read about the gift in the news soon after the donor passed away. She had not yet heard from the trustee about her gift and wondered if she had made a mistake. At this stage, the $500,000 going to her competitor was looking awfully good.
With this in mind, she called the trustee and asked if he might be able to share the details of the gift to her institution. The trustee informed her that it was a large and complex estate and that it would take some time before it would be final, but the charity could expect a gift of at least $2 million.
Ultimately, the Sharpe client received a $2.3 million estate gift, compared to a $500,000 gift to the competitor.
What lessons can we learn from this scenario? We will review this question and more in Part 2.
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