Can Not Asking for a Specific Amount Get You More? Part 2

In Part 1, I shared a story of client who asked for a residual gift instead a specific dollar amount and ended up with a rather large estate gift.

There is often great internal pressure to ask for and “book” a specific value for a gift, which is all but impossible for residuary gifts. This might be for campaign or FASB/accounting purposes. However, doing so can often mean a much smaller gift.

According to Sharpe studies (including those I have done), the average specific dollar bequest runs between $11,000 and $12,000. There are a few exceptions but very few, such as certain mass, low-average-gift charities that get a large number of very small (under $1,000) specific bequest gifts. This can drop the average specific dollar bequest to as low as $5,000-$7,000.

By comparison, Sharpe studies have found that the average residual gift is anywhere from 7 to 15 times larger than the average specific gift amount to those same charities. In most cases, it is closer to the higher figure.

Our studies show that the number of specific and residual gifts that most charities receive is roughly the same, with a slightly higher number of residual gifts.

For every single charity Sharpe has examined, we found that the NUMBER of residual and specific dollar gifts have been similar. However, in every single case, the residual gifts have generated between 85%-97% of the VALUE of all estate gifts.

Sharpe helps clients find ways to encourage the residual over the specific gifts.

This does not work in every individual case, but experience has shown that, over time, the residual gifts overwhelmingly outperform specific dollar gifts. As we all know, a significant aspect of planned giving is statistics and probabilities. This is a statistic that matters!

When faced with the internal pressure to get an estate gift commitment to “put a pelt on the wall,” it is almost always better to delay gratification and instead encourage that residuary gift.
 

By John Jensen, CFP®
 

Sharpe Group will continue to post helpful information for you here on our blog and on our social media sites. If this blog was shared with you and you wish to sign up, you can do so at www.SHARPEnet.com/blog.

We can be found on Facebook, Twitter and LinkedIn @sharpegroup.

We welcome questions you’d like us to address. Email us at info@SHARPEnet.com and we’ll share your question and our thoughts in this blog and on social media.

Posted in blog.

Leave a Reply

Your email address will not be published. Required fields are marked *