In the March 1988 issue of Give & Take, Robert Sharpe, Jr., defined a planned gift as “any gift of any kind for any amount given for any purpose—operations, capital expansion, or endowment—whether given currently or deferred if the assistance of a professional staff person, qualified volunteer, or the donor’s advisors is necessary to complete the gift. In addition, it includes any gift which is carefully considered by a donor in light of estate and financial plans.”
As such, a more complex current gift may be considered a planned gift if a staff member or advisor is required to help complete the gift. However, many planned gifts are, by their nature, deferred—gifts for which the charity will not receive the full benefit for some period of time. These gifts, which include bequests, often provide steady and lasting support for successful fundraising programs.
Despite the obvious importance of planned gifts, during challenging economic times those responsible for planned giving may come under increased pressure to justify the costs associated with these efforts, a task that can be made more challenging given that much of the payoff for your work may not be seen for many years.
Successful fundraisers are able to manage others’ expectations while maximizing their department’s potential. You can work toward doing both by taking these simple steps:
- Know how others view your efforts. Are your planned giving efforts considered a cost center or a profit center? Most planned giving departments generate both income and expenses, but those that are considered mainly a cost center may find themselves in a precarious position. If your responsibilities include facilitating gifts and transactions that others initiate, the income that is generated by these gifts may be reported in another area. Such an arrangement may make it more difficult to justify the cost of planned gift efforts. Make sure people understand your responsibilities and the value you bring so that you are not viewed as a cost center for most of the year and then analyzed as a profit center at fiscal year-end.
- Realize that planned giving is a process. Every gift has five elements: who is making the gift, why it is being made, when it will be completed, how it will be structured, and what is given. Those responsible for fund development must manage all five parts of a gift in order to maximize gift production. At some institutions, the organization of various fundraising arms may need to be rethought. If one group is responsible for handling the who and the why while another office—possibly even in another building—is assigned the what, when, and how, it can be difficult to function smoothly. Know your role and at what point you should jump into the process to make sure the gift is completed in a professional manner.
- Remember that just because many planned gifts will not produce income until later doesn’t mean that your program will not be evaluated today. You need to be prepared to show what you’re doing to promote planned gifts that will generate income sooner and later.
- Keep careful records to track your role in the giving process. Make a note of every letter, meeting, and phone call. When a bequest is received from someone who was stewarded over time, prepare a report summarizing these activities and circulate it to appropriate management staff.
- Strengthen your relationship with peers. The objective of any development officer should be to enhance the strength of the institution. If other fundraisers are aware of what your responsibilities are, they may be more comfortable in seeking your assistance in working with particular gift situations.
- Understand your program’s potential. A small organization with only a few hundred older donors may never be able to generate as much bequest income as a large, established program with thousands of donors who are ready to start making their estate plans. Be wary of benchmarking against other programs. Make sure those evaluating both your potential and your success are comparing apples to apples.
- Be realistic about timing. Avoid overspending today’s budget dollars to promote gifts that may not be realized for many years. If you have mostly younger donors, encourage near-term gifts like gift annuities to benefit aging parents or charitable lead trusts and other gifts that will produce gifts sooner, in addition to encouraging bequests. It is critical to match your program to the age and wealth of your donors.
- Beware of reporting all bequest expectancies in the same way. A bequest expectancy from a 50-year-old is not as valuable in the near term as one from a 90-year-old. Avoid the temptation to bulk up your fundraising reports with expectancies from middle-aged donors. Doing so may cause others to have unrealistically high expectations for bequest dollars that most likely are still decades away from being received. Instead, include expectancies of all ages in a legacy society but concentrate efforts on older donors.
Planned gifts can have a powerful impact, one that can be felt both sooner and later. Planned giving officers should be prepared to demonstrate their role in generating this income while at the same time not promising more than can be delivered over a reasonable period of time. It is always better to exceed lower expectations than to fail to meet overly ambitious ones. Creating a realistic picture of your fundraising potential and presenting a clear strategy for achieving results will put you in a strong position now and in the future.
Note: This article is excerpted from Robert Sharpe’s “How to Cripple Your Career in Five Easy Steps,” presented at the 2010 Partnership for Philanthropic Planning Conference in Orlando, Fla.