Despite limited tax incentives and relatively unsophisticated marketing efforts, large sums are being given worldwide to charitable institutions via bequests and other gift planning arrangements. In Holland, for example, a leading healthcare organization raised the equivalent of $62 million in a recent year from bequests out of a total of $128 million in private contributions. Yet if you ask most Europeans and others from around the world if they “do planned giving,” you will likely get a negative reply.
These were among the first impressions Robert and Timothy Sharpe gathered as they conducted a master class and two breakout sessions on planned giving at the 22nd annual International Fundraising Conference (IFC), held outside Amsterdam in October 2002. The 800 participants hailed from 62 countries. The Sharpes’ classes included participants from Holland, Germany, Sweden, England, Italy, Belgium, Egypt, France, Hong Kong, Thailand, the Philippines, the U.S., and other countries. Here, they share some of their experiences and impressions gained at the conference and in the course of experience they have gained assisting their U.S.-based clients in their gift planning efforts abroad.
More than meets the eye
“We were initially struck by the fact that there really is a great deal more gift planning activity occurring, particularly in western Europe, than most American fundraisers think or many Europeans recognize,” observes Robert Sharpe. “In other parts of the world, people don’t tend to connect what may be the common practice of leaving a chartable bequest via the will or similar vehicles with the term ‘planned giving,’ because outside the U.S. there may be few tax and other financial advantages associated with such gifts.
“Based on what they have learned about planned giving in this country, many outside the U.S. have come to link ‘planned giving’ largely with the tax planning aspects of major gift development. Many of those in our sessions were surprised to learn that studies by the NCPG and others have found that much of the planned gift activity in the States is, in reality, not motivated primarily by tax considerations.”
Uneven distribution of activity
The mission focus of the majority of the organizations at the conference was in the areas of medical research, environmental and political action, and international relief and development. There were relatively few persons representing the educational, cultural, local hospital, and social service organizations that have to a large extent been funded through state support.
As in the U.S., older persons, particularly in continental Europe, tend to be conservative investors and frugal spenders, in part due to memories of very hard times in their youth. This cultural phenomenon has resulted in concentrations of wealth in the hands of older people that appears even more pronounced than similar trends in the U.S.
“In the near term, this concentration of wealth will continue to lead to European charities’ receiving a great deal of private support via charitable bequests, or ‘legacies,’ as they are known in Great Britain especially,” remarks Timothy Sharpe. “Today’s older generation of western Europeans, who continue to benefit from broadly available publicly supported health care and other benefits, may be in a better position to benefit charitable interests along with their families than their U.S. counterparts, because they may not have the same degree of fear of outliving their resources. For now, they believe the social safety net will continue to take care of them, leaving more to pass to family and charity alike.”
Looking ahead, however, many at the conference shared deep concerns about what most believed would be the inevitable downsizing of very generous public welfare programs that prevailed in many nations in the decades following World War II. “Like the U.S., they too have baby boomers who are growing older with fewer people behind them to pay retirement and healthcare costs. The same demographic crisis we will face here in the States in the second and third decades of this century will also be felt in Europe and elsewhere. But it may actually feel worse because of the possible reduction in the level of benefits that generations of Europeans have become accustomed to in their later years,” says Robert Sharpe. “Representatives of a Swedish health care system indicated they were at the conference to learn how to provide the ‘margin of excellence’ through private funding in light of gradual reductions planned in government support of local hospitals.”
Melding of the past and the future
For all of these reasons, more and more nongovernmental organizations (NGO’s) around the world are beginning to look to more structured and intentional encouragement of planned gifts as a growing source of future funding.
In discussions with Sharpe session participants a consensus emerged that it was not really a question of whether an organization “did planned giving,” but rather whether it enjoyed support from voluntary giving. As larger gifts worldwide tend to come in forms other than cash, the real question becomes how to structure such gifts on an outright and deferred basis. “It then became clear that to a large extent, we were simply bringing back to Europe and elsewhere methods and traditions surrounding them that were originally brought to the U.S. from abroad many years ago,” says Tim Sharpe.
Robert adds, “Many of the gift planning tools we commonly employ in the United States today have a long history and deep roots in Europe, the Middle East, and elsewhere. A participant from Egypt noted that vehicles very similar to charitable lead trusts had been used for centuries to facilitate a combination of wealth transfer and funding of social needs. Bequests, trusts, gift annuity equivalents, and more were all being actively used to promote the public good centuries before the founding of the United States and long before there were any federal income, gift, and/or estate tax benefits associated with them.
“In reality, the U.S. has had the privilege of preserving and building upon these ancient forms of giving during the twentieth century, while much of the rest of the world suffered the devastation of a depression sandwiched between two World Wars and their aftermath. During that time, there was little alternative to extensive reliance on tax-fueled social service systems. In recent years, however, we are seeing a return to more of a mix of public funding and private philanthropy. We believe this trend will accelerate with the growing economic power of the European Economic Union and increased wealth in Asia.”
Robert Sharpe further observes that “the United States in effect served as a sort of cultural ‘backup drive’ as we preserved funding means developed elsewhere in the past. We are now simply reintroducing many of the same plans to the grandchildren and great-grandchildren of those for whom such plans were commonplace prior to World War I. As part of that process, we are also reinforcing in our own minds the non-tax motivations that originally gave rise to these plans.”
In 2003, the Sharpe Group enters its fifth decade of service to America’s not-for-profit community and those who provide its funding. As the world continues to grow smaller and more interdependent, the Sharpe Group will continue to adapt, innovate, and help facilitate the transfer of wealth from the most noble among us to those organizations and institutions that through their funding meet vital human needs.
