by Bill Giarratana
A very high percentage of charitable donors are aware of legacy giving in which a charitable organization is named the beneficiary in a person's will. Donors also know this method of giving as a living trust. Ninety-nine percent of donors are aware of the concept of legacy giving.
The youngest group in charitable donors (less than 55 years of age) represents the demographic with the most potential in future to name a charitable organization as a beneficiary in their will. Thirty-nine percent of those who have yet to engage in legacy giving are very or somewhat ready to do so.
So why do we continue to mail to those demographics that are 65 plus and neglect targeting the demographic that has the most future potential?
I believe one of the smartest men that ever lived may hold the key to the question.
Albert Einstein is credited with having said, "Insanity is when you do the same thing over and over and expect a different result. Too often, unfortunately, fundraisers and nonprofit marketers fail to step "outside the box" and examine what is driving their day-to-day behavior. In a time of changing paradigms this puts you at risk.
A move from "linear" to "cyclical" giving. For as long as I can remember, development practitioners have preached the donor pyramid: a linear form of donor growth and education. The thinking goes like this: a prospect makes his or her first gift to your organization and, hopefully, moves on to an annual gift commitment. If the nonprofit nurtures the relationship and the donor responds, the gifts become larger and, ultimately, the organization will receive a bequest or life income arrangement.
Whereas this "linear" approach made perfect sense when people didn't live very long, today's life span of eighty to ninety years or more suggests that it will be lifestyle coupled with lifestage -- a more "cyclical" approach -- that will determine when gifts will be made. Nonprofit organizations will need to be more attuned to finding these moments; this means developing programs that keep in touch with donors and prospects making them aware of the full-portfolio of charitable products, i.e. gift annuities, trusts, estate planning and bequests that your organization offers.
It will require Development, Major Gifts and Planned Giving Department's to work closely with one another identifying individuals that match the correct "lifestyle" with "lifestage" charitable product.
We will also need to "think out of the box" to succeed, but we'll benefit by becoming less complacent and wedded to old ways simply because "that's what we've always done." The trends can be your impetus to a stronger, more productive way of fundraising.
Source: Surveys of Direct Mail Charitable Donors in the United States and Canada
The practice of planned giving at the nation's charities is likely to face a shift from the "technically-focused programs" to a "back-to-basics movement" based on bequests and charitable gift annuities.
This is the conclusion presented by two planned giving practitioners at the National Conference on Planned Giving, held recently at Lake Grapevine, Texas. Cynthia W. Krause, president of Wilson & Krause and trust counsel of the Methodist Health System Foundation in Dallas, and Betsy A. Mangone, vice president of The Denver Foundation, based their prediction on interviews with 29 planned giving professionals.
Although they acknowledged that their study was not statistically valid, they believed that since it included input from many of the nation's leading planned giving programs, as well as five national planned giving consultants, it makes their conclusions relevant to the "successful current and future practice of planned giving and difficult to dismiss."
The study identified the key trends in planned giving since the year 2000. In terms of the number of closures of planned gifts since 2000, they found that half of the charities surveyed said their gifts were up slightly, while the other half reported their closures were approximately the same.
The most common type of planned gifts being closed by charities are bequests and charitable gift annuities. Charities with "historically active charitable remainder trust (CRT) programs experienced significant decreases in the number of CRT closures from earlier years." The charities said that many CRT prospects were "migrating to donor advised funds or creating family foundations and supporting organizations."
Krause and Mangone found a "significant change in the mood of Americans since the September 11, 2001 terror attacks in the United States, which has created "greater emphasis on the short-term, since at any moment, lives might be turned upside down in a catastrophic event."
This creates a "greater propensity to hold onto assets" and therefore "an increasing unwillingness to tie up assets irrevocably." Moreover, donors want increased control of their gifts and often rely more on the "advice of their personal advisors rather than the information provided by the charity."
Charities are responding by more actively marketing gift annuities to "address their donors' uncertainty with their investments" and some have even ceased marketing CRTs, other than for real estate gifts.
Another trend they found is that the old planned giving newsletter format is becoming increasingly ineffective as an educational tool about gift vehicles because the market is becoming saturated, and response rates are lower. "Therefore, some charities are reducing the number of issues sent to constituents." Marketing materials are becoming more mission-based, less technical, with an emphasis on the practical, they said.
The survey also found that the private sector is much more involved in setting up and managing charitable trusts and that a "larger percentage of gifts are coming from (through) professional advisors."
Krause and Mangone found that charitable representatives and consultants are more consistently stating that "planned giving is first about the relationship with the donor" and that "charitable gift vehicles are no longer being thought of as an end unto themselves, but as tools to help donors meet their goals."
Based on the results of their study, Krause and Mangone offered their predictions for the future of planned giving.
They predicted a "back-to-basics movement" with increased focus on marketing bequests because donors will prefer bequests compared to other forms of planned gifts and because professional advisors will offer them as an alternative to irrevocable life-income gifts. There will also be an increased emphasis on the charity's mission rather than the tax benefits of planned gifts and cultivating charitable intent.
"There will be a reduction in technically focused programs among smaller organizations, but not necessarily in larger organizations," they said. "At the same time, there will be an emphasis on understanding the larger planning issues such as those involved with 'philanthropic legacy' planning."
A growing diversity in the types of planned giving services offered will emerge between larger programs and smaller programs, they predicted. "In general, larger programs will offer legacy and intergenerational planning services. Smaller organizations will more consistently limit their programs to bequests, beneficiary designations, and gift annuities." Smaller programs will also utilize the services of professional advisors as partners when obtaining legacy gifts, they predicted.
In addition, the duo foresees an increase of electronic marketing, an increase in collaborative efforts with major gifts officers and a likely reduction in "stand-alone planned giving programs." There will also be a need to "acknowledge and act on the necessity of marketing to and partnering with professional advisors and financial institutions," they said.
by Bill Giarratana
How people see you is too important to be ignored. How you are perceived determines how current and future donors respond to you, and in turn that perception determines the success of your efforts.
Today, a person's donation choices are endless. Since 9/11 there has been heightened awareness of major charities, both positive and negative. How do you survive in this new environment where people have become skeptics and extremely selective in their choice of charities? No one wants to throw away their money; but they still want to help enrich lives.
Competition for donations has become fierce. Media-babble is deafening and messages have become blurred. Nonprofit organizations are starting to recognize what for-profit companies have long realized, that the brand has become core to differentiation and identity. In a sea of faces you recognize the faces you know. Creating and nurturing your face to the world, your brand identity, in this new environment is not only demanding, but also essential to survival.
Because mainstream marketing is changing and as we enter a 'third age' of branding, so the context for brands is changing irrevocably. The first age of branding was the age of functionality, where product purpose was legitimized through trademarks. The second age was the age of aspiration; meaning brands served a self-actualizing purpose. The third age of branding is the age of reconnection, that is, solutions-oriented branding. Empowering consumers to make the world a better place through the products they buy.
Think of a refrigerator for example. While you may have had to be convinced in the 1950s to buy a refrigerator, you would have wanted the great white box to look cool in the 1970s, but in today's uncertain world, you might ask yourself about the impact of the chlorofluorocarbons (CFCs) that your refrigerator is emitting and demand a more environmentally friendly refrigerator.
Carefully nurtured, your brand becomes a halo, endowing product and service with trust: When donors believe that your brand satisfies their need, their trust deepens. It becomes brand loyalty, and it creates your leadership.
So, if today's successful marketing is about appealing to personal values and delivering consumer empowerment, then surely the time is right to inject sustainable development into the marketing mix to help address some of the gritty issues currently facing our planet.
Every charity wants every donor to know that every gift matters-that any size contribution has significance. And we certainly hope this is so! However, there is a major and planned gift perspective that will be useful for organizations to consider with regard to impact gifts.
Where should specialized staff be spending their time and how should they and the organization be thinking about major and planned gifts? What is the definition of a "major" gift? Here we want to look at the kind of impact that the gift has on the organization and on the donor.
The organization's perspective. Major and planned gift programs should be oriented toward individual gifts that by themselves do some or all of the following:
We acknowledge that annual gifts, charitable gift annuities, and bequest provisions below these levels are very welcome-they are not the kind of high impact gifts that organizations should be targeting in their major and planned gift programs.
The donor's perspective. Donors giving at all levels care about the organization's mission and the use of contributed funds. With regard to higher level gifts we would expect some or all of the following:
Final thoughts on impact giving suggest that we look at "impact" as a verb as well as an adjective. Major and planned gift programs and the staff and key volunteers involved must be striving to achieve and influence-to impact-gifts of high significance.