From time to time, someone will ask me if racial/ethnic differences exist when it comes to legacy giving. While phrased in various well-intentioned ways, the questions are usually asked in hushed tones. People fear being politically incorrect. They fear being perceived as bigoted.
Nevertheless, the question is a valid, important one when it comes to defining a priority prospect list.
Does race or ethnicity matter with legacy giving?
In his newest book, American Charitable Bequest Demographics (1992-2012), James reveals that significant racial differences do exist when it comes to planned giving, at least on the surface. He found that in 2010, 6.5 percent of non-Hispanic Whites included a charitable estate recipient in their plans while only 1.8 percent of non-Hispanic Blacks and 1.7 percent of Hispanics did so.
The good news for us is that James’ inquiry did not stop there.
Looking below the surface, James found a critical reason for the disparity in charitable estate planning. Non-Hispanic Whites are simply far more likely to do estate planning with 63.9 percent doing so compared with just 23.4 percent of non-Hispanic Blacks and 19.6 of Hispanics.
To give us a better understanding of the impact of racial differences on legacy giving, James also looks at charitable estate planning among those with estate planning documents, a will or trust. Among non-Hispanic Whites, he finds that 10.2 percent have included a charitable gift. Among non-Hispanic Blacks, it is 7.7 percent with the figure among Hispanics at 8.3 percent.
James asserts that the data “shows that minorities are as likely as non-Hispanic Whites to include a charitable component in their [estate] plans once completed. [The analysis] suggests that the primary barrier to charitable planning among minorities is simply the lack of planning documents.”
James believes that the modest differences that do exist between racial/ethnic groups with planning documents can probably be best explained by the wealth disparity that exists. During the multi-year period of the study, non-Hispanic Whites with a will or trust held, “on average, more than twice as many assets as those in the other categories.”
James finds, “If you control for wealth among those with plans, there is no gap.”
Simply put, those with higher education levels and greater wealth are more likely to have an estate plan. Among those with estate plans, those with higher education levels and greater wealth are more likely to include a charitable component in their estate plans.
Various racial/ethnic groups are not more or less charitably inclined. No cultural differences regarding charitable propensity have been identified. Instead, the two factors that matter most are education and wealth.
James describes it this way:
Consider the youngest [when the study began] in 1998 was a 55 year old born in 1943 (reaching age 20 at 1963), where the youngest in 2010 was a 55 year old born in 1955 (reaching age 20 at 1975). I’m going to say the relative career opportunities in 1963 for these minorities were worse than in 1975. If that is true, we would see it reflected in wealth differences in those two cohorts at this time.”
Indeed, as education level and wealth have increased over the years, so has philanthropy.
If you want to identify your best planned giving prospects, keep these tips in mind:
1. Do not consider race or ethnicity. I do not offer this tip out of a sense of political correctness. I offer it because race or ethnicity as a factor is essentially meaningless.
2. Do consider other factors including education level, wealth, and loyalty indicators such as giving frequency and volunteerism.
3. Do understand that while race and ethnicity do not inherently affect propensity to give, cultural differences exist among racial, ethnic, and religious groups. These differences might affect what types of charities individuals support, how you will approach individuals, and how you will recognize those individuals when they give.
For more insights about legacy donors, I encourage you to read James’ book American Charitable Bequest Demographics (1992-2012). You can purchase a paperback version of the book at The Nonprofit Bookstore (powered by Amazon), Alternatively, thanks to the kindness of Russell James, readers of Michael Rosen Says…may download a free copy of the e-book version here, for a limited time. It’s a great way to mark National Estate Planning Awareness Week.
That’s what Michael Rosen says… What do you say?