Archive for June 9th, 2012

June 9, 2012

How Much is a Bequest Commitment Worth?

A charitable bequest commitment has tremendous value for the organization receiving it. The value may be even greater than you realize. Bequest commitments are valuable in three important ways:

 

1.  Future Money

For donors, a charitable bequest commitment is an easy painless way to give. It’s a way even middle-class donors can be “major donors.” While most people cannot afford to make a huge cash gift to a nonprofit they love, most can make substantial gifts upon death. This is particularly important during economic hard or uncertain times. A bequest commitment allows donors to show their significant support for their favorite charities without having to deplete current cash resources.

For nonprofit organizations, bequests allow more money to flow into the organization than would otherwise be the case. And, the organization will not even necessarily need to wait decades for the donor to die and for the gift to be realized. Depending on the age and health of the donor, the bequest gift might be realized in a surprisingly short time period.

Many people have tried to estimate the value of the average bequest gift in the US. I’ve seen a range of numbers used. The consensus figure I used in my book, Donor-Centered Planned Gift Marketing, is $35,000. However, that’s not a particularly useful figure since there is such a massive range in the size of actual bequest gifts that individuals make.

So, researcher Russell N. James, III, JD, PhD, CFP®, Director of Graduate Studies in Charitable Planning at Texas Tech University, looked at how bequest giving compares with annual giving. In his AFP International Conference presentation, “The Presence and Timing of Charitable Estate Planning: New Research Findings,” James revealed the following about Americans over the age of 50:

 

 Total Estate Value

Annual Giving Multiple  

 < $100,000

0.15  

 $100,000 – < $500,000

1.89  

 $500,000 – < $1,000,000

3.73  

 $1,000,000 – < $5,000,000

8.12  

 $5,000,000+

11.65  

 TOTAL

5.07  

 

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