15 Common Planned Giving Myths Debunked (Part 1)

Sadly, many myths about planned giving continue to exist. Some of these keep nonprofit organizations from engaging in gift planning. Others lead development professionals to make terrible, costly mistakes.

All planned giving myths are dangerous.

Goddess Athena by Great Beyond via Flickr

Statue of Athena, Greek Goddess of Wisdom.

That’s why I believe that debunking common planned giving myths is important. In fact, I feel it’s so important that I addressed five of them in the very first chapter of my book, Donor-Centered Planned Gift Marketing. I’ll summarize them next week in Part 2 along with some other myths.

For now, I’m going to share eight myths identified by the members of the Smart Planned Giving Marketers Group on LinkedIn. The remaining seven will be featured next week.

Greg Warner, President of MarketSmart, started the Group which now numbers 577. If you have any interest in planned giving, you should join.

Recently, Greg started a terrific discussion to identify and debunk common planned giving myths. So far, the Smart Planned Giving Marketers Group has identified and debunked 15 planned giving myths. While I have numbered the myths, strictly for reference purposes, I am presenting them here in alphabetical order by contributor:

Ronald Blaum, Director of Gift Planning, Church World Service:

MYTH 1 — The Estate Tax is a mandatory tax.

To stimulate conversation in a group setting, I’ll often ask this question: ‘Paying estate taxes are voluntary, right?’ And, of course, people say, ‘No, they are not.’ Then, I proceed to show how the use of charitable gifting strategies and other techniques can make most, if not all, estates tax-free. With the higher estate exemption, the far greater concern for most people should be minimizing the negative impact of Income Tax on qualified plans, not estate tax. Think about what assets to use for gifting, not just the dollar amount or percentage of an estate.”

Reeve Chudd, Partner, Ervin, Cohen & Jessup:

MYTH 2 — My kids will resent me doing it.

I’ve been handling estates with charitable bequests for 34 years, and not once have I heard the heirs doing anything but enjoying the recognition their parents receive posthumously from charitable recipients. Further, when a name appears on a building or a program as a permanent memorial of a deceased donor, I see their children relishing their name connection to such philanthropy.”

Greg Lassonde, CFRE, Legacy Giving Specialist:

MYTH 3 — Age is an important factor in list segmentation.

The reality is that sometimes age is an important secondary factor in list segmentation. One example of this is Charitable Gift Annuities. If your organization’s minimum age for issuing a CGA contract is 70, you might want to mail only to those older than 55 (going that low for deferred CGAs).”

As Greg notes, while age can be an important secondary factor, the reality is that planned gift opportunities exist at every age level. For example, while it’s best to make a CGA appeal to older prospects, Bequests should be marketed to a broader age band, particularly those in their 40s and 50s. The points here are that while age is certainly of some importance, it is more important to recognize that the quality of the relationships is what is critically important, and that virtually everyone is a prospect for some type of planned gift.

Hazel Lloyst, CFRE, Capital Campaign Manager at Loyalist College:

MYTH 4 — [You can] judge a donor by their outward appearance.

From experience, I have found that many of my most frugal donors turned out to be the most generous, altruistic donors upon their passing. It was a pleasure to work with them over the years and hear their stories. It was always with tremendous gratitude that I was able to ensure their wishes were followed upon their passing while helping to ensure the timely transfer of their estate.”

Phil Melberge:

MYTH 5 — It costs too much.”

While large nonprofit organizations invest substantial sums in their philanthropic planning efforts, smaller charities can still achieve great planned giving results at little cost.

The most common form of planned giving is the Charitable Bequest. Encouraging prospects to include your organization in their wills can be accomplished by adding this tagline to all of your communications: “Please remember us in your will or trust.” It doesn’t cost you a cent.

To find other no-cost or low-cost ways to promote planned giving, download a free copy of my article “Effectively Cultivating Prospects at Little or No Cost” from the Association of Fundraising Professionals’ Advancing Philanthropy magazine. 

Jill Nelson, CFRE, Senior Director, Estate Giving, The Princess Margaret Cancer Foundation:

MYTH 6 — The tax benefits of a planned gift are the motivation to give.

Like any gift, people give because they want to help — to fix something — to make life better/more beautiful. Tax benefits are simply a facilitator, and really are likely to only affect the timing or the size of the gift. Therefore, marketing material and efforts should focus on the reasons for a gift — the impact it will make on the cause the donor cares about. (And, of course, building the relationship and the trust of the donor.) I don’t remember who said it first, but I love the attitude that says that when a donor puts you in their Will, they are recognizing you as part of their family. When you think about that, you realize just how strong the relationship and the trust have to be.”

Scott Park, Assistant Vice President, Augustana College:

MYTH 7 — If donors don’t have the capacity to give a major gift, then you shouldn’t market planned gifts to them.”

While many individuals may not be able to afford to make a major gift to the charity they love, they may be able to make a substantial planned gift. Planned gifts are the major gifts of the middle class.

Consider the case of Oseola McCarty. She was an 87 year old laundry woman with a sixth grade education. She was certainly not anyone’s major gift prospect. However, McCarty did end up making a $150,000 planned gift to the University of Southern Mississippi.

Or, consider the conversation I had with my oldest, childless aunt about what it is I do for a living. I tried explaining planned giving. Grasping what I was saying, she asked, “Why on Earth would someone give to a charity after they’re dead?” I asked her, “What charities do you support now?” Among the organizations she supports is an animal welfare group. I then asked, “Who’s going to take care of the little puppies and kittens after you’re no longer here to keep writing checks?” Her eyes widened and, in that moment, I think I might have lost my inheritance. But, this woman who could never be a major donor can endow her annual fund gift through a Charitable Bequest, if she chooses.

MYTH 8 — I need to be an expert before I can effectively discuss split income planned gifts with prospective donors.

“If you can grasp the concept of the apple orchard analogy (give the apples, keep the trees: lead trust; or keep the apples, give the trees: remainder trust) you can effectively market split income gifts with prospective donors. Whether an expert or not, your conversations with the prospective donor should be focused on how the gift will impact the mission of your organization, not a recitation of the finer points of the planned giving vehicle and ‘Oh, by the way, you get an income (with remainder trusts) or you or your heirs get the asset returned to you’ (with lead trusts). This may be the most insidious myth because few will actually voice it, but the impact of missed opportunities as a result of it is incalculable.”

You’ve just read the first eight planned giving myths. Next week, in Part 2, you’ll have a chance to read about the next seven myths.

I thank Greg for starting this discussion, and I thank everyone who participated and shared his or her thoughts. Now, I invite you to join the conversation either on LinkedIn or below. What are some other planned giving myths?

That’s what Michael Rosen says… What do you say?

5 Responses to “15 Common Planned Giving Myths Debunked (Part 1)”

  1. I’d like to give a different perspective on Myth #2.

    In our case, “My kids will resent me doing it.” Most of the time in this particular arena -THEY DO!!!! We have had final wills that have actually been short-circuited by offspring who felt their families needed the funds more than the institution.

    Most of our student/alumni population are the first in their families to go to college so the “passing of the wealth” is typically not SOP (Standard Operating Procedure). Most times, there are not a lot of funds to be passed down to the next generation. Combine that point with taxes and a down economy and you have a problem!

    Also, the previous is actually a cultivation issue. Now, when we meet with donors regarding a possible planned gift, we ask for the family to be present. In fact, we STRONGLY recommend that they be involved. We are now asking our donor prospects to invite their family members to the campus so that they may begin to “buy-in.” We encourage them to meet and interact with the students. We are also encouraging them to “tell the story” to their offspring about how this institution was an important element in their success.

    Having noted this observation, it is incumbent upon us as educators/marketers of planned giving vehicles and even major gifts to encourage certain groups in generational philanthropy. One alumna at this institution said it well. When she spoke of her mission to finance her niece’s college education, she said “We must reach back and help someone else to finish college. After all, someone helped us”.

    • Michelle, thank you for sharing your insights. I suspect that Reeve would not disagree with you. While many children of donors will automatically support their parents’ philanthropic decisions, many others will not be automatically supportive. As you’ve suggested, nonprofit organizations should not assume that the children of donors will cheer-on the philanthropic gestures of their parents. Instead, charities need to work with families and earn the enthusiasm of those family members. I think Reeve would agree with us that it is important to cultivate the families of donors and not just the donor. In the process, the charity may find that the children of the donors not only support their parents’ giving, they may find that the children become donors as well.


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