Breaking News: Big Planned Giving Myth Busted!

Many nonprofit professionals have long believed that those who make charitable bequest commitments will be less likely to make an annual fund gift. The fear, held by CEOs and CFOs in particular, is that legacy gift donors will feel they have already done their part and, therefore, will no longer be receptive to annual appeals.

Now, new evidence busts that planned giving myth once and for all!

As researcher Russell James, JD, PhD, CFP will explain in an upcoming  free webinar hosted by MarketSmart, not only will legacy donors continue to support their favorite charities on an annual basis, their support will actually increase once they have made their planned gift commitment, as indicated in the following graph:

Current Giving Before and After Adding Charitable Estate Beneficiary

Among those who have added a charitable beneficiary to their estate plan, the average annual charitable giving before making the estate gift commitment was $4,210. After making the estate gift commitment, the average annual charitable giving jumped to $7,381! On the graph, the label “Mixed” means we do not know how much of the giving was before or after the addition of the charitable estate plan given the timing of the survey.

While making a planned gift commitment does not necessarily cause one to increase his or her annual giving to charities, the longitudinal evidence now reveals that it most definitely does not cause donors to decrease their annual charitable support.

Recognizing that the average annual giving amounts for this group are quite large, James notes:

Giving among those who later added a charitable component [to their estate plan] was much larger than giving among those who did not. This bears out the reality that (a) consistent donors are more likely to add a charitable estate component and (b) wealthy people are more likely to have a charitable estate component.”

The data reported in the above graph comes from the Health and Retirement Study tracking the charitable giving of adults over age 50, both before and after they add a charitable component to their estate plan.

“[The data] seems to put to rest concerns about cannibalization of current giving resulting from charitable estate planning,” reports James. The graph represents the most comprehensive, long-term analysis of this phenomenon.

Charities can now implement or maintain a planned giving program without fear that it will harm their current giving efforts.

RJivorytower-02James, a leading philanthropy researcher based at Texas Tech University, will elaborate on these findings and share additional, valuable insights during a free webinar “News from the Ivory Tower: New Research Impacting Gift Planning,” on Thursday, January 29, 2015 at 2:00 PM EST.

James will review:

  • The latest demographic trends showing who makes charitable estate plans, when the plans are added and dropped, and who ultimately transfers dollars at death.
  • Which words you should avoid to maximize legacy gift disclosures.
  • Which types of donor stories elicit the most favorable responses from planned giving prospects.
  • The latest neuroimaging data showing how different marketing messages influence planned giving decisions.

While the webinar is free, space is limited. So, reserve your spot today by clicking here.

For a free electronic copy of James’ book, American Charitable Bequest Demographics (1992-2012), subscribe to my blog (also free) over in the right hand column. When you do, you’ll receive a confirmation and a link to James’ book. If you’re already a subscriber and would like the link, please contact me directly.

For additional insights about gift planning, checkout my book Donor-Centered Planned Gift Marketing. I’m honored to say that my bestselling book is the winner of the AFP/Skystone Prize for Research in Fundraising and Philanthropy. It has been included on the official CFRE International Resource Reading List.

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

18 Responses to “Breaking News: Big Planned Giving Myth Busted!”

  1. Dear Michael: This is fabulous news. Thank you so much for sharing. I look forward to hearing Dr. James’ presentation in the upcoming webinar. Do we have permission to use the slide from Dr. James in our presentations with an acknowledgement?

    • Nancy, thank you for asking for permission to use the above slide. I’ve checked with Dr. James, and he has granted his permission for you, and all of my readers, to use the slide with appropriate attribution in any professional presentations. We’re pleased to know that the information resonated with you.

  2. Reblogged this on The Planned Giving Blog and commented:
    Thank you to Michael Rosen, Russell James and Greg Warner for this interesting piece. Take a look at that chart!

  3. I’m never sure why the myth that bequests lead to reduced outright giving persists – it’s certainly not my experience. For example, my legacy society members as a group increased their outright giving by 60% this year. More than half increased their gifts, most of those who had never made an outright gift before gave; and only two decreased. The stewardship they received as legacy society members only increased their commitment to the organization.

    • Tracy, thank you for sharing your results. While aggregate research is certainly terrific, it’s also nice to have actual case study results that support the research.

      Like you, I’ve always been puzzled by the persistence of this particular myth. I suspect that it has endured because, in the absence of concrete evidence, there has been fear of the unknown. Also, embracing the myth justifies inaction, a default position at many charities. Now, nonprofit organizations have one less excuse for not marketing planned giving.

  4. Research is one of the best ways to counter a myth. And while I know nothing about Dr. James results other than the above graph (and until we see the webinar), let’s look at human nature, psychology, and today’s marketing. If someone makes a bequest they know, like and trust the organization. If after, they have made a planned gift, especially one that generates more income for them during their lives, then they have more to give during life.

    Now, let’s look at the psychological aspects. When you made the bequest it felt good, whether you received public credit or the gift was anonymous. When you make the irrevocable planned gift or current outright gift it feels even better because you can enjoy the feeling when you are alive. You can see the benefits of your gift in so many ways.

    So, you know, like, and trust the organization (you made a bequest), you’ve received a psychic reward for your gift, and now you make a planned gift that perhaps increases your income and you feel personally benefited by the gift. A better lifestyle, visit the grandkids more, travel, stay out of a nursing home, whatever the personal benefit. Now you can afford to give more and feel even better. It’s a psychic circle. Just follow the above yellow brick road with your own feelings in the place of the donor. Wouldn’t you give more now that you can?

    For many years I have subscribed to the notion that the more we give in information to donors on the many ways they can give, the more we will receive.

    I personally believe planned giving is a catalyst for more giving, not less. Michael, I agree. I have never understood why, as an example, management was so fearful of including planned giving in a capital campaign. Why no calculable credit was given? That’s another entire research project!

    As for marketing? The latest trend from the smallest mom and pop enterprise to Fortune 500 companies is that the more knowledge you provide the consumer (donor), the more they know, like and trust you. It’s not a sales pitch. It’s giving to receive. You’re providing knowledge in exchange for their trust. Suggest a plan that you believe may not even benefit your organization. You may be surprised. The gift annuity that you suggest that you can’t even legally issue may bring you annual gifts. The suggestion of a DAF that is in place at the local CF or national fund. Just develop the relationship. The fact of the matter is, there is more money to give, more personal psychic benefit.

    Great post, Michael. See you at the webinar.


    • Lee, thank you for sharing your thoughts. Logic definitely supports the idea that planned giving would not detract from current giving. That’s one reason why I’ve always been surprised by what I’ve seen as an unjustified fear. Well, now we don’t need to rely on logic alone; we have hard evidence. I hope it inspires more organizations to engage in planned giving.

  5. Michael, I guess I am unconventional in the fact that I have always thought that planned givers would also be generous annual donors. In my mind, when an individual plans to give a legacy gift or signs on for an annuity, they are passionate about the cause, and the planned gift is just another extension of that passion. Perhaps, organizations that think this way are too fearful to fully engage their donors?

  6. Michael, I was just mentoring a young colleague today, teaching the PG section for her to take the CFRE exam. I made the exact point that legacy donors offer the opportunity to create the life-long loyal donor relationship that leads to higher level partnering in programs in whose success they are actually invested. This may be a myth to ‘many nonprofit professionals,’ but those of us in planned giving have known this secret for decades!

    I’ve signed up to hear from Dr. James, thank you!


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