Are You Wasting Time by Hunting Unicorns?

Go to any fundraising conference, and you’ll find unicorn hunters. You might even be one. You can see the unicorn hunters in seminar sessions about Charitable Remainder Annuity Trusts (CRATs), Charitable Lead Trusts (CLTs), and Charitable Remainder Uni-Trusts (CRUTs).

Unicorn hunters believe that Trusts are the cornerstone to a healthy planned giving program. Unicorn hunters scour the wealthiest portion of their donor files to find Trust prospects and then focus an enormous amount of time and energy trying to close big Trust gifts.

Unicorn by Rob Boudon via FlickrSome would-be unicorn hunters are overwhelmed by the hunt. They fear they have no prospects and/or they fear they have insufficient knowledge to pursue such gifts. So, they don’t implement any kind of planned giving effort.

Well, here’s your reality check, courtesy of Giving USA 2015: The Annual Report on Philanthropy for the Year 2014.

As the chart below reveals, the number of Trusts is tiny compared to the number of Public Charities which stood at 963,234 in 2012 (not including religious congregations and organizations with less than $5,000 in revenue), according to the Urban Institute’s The Nonprofit Sector in Brief 2014.

Even if every single charity that received a Trust gift only received one, that would mean that less than 12 percent of charities would have received a Trust gift in 2012. In other words, the likelihood that a fundraiser will close a Trust gift is very small in any given year. Moreover, the odds have been getting smaller as the number of charities has grown while the number of Trusts has declined.

Of course, that’s not quite how it works in the real world. In the real world, large organizations with large donor files containing plenty of wealthy supporters are far more likely to close Trust gifts than smaller organizations with smaller donor lists. If you don’t work at a large, established organization, the chances that you’ll close a Trust gift this year are miniscule.

 Trust Chart - 2015

While the dollars associated with Trust gifts are certainly significant, the actual number of such gifts is small. By contrast, far more people name a charity in their will, make beneficiary designations, give appreciated securities or personal property, or donate from their IRAs.

Keeping your eyes open for Trust-gift opportunities can be beneficial. However, you’re much more likely to close other types of planned gifts. This means:

  • You should not let yourself be intimidated by the idea of planned giving since most planned gifts are really quite uncomplicated.
  • You can have a perfectly robust planned giving program without ever closing a Trust gift.
  • You don’t need to be a Trust expert to have a strong planned giving program.
  • You should probably attend seminars dealing with other planned giving vehicles and issues other than those about Trusts.

This also means that planned giving is not the domain of the ultra-wealthy. In other words, rather than trying to build a planned giving program around your richest prospects, you should focus your efforts more broadly and include all of your organization’s loyal supporters.

When you broaden your prospect focus, you’ll have greater planned giving success and your wealthy donors will be glad to see you diversifying your philanthropic support. But, don’t just take my word for it. Here’s what H. F. (Gerry) Lenfest, a mega-philanthropist and member of the Giving Pledge, stated in his Foreword to my book, Donor-Centered Planned Gift Marketing:

Through my voluntary work with nonprofit organizations, I have seen the tremendous power of planned giving. I have always known that some of the most prominent names in philanthropy—for example, Rockefeller, Carnegie, Astor and, more recently, Annenberg—have left lasting philanthropic legacies through significant planned gifts that have established or transformed nonprofit institutions. But I have also seen that the impulse to support worthwhile causes is present and also acted upon by those of more modest means.

Planned gifts are the major gifts of the middle class and such gifts, cumulatively, have a significant impact. Such gifts also have great meaning for the donors themselves. When it is part of estate planning, planned giving can offer a means to help donors take care of their families in ways not otherwise available to them, and yet still provide added support to the charitable causes they cherish.

No organization is too small to benefit from having a planned gift endeavor as a critical component of its development program. It can be very tempting for charities to focus limited resources only on immediate, annual giving, or short-term pledges such as for capital campaigns. However, for any nonprofit organization to achieve long-term sustainability, it must incorporate, at the very least, the fundamentals of a planned gift program.

Part of the beauty of planned giving is that virtually any organization and any donor can participate. While the largest nonprofit organizations may offer comprehensive gift planning programs, even the smallest charities can encourage donors to make a gift of appreciated stock, a contribution from a retirement fund, or to leave something to the organization in their will. Planned giving is not something that should be restricted to the wealthiest of philanthropists or the largest of organizations. Enabling such giving opportunities creates a win-win scenario for organizations and their donors.”

So, while wealthy donors might get involved in your planned giving program with a CRAT, CLT, or CRUT, it’s far more likely that those of more modest means will participate with much simpler gifts that will allow your organization to build a successful planned giving program that will provide meaningful support for your organization. By devoting less attention to the hunt for unicorns, you’ll be able to devote more time and resources to prospects who are far more likely to make a planned gift to your organization if treated right and approached appropriately.

For valuable tips to help you grow your planned giving results, register for my free webinar, “Planned Giving: It’s Easier than You Think!” hosted by Wild Woman Fundraising on July 17,2015.

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

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