Posts tagged ‘Charitable Bequest’

April 17, 2015

Is It Better or Worse to Send More Appeals?

Part of me is definitely a fan of conventional wisdom. Come on. What’s not to like about wisdom?

On the other hand, part of me hates the notion that we should continue doing things because that’s the way they’ve always been done. All too often, conventional is code for mediocre.

In other words, I think it’s wise to regularly challenge conventional wisdom, so long as we do so thoughtfully and preferably with good data.

So, being a good fundraising nerd, I enjoyed reading a number of articles this week that explore how often charities should send appeals to donors.

Let’s start with the conventional wisdom:

The more appeals you send, the more money you will raise.

Change in Hands by Randy Willis via FlickrAndrew Olsen, CFRE, Vice President of Client Services at the Russ Reid Agency, tested the conventional wisdom. In his blog post “Fundraising Myth Busters: Solicitation Frequency,” Olsen concludes, “Don’t be afraid to add a solicitation or two to your annual line up. As this case shows, you stand to make a lot more money for your cause if you do!”

In his post, Olsen shared testing that was done for two nonprofit organizations:

  • In the first case, the organization went from five to 10 solicitations, and year-over-year revenue increased 123 percent.
  • The second organization increased from three to six solicitations, and year-over-year revenue increased 110 percent.

Given that the highly respected Russ Reid Agency conducted the tests, I had to take notice. However, Olsen’s post raised more questions for me than it answered:

  • While gross revenue increased in both test cases, did net revenue increase significantly?
  • What impact does increasing the number of appeals have on long-term donor retention?
  • How does increasing the number of appeals impact donor Lifetime Value (LTV).
  • If revenue went up, why stop at six or even 10 appeals? Why not send an appeal out monthly, weekly, daily, hourly? When should we stop?

With these questions nagging at me, I was relieved to see that direct-response guru Roger Craver wrote a four-part series on the subject for The Agitator blog (Note: The Agitator is now a paid subscription site.).

Craver looked at solicitation frequency a bit more closely than Olsen did. For example, he reported that the net income from successive appeals goes down after a point. He also showed evidence that some donors on a file are more receptive than others to multiple appeals. While not surprising, it is nice to see the data on this and have a chance to reflect on how screening for solicitation-frequency preference can affect net revenue. Craver shows that sending fewer appeals, particularly to certain individuals, can lead to greater net income.

March 10, 2015

Want a FREE Book? How about 2 FREE Books?

From time to time, I come across truly special offers that I’m pleased to share with you.

Today, I want to give you the chance to get not one, but two, FREE books about planned giving written by Texas Tech University researcher Russell James, JD, PhD, CFP:

Visual Planned Giving: An Introduction to the Law & Taxation of Charitable Gift Planning

Visual Planned GivingThis textbook is written specifically for fundraisers or financial advisors seeking to expand their knowledge about charitable gift planning. This introductory book addresses all of the major topics in planned giving law and taxation and features over 1,000 full-color illustrations and images that guide you through complex concepts in a visual and intuitive way. Distilled from his years of teaching Charitable Gift Planning at the undergraduate and graduate levels, James makes this topic accessible and enjoyable for the busy professional.

Here are some of the things you’ll learn:

• The secret to understanding planned giving

• A super simple introduction to taxes

• How to document charitable gifts

• Valuing charitable gifts of property

• Special techniques for donating retirement assets, private foundations and donor advised funds

• And much more!

The paperback version of this book retails for $187.98. However, you can get the electronic version for FREE thanks to my friends at MarketSmart, just click here.

American Charitable Bequest Demographics

This book provides an extensive review of the changing nature of American charitable estate planning from 1992-2012 and includes over 50 charts and graphs. James presents information in a simple, visual fashion with each page containing a graph or chart, comments on the importance of the information, and details about the methodology behind the data. Much of the information presented comes from a long-running, nationally-representative, longitudinal survey including information about the final estate distributions from over 10,000 survey respondents who have died during the study.

• Major sections include:

• National demographic trends

• Trends in charitable plans among those aged 55+

• Examination of matured plans of deceased respondents

• Timing of charitable plan changes

• And much more!

The electronic version of this book retails for $9.99. However, thanks to James, you can get it for FREE when you subscribe to this blog site in the right-hand column. You’ll receive an email confirmation of your subscription that will contain a link to the book. (I recognize that your privacy is important, so I assure you that your email address will never be sold.)

Now that I’ve saved you a bundle of money, I’d like to suggest some books you can purchase that will inspire and help you achieve greater results. When you make your purchase, usually at a discount, at The Nonprofit Bookstore (powered by Amazon), a portion of every sale will be donated to charity.

March 6, 2015

Stephen Pidgeon: What’s Holding Back Your Legacy Fundraising?

What is one of the major things holding back your legacy fundraising efforts?

It’s your own naivety.

You might not like that answer, but it’s the conclusion reached by veteran fundraising expert Stephen Pidgeon, the author of How to Love Your Donors (to Death). Pidgeon will be sharing his insights at the AFP International Fundraising Conference (Baltimore, March 29-31, 2015) in his session, “Bequest Asks: Getting it Right.”

So, why does Pidgeon think many fundraising professionals are naïve?

Because THEY don’t like to thinHow  to Love Your Donors (to Death)k about death, [fundraising professionals] assume everyone else is the same. Well, older people (those in their late 50’s and older) do think about death, and they do it perfectly maturely and with no fuss. And the older they get the more unexceptional it becomes. Indeed, supporters are often hugely grateful for the opportunity to make such a major contribution, albeit after they have died. It is a matter of immense pride to them that they have made the decision and sorted their affairs.

“I’d ask what right has some well paid, youthful charity executive (meaning in their mid-50s or younger!) to deny their best supporters the opportunity of such deep satisfaction. That’s patronising age-ism and when you get into your 60’s or older, nothing is more irritating. Casually mentioning the possibility of a bequest in a newsletter that is read by less than 20 percent of its circulation is NOT ‘…giving your best supporters the opportunity…’!”

The key when speaking with people about bequest giving is to do so in the right way. After all, you’re not helping them plan their funeral; you’re helping them build their legacy. (Be sure to read my post “One Word is Costing Your Fundraising Effort a Fortune” about the latest research findings reported by Dr. Russell James.)

Pidgeon also identifies another problem with bequest marketing:

January 23, 2015

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:

January 16, 2015

Dying to Know How Much Bequest Income Your Charity will Receive?

I always enjoy hearing from my readers. Sometimes, they give voice to questions that I suspect many others have as well. For example, I heard recently from the Development Associate of a small nonprofit organization:

Hi, Michael. I enjoy your posts and blogs very much. Do you know of any statistics which tell how long it takes to see any benefit from a planned giving program? I work at a small organization and they want to put a dollar amount to be raised in the annual fund raising plan. Doesn’t common sense say you cannot expect a definite planned giving amount EVERY year? We are very small and really only capable of pursuing bequests. Are there statistics to support this in writing that I could use to share with my Board and CEO? Many thanks for all your informative and helpful posts!”

Regarding the first question about how long it will take a new planned giving program to become effective, I’ll provide the standard consultant’s answer: It depends. I’m actually not being flippant. The answer depends on a great number of variables including, but not limited to:

  • How many planned giving prospects are there?
  • How educated are they about planned giving?
  • What is the quality of the relationship that the organization has with prospective planned gift donors?
  • How old are the prospects?
  • How healthy are the prospects?
  • Do your prospects tend to have children and grandchildren?

The good news is that while we cannot easily predict when an organization will begin to benefit from a bequest giving program or how much money the program will produce by a particular date, we do know that the organization will benefit sooner as well as later. Even with deferred commitments such bequest gifts, charities will often begin to see a return within three to five years.

The Wizard by SeanMcGrath via FlickrThe second question also does not lend itself to an easy answer. However, as the Development Associate suspects, it is “common sense” to say that most organizations “cannot expect a definite planned giving amount EVERY year.”

Nevertheless, I know that this issue is not limited to this particular charity. I also know that it’s not limited to small charities. Not long ago, I learned of a much larger nonprofit organization that always budgets to receive $1 million of bequest revenue annually despite the objections of the group’s planned giving specialist.

So, what is the answer? How much, if anything, should organizations budget for planned giving support?

While large organizations with mature development programs might be able to forecast planned giving revenue with some degree of accuracy and safety, there is no way a small organization with no significant prior planned giving experience can do that. Budgeting on bequest revenue is generally problematic for the following reasons:

  • You don’t know how many individuals have already made a bequest commitment but simply have not told you.
  • You don’t know how many people would be willing to make a bequest commitment.
  • You don’t know how many people who have made a bequest commitment have changed their will to remove the charity.
  • You don’t know when people who have made a bequest commitment will die. While actuarial tables can provide some hint at this, the reality is that such tables are more reliable with larger groups rather than single individuals.
  • Many people who are willing to make a bequest commitment will not tell you the amount of that commitment. If the commitment is a percentage of estate, the donor will likely not even know how much will end up in the charity’s hands.

In short, with bequests in particular, there are too many unknowns. For a new planned giving program, regardless the size of the charity, projecting bequest revenue figures would simply be guesswork. Even for larger organizations with an established gift planning program, budgeting for planned giving revenue can be risky. For example, I know of one organization that budgeted for planned giving revenue but came up short resulting in an operating deficit. Ouch!

November 14, 2014

One Word is Costing Your Fundraising Effort a Fortune

If you’re like most nonprofit development professionals, you’re doing it. You’re using one particular word in your fundraising effort that is costing your nonprofit organization a fortune.

I have the research that proves it.

If you talk with prospects about and ask them for a “bequest” commitment, you’re leaving enormous sums of money on the table. That’s the conclusion of recently released data shared by Russell James, JD, PhD, CFP, a leading philanthropy researcher based at Texas Tech University.

wordsthatwork3-01James will be sharing his research-based insights during a free webinar hosted by MarketSmart, on Wednesday, November 19 at 1:00 PM (EST). Words That Work: The Phrases That Encourage Planned Giving will explore the words and phrases that inspire donors to give and give more. Conversely, James also will look at the words and phrases that development professionals traditionally use that are actually counter-productive, such as the word bequest.

Consider this: A 2014 survey of 1,418 individuals found that 23 percent of respondents were “interested now” in “making a gift to charity in my will.” By contrast, only 12 percent were “interested now” in “making a bequest gift to charity.”

In other words, talking about bequest giving cuts your chance of getting a bequest commitment nearly in half! For greater results, it’s better to use simple, approachable language. As James suggests, when communicating with donor prospects, it’s a good idea to imagine you’re talking with your grandmother.

Not only do the individual word choices we make have a massive impact on the money we raise, how we use simple phrases can likewise make a huge difference.

James recently reported that 3,000 actual testators in the UK, not simply survey takers, were randomly placed into one of three groups when speaking with an estate planner:

  1. No reference to charity.
  2. Would you like to leave any money to charity in your will?
  3. Many of our customers like to leave money to charity in their will. Are there any causes you’re passionate about?

When the estate planner did not raise the subject of charitable giving, five percent of testators initiated the inclusion of at least one charity. In the second group, which was asked about including a charity, 10.4 percent agreed to do so. Clearly, asking has a significant, positive impact. However, members of the third group, which heard that others were including charities in their will, were even more likely to make a commitment. Now, here’s one of the key findings: Among those in the third group, 15.4 percent included at least one charity in their estate plan.

The commercial sector refers to the simple phrasing used with the third group as the bandwagon effect or social-norm effect. People are more likely to take action if they know others are already doing so. As the research demonstrates, this principle holds true when encouraging people to include a charity in their estate plan.

Interestingly, the positive impact does not stop at just the percentage of folks willing to make a charitable plan.

March 7, 2014

Latest, Greatest Secret to Fundraising Success Unveiled!

Most nonprofit development professionals would love to find the Holy Grail of fundraising. Discovering a new piece of research, a proven technique, a new technology that could unleash a torrent of funds would be undeniably wonderful.

But, do we need the Holy Grail?

Some folks seem to thinks so. Perhaps that’s why, when I’m invited to speak at conferences or lead workshops, my hosts frequently want me to present the “latest, greatest” ideas for fundraising success. Perhaps that’s why so many articles, blog posts, and seminar titles include buzz words such as “secrets,” “great tips,” “powerful,” “fresh,” “innovative,” “simple,” “key tools,” etc.

I’m not immune. I’m always on a quest for new, robust ideas. In addition, I title many of my articles (see above) and seminars with the buzzwords I know will attract attention.

In one planned gift marketing seminar I did a few years ago, I shared a variety of ideas for promoting planned giving. I knew I had a diverse audience, so I provided both simple and sophisticated ideas. While my suggestions were certainly not revolutionary, they did push the envelope of current practice.

Following my talk, a fellow came up to me and said, “You didn’t say anything I didn’t already know.”

Ouch! That’s not the feedback I like, even if it was just one person’s opinion. I always want everyone to come away from my seminars with at least one terrific idea.

After receiving the stinging feedback, I said to the man, “I’m sorry to hear that you didn’t get any fresh ideas. However, I’d love to hear about how you’ve used the phone to market bequests.”

He replied, “I haven’t implemented a phone program.”

“Ok, then tell me how your direct mail campaign has done,” I requested.

“I haven’t done a planned gift mailing,” he said.

“Ok, then tell me about your website and how it allows you to track and rate visitor interaction,” I requested.

“Our website isn’t that sophisticated,” he said.

The conversation continued. The point is that this fellow knew what he should or could be doing, but he was not doing it!

While finding the Holy Grail of fundraising would be spectacular, the truth is that such a singular, miraculous method or tool does not and will never exist. However, I have some good news. We do not need a Holy Grail.

Low Hanging Fruit by defndaines via FlickrMy latest, greatest idea for fundraising success is something that can benefit virtually all nonprofit organizations: Master the fundraising fundamentals and grab the low-hanging fruit.

At this point, you might be thinking, “Sheesh! There’s nothing new or great about that idea.”

Well, if that’s what you’re thinking, you should be right.

Unfortunately, I see far too many examples, far too regularly that charities simply have not mastered the fundamentals, and they have left plenty of low-hanging fruit on the tree. Just like the fellow who came up to me after my seminar, many folks may know what they should be doing but they’re not doing it.

Consider this: A new study by Dunham and Company found that charities could be losing literally billions of dollars in donations because they have failed at the online basics. For example, 84 percent of nonprofits do not make their donation pages easy to read and use with mobile devices. By the way, that statistic includes some of the nation’s largest charities.

The fundamentals matter. The evidence shows they could add up to billions for the nonprofit sector.

Do you want more money for the annual fund? Then tell me, do you have a monthly donor program? Do you do second gift appeals? Do you effectively steward gifts to ensure a high donor retention rate? Do you use database analysis to help you better target asks, even in your direct mail appeals?

February 28, 2014

Warning: US Volunteerism at a Decade Low!

The rate of volunteerism in America fell to the lowest level in a decade, according to the US Bureau of Labor Statistics report Volunteering in the United States — 2013.  This appears part of a downward trend.

Nonprofit organizations should find this trend alarming for a number of reasons, including:

Volunteers provide an essential labor pool. Approximately 62.6 million (25.4 percent) Americans volunteered at least once between September 2012 and September 2013.

The median volunteer spent 50 hours on volunteer activities during the study period. These significant volunteer hours mean that volunteers are a valuable part of the nonprofit labor force. Declining volunteerism rates mean charities will either have to limit services, discontinue certain activities, or pay for employees to perform the tasks formerly handled by volunteers.

Volunteers serve as ambassadors. Individuals who volunteer usually act as ambassadors for the organization. They obviously have a high-degree of interest in the organization, which is why they volunteer with it.

Through volunteer experiences, provided they are good ones, the volunteers will become more engaged with the organization and more passionate about its work. They will speak of the organization with family and friends. When they do, it will be in a positive, passionate tone. This word-of-mouth promotion will help your organization to attract additional volunteer and donor support.

Volunteers are more likely to donate. The more engaged an individual is with his community, the more likely he is to volunteer and contribute money to nonprofit organizations. The more points of connection there are between an individual and a particular nonprofit organization, the more likely that individual is to give, give often, and give generously to that organization, as I point out in my book, Donor-Centered Planned Gift Marketing.

Volunteerism is an important point of connection. This phenomenon is explained, in part, by the Social Capital Theory popularized by Robert Putnam, author of Bowling Alone.

Volunteers are more likely to make planned gifts. Consider what researcher Russell James, JD, PhD, CFP reports in his book, American Charitable Bequest Demographics (1992-2012):

Among those with [estate] planning documents, those who both volunteer and give ($500+) are dramatically more likely to plan a charitable estate gift than those who only volunteer or only give ($500+). Those who only volunteer, plan charitable estate gifts at approximately the same rate as those who only give.”

Graph from American Charitable Bequest Demographics (1992-2012) by Russell James.

Graph from American Charitable Bequest Demographics (1992-2012) by Russell James.

Furthermore, those who only volunteer or only donate ($500+) are more than twice as likely to make a legacy gift than those who do neither.

For a free electronic copy of James’ book, subscribe to this blog site in the right-hand column. You’ll receive an email confirmation of your subscription that will contain a link to the book.

Clearly, the steady decline in volunteerism represents a serious problem for the nonprofit sector.

So, why is volunteerism on the decline? Unfortunately, the reasons for the decline are unclear. However, the report contains some clues.

February 23, 2014

Honoring Donor Intent: When it Works, When it Doesn’t

Donor-centered fundraising is smart fundraising. Part of being donor centric involves always honoring the donor’s intent.

The Association of Fundraising Professionals’ Code of Ethical Principles states:

[Fundraising professionals] recognize their responsibility to ensure that needed resources are vigorously and ethically sought and that the intent of the donor is honestly fulfilled.”

Honoring donor intent is essential for at least two reasons:

  1. It’s the right thing to do.
  2. It’s a fundamental way to earn and deserve trust. Without trust, fundraising would be virtually impossible.

To honor donor intent, you must first ensure that the contribution is received according to the donor’s specifications. This is particularly important for planned gifts when the donor is no longer around to make sure everything goes according to plan. The charity becomes the voice of the donor.

The next part of honoring donor intent requires that the organization use the gift for the purpose specified by the donor.

Unfortunately, honoring donor intent is not always an easy thing to do. Sometimes, it works the right way while other times it morphs into something ugly.

Let’s look at two examples.

The Pennsbury Scholarship Foundation learned of the passing of an elderly woman in the community. I first shared her story in my book, Donor-Centered Planned Gift Marketing. A member of the all-volunteer organization’s board knew the woman and knew the Foundation was in her will.

The woman’s attorney produced a copy of the will which included a nearly $1 million bequest for the Foundation and nearly nothing for her two estranged children. However, the children produced another version of the will where the charitable provision was whited-out, literally.

The attorney for the children approached the Foundation to negotiate a settlement agreement. The Foundation, under the advice of legal counsel, held firm and asked that the matter proceed to court as soon as possible.

The attorney for the children initiated a series of delaying tactics hoping that the Foundation would eventually negotiate rather than have the matter drag out. Under the advice of legal counsel, the Foundation held firm.

About one year later, surprisingly quickly given the circumstances, the court upheld the clean version of the will, and the Foundation received the full bequest.

In the Foundation’s case, the donor’s interest was in alignment with the charity’s. The Foundation was right to defend the donor’s wishes. By defending the donor’s interest, the Foundation ultimately benefited. More importantly, young people in the community will benefit for years to come as the Foundation provides scholarships that would not otherwise be possible to award.

Sadly, there are times when protecting the interests of the donor cross a line. In those cases, the organization goes from being donor centric to being self-centered, even greedy. This might be the case with the University of Texas.

Warhol's Farrah Fawcett portrait on exhibit at the UT Blanton Museum.

Warhol’s Farrah Fawcett portrait on exhibit at the UT Blanton Museum.

The University received a bequest from Farrah Fawcett. The Seventies icon left “all” her artwork to the University where she had studied art prior to the successful launch of her acting career. The collection included at least one portrait of Fawcett by famed artist Andy Warhol.

However, the Fawcett story is complicated. Warhol actually did two, almost identical pieces. According to Ryan O’Neal, the actor and on-again-off-again boyfriend of Fawcett, Warhol gave one portrait to Fawcett and the other to him.

February 10, 2014

Special Report: Mark Zuckerberg & Wife Lead List of Top Philanthropists

[Publisher’s Note: “Special Reports” are posted from time-to-time as a benefit for subscribers and frequent visitors to this blog. “Special Reports” are not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

 

With a gift of $992.2 million of Facebook stock to the Silicon Valley Community Foundation, Mark Zuckerberg and his wife, Dr. Priscilla Chan, find themselves at the top of The Chronicle of Philanthropy’s list of largest philanthropists in 2013.

Mark Zuckerberg by Andrew Feinberg via FlickrZuckerberg, at age 29, is the youngest philanthropist ever to top The Chronicle’s annual list of largest donors.

George Mitchell, with a bequest gift of approximately $750 million to the Cynthia and George Mitchell Foundation, ranked second on the 2013 list.

In total, the top donors of 2013 contributed $7.7 billion plus $2.9 billion in pledges. The numbers and ranking are based on publicly available information.

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