Posts tagged ‘gift planning’

February 13, 2015

Special Report: House of Representatives Approves IRA Rollover…Again

[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 usually not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

 

The US House of Representatives has passed a bill to renew and make permanent the IRA Rollover, a measure long-supported by the nonprofit sector. Congress approved the bill by a vote of 279-137. Of note, 39 Democrats joined with the Republican majority to ensure passage by a wide margin. The bill now moves to the Senate.

Like a similar measure passed last year, H.R. 644 — Fighting Hunger Incentive Act of 2015 includes the following components:

  • The IRA Rollover provision,
  • Extension and expansion of the charitable deduction for contributions of food inventory,
  • Enhanced deduction for gifts of qualified conservation easements,
  • Modification of the excise tax on the investment income of private foundations.

Unfortunately, President Barack Obama has once again vowed to veto the bill if it reaches his desk in its present form. The House would need 290 votes to override a veto.

Making Sausages 4 by Erich Ferdinand via FlickrThe White House opposition to the bill might be because the bill does not contain any provision that would pay for the tax breaks it would provide. The Congressional Budget Office has concluded that the bill would add to the Federal deficit.

Last year, the Democrat-controlled Senate failed to take any action on the comprehensive charitable giving incentive measure passed by the House. Now that Republicans control the Senate, there is a greater expectation of action this year. However, it remains to be seen if the bill can be modified to garner presidential support.

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!

January 2, 2015

Don’t Make New Year Resolutions You Can’t Keep

It happens every year at this time. People make New Year resolutions. Then, a short time later, they break those resolutions.

Breaking New Year resolutions is bad. Doing so can make you feel guilty. It can erode your self-esteem. If you told anyone about your resolutions, your failure to keep them could even be embarrassing.

Here’s a novel idea for 2015: Don’t make New Year resolutions you can’t keep.

Fireworks

Happy New Year from Philadelphia!

Instead of setting overly challenging goals, I encourage you to adopt the three following, easy-to-keep resolutions. While easy to adhere to, the following resolutions are nevertheless meaningful. You’ll notice that my three resolutions include something that will benefit you, something that will benefit others, and something that will benefit your organization:

 

  1. Indulge yourself. Yes, you need to take care of yourself by eating right, exercising, and getting an annual medical physical. However, you also need to let yourself be bad occasionally. You need to take care of your psyche. If that means having a slice of chocolate cake, then go for it! If it means watching old television episodes of Gilligan’s Island, so be it. If it means having your spouse watch the kids so you can enjoy a leisurely bubble bath, make it happen. By being good to yourself, you’ll be better able to be good to other people.

 

  1. Make sure those you love know you love and appreciate them. Don’t assume that those you love know it or know the extent to which you care about them. Tell them. Show them. Don’t just run for the door in the morning to rush off to work; instead, take the time to kiss your spouse good-bye. Don’t just nod when your child comes home with a good test score; instead, take the time to tell him how impressed you are. Make your partner a steaming cup of tea before she asks for it or goes to make it herself. In other words, make the most of the little moments.

 

  1. Grow professionally. One of the hallmarks of being a professional is ongoing education and sharing knowledge. So, commit to attending seminars and conferences. If time or money are obstacles, participate in a webinar; there are some excellent free webinar programs available throughout the year. Or, read a nonprofit management or fundraising book. There are some terrific books at The Nonprofit Bookstore (powered by Amazon) that will inspire and help you achieve greater results. You’ll find Reader Recommended titles, the complete AFP-Wiley Development Series, and other worthwhile items. If you have found a particular book helpful, consider sharing a copy with a friend, colleague, or your favorite charity. By the way, a portion of the sale of books through The Nonprofit Bookstore will be donated to charity.

 

(If there’s a nonprofit management or fundraising book that you read recently that you found particularly helpful, please let me know below so I can include the title in the Readers Recommended section.)

For additional reading, you might also consider looking at some of my posts that you might have missed. Here is a list of my top ten most read posts during the past year:

  1. Can a Nonprofit Return a Donor’s Gift?
  2. Delivering (My Own) Bad News
  3. 5 Things Never to Do in Your Phone Fundraising Calls
  4. One Word is Costing Your Fundraising Effort a Fortune
  5. Special Report: Top 40 Most Effective Fundraising Consultants Identified
  6. How NOT to Run a Capital Campaign
  7. Cheating Death
  8. #GivingTuesday Has NOT Made a “Huge Difference”
  9. 5 Lessons Moses Can Teach Us about Fundraising
  10. 20 Factoids about Planned Giving. Some May Surprise You.

I invite you to read any posts that might interest you by clicking on the title above. If you’ve read them all, thank you for being a committed reader.

I’m honored to know that I have readers from around the world. (I love the Internet!) While I appreciate all of my readers, I thought it would be interesting to look, beyond the United States, to see my top ten countries for readership:

December 16, 2014

Special Report: Congress Passes the Charitable IRA Rollover

At 7:32 PM (EST) this evening, Dec. 16, 2014, the US Senate passed HR 5771, the bill that retroactively extends several tax provisions, including the IRA Rollover. The law will expire on Dec. 31, 2014, without any grace period. However, it’s important to note that the measure will not become law until signed by President Obama, which is expected.

While approval of the IRA Rollover is good news, it unfortunately comes extremely late in the year. This means most nonprofit organizations will be unable to fully take advantage of the provision. Nevertheless, there are a couple of simple actions you can take:

  1. Look at your donor file to see which individuals have made gifts from an IRA in the past. Then, call those donors to let them know of the opportunity for 2014, assuming President Obama signs the measure. At the very least, email those donors.
  2. Email all of your older donors to alert them to the opportunity for them to give from their IRAs. Even if they don’t take advantage of the IRA Rollover, they’ll appreciate that you informed them about this late breaking news.

December 7, 2014

Special Report: House of Representatives Approves IRA Rollover

[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 usually not widely promoted. To be notified of all new posts, including “Special Reports,” please take a moment to subscribe in the right-hand column.]

 

On Wednesday, Dec. 3, the US House of Representatives passed a short-term tax extenders bill. The bill extended certain tax provisions for 2014, including the IRA Rollover, a provision long supported by the nonprofit sector. The package would cover 2014 but NOT apply to 2015 or beyond. The bill now goes to the Senate.

US Capitol by Glyn Lowe Photoworks via FlickrSen. Harry Reid (D-NV) has questioned whether the Senate will have time to pass the House bill before the end of the year. However, Sen. Ron Wyden (D-OR), Chair of the Senate Finance Committee, and the White House have shown a willingness to move forward with this one-year retroactive fix, according to Jason Lee, General Counsel at the Association of Fundraising Professionals.

For more information about the bill, click through to:

The Hill“House Approves Slate of Tax Breaks”

The Hill“Reid Indicates Senate Might Not Pass House Tax-Extender Bill”

The sad reality is that even if the tax extenders bill passes the Congress and is signed by Pres. Obama, there is precious little time for charities to take advantage of the IRA Rollover provision in 2014.

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.

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