Planned Giving Primer

The concept of planned giving is nothing new — churches began the process many years ago — but too many nonprofit organizations don’t have sufficiently organized planned-giving programs. If you’re one of them, here’s something of a primer.

Planned giving is a generic name for fundraising programs that seek to generate giving from supporters in their later years who will continue to give once they’ve passed away — in the form of estate gifts and other charitable vehicles. It’s the best long-term resource in which a nonprofit organization can invest.

A relatively small amount of money invested now to conduct some basic marketing and education concerning planned giving will result in a windfall for your organization in five to 10 years. All you need is a little bit of skill and a lot of patience.

Different vehicles
The most common forms of planned gifts are bequests, in which a supporter sets aside money for the nonprofit organization in her will or insurance policy. Other bequests can include the donation of land or stocks.

You can promote the concept of bequests through mediums as simple as ads in your newsletters and other publications, or as complex as multi-
faceted marketing campaigns that use direct mail and personal contact. You don’t have to wait for a donor to die before gaining her support through planned giving. As a matter of fact, the cultivation process has to begin well in advance.

Other options include annuities. Annuities involve the donation of a set sum of money by a living donor to an organization, which then pays the donor a specific amount of interest every month during the remainder of her lifetime. When the donor dies, the organization keeps the balance of the money.

Annuities are great because they can help both the organization and the donor.

While the organization benefits from the donation, the donor also benefits by receiving revenue for the remainder of her life. The older the donor, the higher her return rate. So a 90-year-old donor will receive a much higher return rate than a 70-year-old donor.

How to do it
Many organizations work through consultants who specialize in planned giving to develop their campaigns and related materials. The consultants provide readily available knowledge and marketing materials that require little effort on the part of the nonprofit organization.

Other organizations, chiefly larger groups, rely on focus groups to develop their own materials. Focus groups usually aren’t very effective in gauging direct-marketing response. It’s normally cheaper and more effective to test direct-mail packages by simply mailing them to small test cores.

But you don’t have that advantage with planned-giving materials — it could be years, or even decades, before a “test” donor passes away and leaves your organization a gift. Only then would you be able to judge the effectiveness of your marketing materials. That’s why focus groups have proven to be a valuable tool in helping to develop effective planned-giving campaigns.

Correctly targeting potential planned-gift supporters is a tricky business, and you need to work closely with your consultant to develop the right mix of materials targeted to the right mix of recipients. Demographic factors such as age, gender, length of home ownership and the value of the primary residence often are important elements to examine.

Amazingly, the amount of a donor’s previous donations often is not a reliable indication of her ability and inclination to donate through planned giving. I’ve seen many instances in which donors who have given only $20 or $25 to a nonprofit organization during their lifetime leave hundreds of thousands and even millions of dollars to that organization at their death.

Jim Hussey is president of Adams Hussey & Associates. He can be reached at jhussey@ahadirect.com.