Changes in marketplace spur planned giving

By Todd Cohen

As more Baby Boomers reach their peak earning years and approach their peak giving years, the charitable marketplace increasingly is gearing itself to tap that generation for planned gifts.

“The handwriting is on the wall,” says Margaret Holman, president of Holman Consulting in New York City. “The leading edge of the Baby Boomers has just turned 60, and most planned gifts come from people who are age 65 and older.”

So nonprofits “are transitioning to prepare for a generation that is transitioning,” Holman says.

Nonprofits’ growing embrace of planned giving also reflects greater awareness on the part of charities, donors and professional advisors that deferred gifts using assets other than cash can be effective tools for making substantial gifts to sustain charities while generating a stream of income for donors during their lifetime, experts say.

“When people begin to think seriously about and look seriously at their own portfolios, they often realize these planned-gift instruments are ways to make larger gifts than they otherwise might make outright,” says Tim Seiler, director of The Fund Raising School at Indiana University.

And as they find that offering a continuum of giving options can produce more fruitful and longer-term relationships with donors, a growing number of nonprofits are integrating planned giving into their fundraising programs, experts say.

“There’s a sense that planned giving is an integral part of thinking about who you are,” says Joe Breitenicher, president and CEO of The Philanthropic Initiative, a nonprofit consulting firm in Boston that advises individuals, families and companies


Demographic changes are driving charities’ embrace of planned giving, experts say.

With the oldest of the estimated 77 million Baby Boomers born between 1946 and 1964 starting to reach age 60, and many of them controlling considerable assets, they are beginning to think about how to distribute those assets and plan their estates, says Seiler.

“There are more people who in a position now to think strategically about large gifts to charity and fulfilling some of their own dreams about making a difference,” he says

Yet while the dollars through charitable bequests from the “Greatest Generation” that preceded the Boomers have remained the same or even grown because that generation was highly effective at shepherding its asset base, Holman says, the number of bequests from those donors has declined over time as the size of the generation shrinks.

Boomers are next in line to make bequests, she says, yet the oldest Boomers have hit the prime age to make major gifts but are still five years away from reaching the prime age for making planned gifts.

“They need to be transitioned into making blended gifts,” she says, or those that combine planned gifts using deferred strategies with major gifts using current assets.

“So by the time they get to be in their 70s — the traditional demographic of a planned-gift donor — they will be educated as to what planned gifts are,” Holman says.


To better handle that transition, she says, many nonprofits, particularly smaller ones, are creating single positions to handle both major gifts and planned gifts.

And many mid-sized-to-large organizations that may not have a donor base big enough to justify having a separate planned-giving department are decentralizing that function and asking their affiliates or regional offices to create single positions to handle both major gifts and planned gifts, she says.

By blending the two fundraising functions, she says, major-gift officers “are now learning to consider every prospect, regardless of the size of the gift they’re capable of making, as a potential planned-gift prospect.”

The combination also has helped planned giving begin to “permeate an entire organization” and become more a part of capital campaigns.

“It allows professional fundraisers to help donors make the biggest gift they’ve formed the donative intent to make,” Holman says.

And instead of the push to meet goals to raise a set number of gifts of different sizes, and having those gift goals drive fundraising, she says, the focus has moved to helping the donor accomplish philanthropic goals.

“Changes in the marketplace are changing fundraising, which improves the quality of the process for both parties,” Holman says.


Seiler says better training and education about planned giving have helped generate greater awareness on the part of nonprofits and professional advisors about the benefits of planned giving.

“If you are philanthropically motivated – and that’s the key point, and they want to do something really meaningful for themselves as well as for nonprofit organizations – planned gifts often allow them to make very, very substantial gifts,” he says.

Planned gifts can be substantial, Seiler says, because they involve assets that are much greater than what the donor has on hand.

And while the benefit to the nonprofit may be deferred, he says, the gift can provide a source of income to the donor even after the asset is transferred.


Nonprofits that do not give donors the option of making a planned gift are “missing a development opportunity,” says Breiteneicher.

Offering a planned-giving program shows donors “you take your work seriously,” he says.

“It’s thinking about the whole relationship with the donor,” he says.

And donors can play an important role in recruiting other planned-gift prospects, he says.

“If they liked what you did and understood your mission and work, why wouldn’t you ask them to be honest brokers with others,” he says. “Don’t ever waste a single relationship, even those who are no longer contributors.”


For organizations that do not have a planned giving program, Breiteneicher says, an easy step to take in starting one is to ask donors to assess the job the organization is doing, and ask them what they like about planned-giving programs they may participate in at other charities like a college, hospital or religious congregation.

Seiler says another simple step is to offer information sessions about estate planning for both prospective donors and professional advisors.

With more than half of U.S. households lacking a will, he says, nonprofits can use a variety of vehicles like newsletters, direct-mail marketing and email to continually “raise peoples’ consciousness” and encourage constituents to provide for the organization in their will.

A growing number of charities are integrating planned giving into their organization’s overall development program and strategy, he says.

“The more opportunities people have to give,” he says, “the more likely it is that organizations are going to receive.”


Holman says that nonprofits need to be patient because it can take years for the cultivation of donors to pay off in the form of planned gifts.

“If you have patience and you can strategically think ahead about this transitory period, then you’re going to have the biggest bumper crop of planned-gift prospects, most of whom earned more than their parents ever did,” she says.

“So organizations that can be patient and think strategically about how do I best involve Boomers now,” she says, “will have a better chance of becoming a member of the Boomer’s family and therefore getting bequests.”

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