by Andy Ragone
I recently presented the merits of planned giving to a board of directors in ten minutes. They would then decide whether to use our company and whether planned giving was a worthwhile pursuit. Since I expected to have more time to present, it could have gone better.
You may be thinking: “Hey, that’s the breaks! Better luck next time.”
Fortunately, it wasn’t quite that bleak. We had some allies who would speak more to the merits of gift planning within the organization, so not all was lost. My presentation, while important, was not the only factor involved. But ten minutes to cover the value and strategy for building a planned giving program? Sheesh.
Understanding the merits of planned giving is challenging, let alone building the program itself. Unsurprisingly, many organizations do not pursue these types of gifts. However, they ignore them at their peril, partly because their competitors have seen the value of asset giving. If these competitors are actively building their programs, they will exponentially outpace the organizations that do not aggressively move in this direction.
Robust gift planning programs account for 40-60% of an organization’s total donation revenue and increase an organization’s revenue by upwards of 65% within a five-year trajectory. This contrasts with those only pursuing cash (or equivalent) gifts, which see growth at 11% over that same five-year period.*
In other words, an organization that ignores the intentional building of a gift planning program eventually gets left in the dust.
"Okay... Where do we begin?"
Let's start at the top. Literally. Developing a gift planning program requires top-down decision-making.
Leadership buy-in is the first hurdle to overcome when building a program. However, leadership buy-in can be tricky, especially when trying to convince a board to see the merits of planned giving within ten minutes. I’ll try to be more succinct next time:-)
What should you know about getting leadership buy-in? More importantly, what are the obstacles to spot and how do you overcome them? In Part 1 of this blog, I'll explain the first two obstacles and what can be done to move past them.
About Leadership Buy-In
While decision-makers may know the value of having a thriving planned giving program, they may not be patient enough to see it through. Over the years, I have had far too many conversations with organizations not to flag this as a primary concern. I’m not alone. According to research by the National Association of Charitable Gift Planners, getting leadership buy-in is one of the chief matters to address. Click here to read more and gather some helpful resources from them.
What is needed to engage leadership and encourage its buy-in?
If I could sit down with a board and cover the bare minimum of what they need to know, the following is what I would cover.
Leadership and donors alike must believe in your organization's vision. They also need a clear and compelling picture of how their planned gifts will be used towards that vision.
Organizations with a clear understanding of what the future holds for them and the populace they serve know that funding support will need to occur. Big dreams require big funds. Leaders and donors of these organizations are “all in” and believe the organization’s mission and direction to be worthwhile. These organizations are found in every nonprofit sector and serve people who enthusiastically believe in their causes.
I often see organizations building planned giving programs as a last-ditch effort to keep their programs on life support. An organization may have plateaued some time ago and is trying to keep itself afloat. This type of organization may receive some estate gifts from those donors who have been close to it over the years, but without a vision and future hope, most donors will not give significant estate gifts.
Instead, most donors will give to an organization that promises a bright future of significant impact. Leaders and donors alike notice positive organizational movement when they see it. Gift planning success soars when vision is clear and leadership is on board.
When building your program, repeatedly remind your leaders that ROI generally does not happen in the first year.
Receiving estate and complex gifts takes time. While putting an estate plan together might seem simple enough, such as completing a will and mentioning an organization in that will, donors, especially those who are retired and living off their estate wealth, may see things a little differently.
The closer these individuals get to death, the more thoughtful they become with their planning. They may take a new interest in estate planning by converting from a will-based plan to a living trust-based plan, especially if they have property and wish their family to avoid the myriad of issues and expenses that come with probate. In these cases, they will likely work with an estate planning attorney who can help them complete their plan. This can take several months and incur a cost generally between $2,000 and $5,000, depending on the complexity of their estate and family dynamics.
Furthermore, while many planned gifts are current gifts of assets, future estate gifts take considerable time to materialize. After all, we wait for death to occur before receiving promised gifts. This is just one of many scenarios that occur in gift planning.
Fortunately, we do see immediate ROI coming from donors giving IRA, DAF, and Stock gifts in lieu of cash. But even those gifts require a fair amount of marketing and education before donors make the transition to give in those ways. Planned giving requires just that—a plan. Plans take time.
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Part 2 will identify planned giving metrics, encourage intentionality, and finding the right personnel to do the job.
*James, R. N., III. (2018). Cash is not king for fundraising. Gifts of noncash assets predict current and future contributions growth. Nonprofit Management & Leadership. 29(2), 159-179.