As the United States experiences the largest inter-generational transfer of wealth in history, many charities are missing a tremendous opportunity to strengthen themselves by encouraging legacy giving. Contributions by will, trust, naming a charity on a beneficiary form, life-income arrangements, and endowment gifts all represent forms of legacy giving.
Nonprofits have experienced explosive growth over the last 30 years, and competition for philanthropic dollars has intensified. Charities increasingly recognize that long-term survival depends on diversifying and strengthening revenue streams.
Because the vast majority of philanthropic gifts come from individuals, not foundations or businesses, charities are increasingly focused on cultivating and stewarding relationships with individual supporters. Successful organizations recognize that donor-centered communications are essential to sustaining long-term relationships. Yet most charities have not yet embraced legacy giving as part of their strategic resource development efforts.
Nearly 70 percent of Americans make gifts to charity during their lifetime, yet fewer than 10 percent create legacy gifts. Why are people generous in supporting nonprofits during life but make no provision for them at death? Most have never been asked to do so!
Though we are in the midst of a significant generational transfer of wealth, organizations are not seizing the opportunity to talk with their supporters about the impact legacy giving can have on their mission-based goals.
Legacy gifts can enable organizations to achieve long-term financial stability and sustainability. Studies show that legacy giving offers a powerful means to enhance and diversify a charity's fundraising efforts because:
Successful legacy giving programs require several essential building blocks. Review and assess your organization's readiness by answering the following questions:
Mission: How will legacy giving strengthen your mission?
Case: Can you describe your long-term resource needs and desired outcomes?
Leadership: Will staff and volunteer leaders endorse legacy giving?
Prospects: Do you have supporters who care about your organization's future?
Stewardship: Will you celebrate and engage legacy donors?
Communications: What opportunities exist to promote legacy giving?
Program Plan: Can you commit modest but consistent effort to legacy gifts?
We have made it too complicated! The technobabble of traditional planned giving is intimidating for charities and their supporters alike. Plus, communication and marketing efforts often focus on how to make a gift, without first explaining why this form of giving is important.
Most charities lack the resources to commit time and staff to staying abreast of gift vehicle rules and regulations. Promoting complex gift vehicles isn't feasible for most organizations. The knowledge required to market, design, and secure life-income gifts is extensive, and the rules and regulations diverse and ever-changing. Developing an understanding for how the various gift arrangements work, the tax policy involved, asset management considerations, and accounting rules can be daunting. Unfortunately, many charities that might otherwise promote legacy giving to their friends and supporters get scared away.
And ironically, for all the work and knowledge required to attract life-income trusts and other complex gifts, they represent only a small percentage of actual legacy gift revenue. Most legacy giving revenue is generated by bequests. Organizations can raise more money by encouraging gifts by will and emphasizing the ease of naming a charity as a beneficiary of a checking, savings, or pension account.
"As public funding is reduced, and many of our clients struggle to meet their daily needs, we must encourage legacy giving as a means to provide much needed community services."—Roberta Berner, Executive DirectorGrafton County Senior Citizens Council (New Hampshire)
"As public funding is reduced, and many of our clients struggle to meet their daily needs, we must encourage legacy giving as a means to provide much needed community services."
Deferred giving, planned giving, and gift planning are terms that have little meaning outside the fundraising profession. We need to use language that our supporters understand.
Legacy Giving (Leg'?-se Giv'ing)Verb. To convey one's values through creation of a future gift to charityNoun. A foresighted action to strengthen a favorite cause
Any individual can create a legacy gift by naming a charity on the beneficiary form of a savings, checking, or pension account; remembering a charity in a will or living trust; or using a more complex instrument such as a charitable life-income trust.
All of these forms of legacy giving demonstrate a powerful and meaningful way for individuals to create a philanthropic legacy for their communities and the causes they care about.
"Legacy giving extends beyond traditional planned giving and requires articulated goals and achievable objectives, an organizational culture which embraces long-term support, and an ongoing commitment to engage others in broad discussions about your charity's mission and future."—Charles Gordy, Director of Planned GivingHarvard Law School
"Legacy giving extends beyond traditional planned giving and requires articulated goals and achievable objectives, an organizational culture which embraces long-term support, and an ongoing commitment to engage others in broad discussions about your charity's mission and future."
As the profession of planned giving grew in the 1990s, there was increasing interest in establishing criteria for quantifying gifts. This interest mirrored efforts in the broader field of fundraising to create measures and planning objectives to allow for accountability and consistency of comparison across organizations.
Voluntary reporting standards were developed to enable charities with planned giving programs to "count" irrevocable planned gifts in their fundraising reports. But there have been unforeseen and unfortunate consequences resulting from the measurement standards. The models for quantifying legacy gifts have had the net result of placing a disproportionate emphasis on life-income gifts.
Many charities with "successful" planned giving programs put more effort into promoting complex planned gifts because they can count them, even though these forms of giving represent a distinct minority of legacy gift revenue. As in many endeavors, our efforts conform to achieve that which is being measured. An unfortunate outcome of the desire for quantification is that we have put more attention on complex gifts than on increasing the number of Americans who create philanthropic legacies.
Ultimately we have no way to determine when a legacy gift—revocable or irrevocable—will be received. Although measurement is generally a laudable goal, attempting to quantify legacy gifts is akin to counting the number of angels on the head of a pin.
"As members of the fundraising profession, we have an opportunity to better serve our donors by developing our ability to be advocates for legacy giving."—Lisa Intagliata, PresidentAFP Florida Caucus
"As members of the fundraising profession, we have an opportunity to better serve our donors by developing our ability to be advocates for legacy giving."
If the primary goal of a fundraising program is to raise money, we should focus our time and effort on methods of giving that will achieve the greatest return. Whereas most people are not prospects for a life-income trust, almost everyone can create a legacy gift by will or through beneficiary designation.
We should measure our efforts by our commitment to:
True success should be measured by broad participation. Our focus should be to increase the number of individuals who create philanthropic legacies; we should put less emphasis on promoting gift vehicles and spend more time talking about how legacy gifts will impact and strengthen our work.
"We have learned that we can be successful in attracting legacy gifts by helping our supporters understand the impact they can make towards helping the children and adults we serve to lead independent, productive and fulfilling lives."—Mark Woroby, Executive DirectorWildwood Foundation (Albany, N.Y.)
"We have learned that we can be successful in attracting legacy gifts by helping our supporters understand the impact they can make towards helping the children and adults we serve to lead independent, productive and fulfilling lives."
We must help our volunteer and staff leaders understand why legacy giving is important to our organizations' future. Our approach should include promoting discussions about the importance of long-term goals and sustainability, encouraging investment in outcomes, and broad-based participation for legacy giving.
We need to help our supporters recognize that legacy gifts:
And we should bring our supporters into conversations about our organizational goals and aspirations. Enabling them to share in a collective vision is an important step in encouraging long-term support. A cross section of studies and research consistently shows that donors want to have more information about, and a better understanding of, the impact of their philanthropy.
Attracting legacy gifts need not require large investments of time and money. Even small organizations can build successful programs if they focus on educating their supporters about why legacy gifts are important to achieving mission-based outcomes, and by promoting simple and accessible forms of giving.
By putting a greater emphasis on creating awareness and offering education about simple forms of legacy gifts, charities can build successful legacy giving programs and expand the number of Americans who view legacy giving as a natural extension of their philanthropic values.
Communication and marketing efforts should explain why legacy gifts are important and encourage participation. Building and sustaining a legacy giving program need not be complicated or involve large investments of time and resources. You can create a successful legacy giving program by taking simple steps to educate your friends and supporters, and by developing an organizational culture that values legacy donors and the long-term support they provide.
Charities touch our lives and enrich our communities in myriad ways. The role they play in society is too important to leave to chance. If the nonprofit sector is going to grow and sustain itself, legacy gifts are essential to achieving a healthy future.
To ensure that nonprofit organizations retain their vibrant role in the lives of future generations, we need a collective commitment to foster, encourage, and promote discussions about mission-based, financial stewardship. We need to help staff and volunteer leaders promote legacy giving by focusing on mission, values, and relationships. After all, isn't that what effective philanthropy is all about?
Caleb B. Rick, JD, Legacy Giving© 2010, Legacy Giving
Caleb B. Rick, JD, is an adjunct professor of nonprofit management at Vermont Law School and a nationally known proponent of donor-centered, outcomes-based legacy gifts (www.legacygiving.com). He has counseled hundreds of charity leaders on legacy and endowment giving and spoken at dozens of conferences over his 20-year career.
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