Affluent donors make contributions with little or no advance planning says the authors of the article, Spontaneous Compassion, published in the December issue of Worth magazine. The authors surveyed 446 individuals with a net worth of $5 million or more and with a history of giving at least $50,000 a year to nonprofit organizations. Here is what they found:
* Three-quarters of respondents characterized themselves as high-influence givers, that is, donors wanting to exercise authority and control in the selection of the charities they support and in how their contributions are used.
* Approximately 50% had already established a planned gift.
Of the 247 individuals with planned gifts:
* 87% said the opportunity to proactively reduce taxes was of material importance for them.
* 97% said the planned giving process was part of a wider effort that focused on financial planning, estate planning, or both.
* High influence givers often want a high level of involvement in all their financial affairs and they treat philanthropy as an extension of a bigger initiative.
The most popular vehicle for high influence givers is the charitable remainder trust (CRT).
* 60% of those with have planned gifts have already established a CRT.
* 34% of them prefer private foundations.
Checkbook Philanthropy
Low influence givers, typically called 'checkbook philanthropists,' make gifts in response to specific fundraising requests or one-off situations such as events or auctions. The authors found that 75% of low influence givers use a simple will bequest as a way to structure their charitable gifts. 29% of low influence givers also use donor-advised funds.
Multiple Planned Gifts
A general belief in the gift planning community is that most folks who establish a planned gift usually make another planned gift. The authors' research reinforced that belief. They found that 50% of high influence givers expect to enhance their existing gifts or establish additional ones in the future. Therefore, it is very important to continue cultivating your existing donors.
There are several reasons for making additions and/or making multiple planned gifts. In my own experience, I see donors enjoying the attention they receive from the organizations. Educational materials and financial reports are provided to them. Donors get a chance to meet other donors at invitation-only events. They also gain access to experts with program knowledge from the organization.
Some donors are impressed with the financial returns of their CRT and see it as a great investment and giving vehicle. Other donors get excited about receiving their quarterly or annual payments. Of course, most get the 'warm-fuzzy' feeling that they made plans to ensure the longetivity of the organization's work.
One charitable gift annuitant I worked with had 9 charitable gift annuity contracts with one college! Another client established a charitable remainder annuity trust (CRAT) for each year that he was retired (5 so far).
So while planned giving may yield many benefits, it is important to remember that it can be a daunting and emotionally taxing experience for the donors. The process forces donors to face estate planning issues and thoughts of their mortality. However, with the right team of advisors to help navigate the process, it can be a rewarding experience for all involved.
Thanks to Dee Dee Nguyen for the photo taken in Thailand.
