OPRN - Prospecting for Hidden Treasure: Finding Gold in Your Planned Gift Prospect...

04/11/2023 Footer 1

PROSPECTING FOR HIDDEN TREASUREFINDING GOLD IN YOUR PLANNED GIFT PROSPECT POOL

Katherine Swank, J.D.Senior Consultant, Target Analytics®, a Blackbaud Company

Presentation with active hyperlinks available @ www.slideshare.net/kswank

© Blackbaud 2014 22

Name Katherine Swank, J.D.

Title Senior Fundraising ConsultantTarget Analytics

Development Background

• Health, Public Broadcasting, Higher Education• Raised over $200 million

Interesting Facts

• Past president, Colorado Planned Giving Roundtable

• Affiliate faculty, Regis University’s Masters in Global Nonprofit Leadership program

• Member, Partners for Philanthropic Planning

Publications & Presentations:

• www.npENGAGE.com fundraising blog• Creating a Legacy: Building a Planned Giving

Program from the Ground Up @ www.blackbaud.com/resources

• Presentations @ www.slideshare.net/kswank

YOUR PRESENTER

http://www.npengage.com/

http://www.npengage.com/

http://www.blackbaud.com/resources

http://www.slideshare.net/kswank


Where do Planned Gifts Fit in the Development Pyramid?

• Prospect Pool, Average Gift Amount & Cost to Raise a Dollar

Who Makes Planned Gifts?

• Get to Know the Planned Gift Donor

• Donors, Recipient Organizations and Other Facts

• Trends in Planned Giving

What Data is Useful for Planned Gift Programs?

• Determine Your Full Prospect Pool

• Apply the Data

• Using Data to Report Planned Gift Revenue and Inventory

• Take-Aways and Wrap-Up

LET’S EXPLORE THESE QUESTIONS


W HE RE DO P L ANNE D G IF T S F IT IN T HE DE V E L OP ME NT P Y RAMID?


PLANNED GIVING IN YOUR DONOR PYRAMID

You Have More Planned Gift Prospects than Major and Principal Gift Prospects Combined

Principal Gift Prospects (<1%)

Annual Gift Donors (90%)

Major Gift Prospects (10%)

Planned Gift Donors (30%)


PLANNED GIVING IN YOUR REVENUE PYRAMID

Principal Gifts ($50,000-$1,000,000)

Annual Gifts ($1 - $1,000)

Planned Gifts ($25,000-$150,000)

Major Gifts ($1,000 - $100,000)

Planned Gift Donors Have a Higher Average Gift Than Major Gift Donors


PLANNED GIVING COST IN YOUR BUDGET PYRAMID

Planned Gifts (3¢ - 10¢)

Special Events/Acquisition (50¢/$1.25)

Principal and Major Gifts (5¢ - 10¢)

Renewed Annual Gifts (20¢)

Planned Gifts Cost Less to Raise a Dollar than Other Development Efforts


W HO MAKE S P L ANNE D G IF T S ?


PLANNED GIFT DONORS

Who Really Makes Planned Gifts?

• 1:10 of current donors• 2:3 have no offspring or no grandchildren• Educated, especially graduate degrees• Household incomes >= $200,000• Estates >= $1,000,000- Excluding the primary residence

• Make total charitable gifts of > $500 annually• Volunteer• Surviving spouse of married couple and single

women; but rarely single men

When Do They Make Them?

• 1:10 donors makes planned gift between ages 50-79• 2:10 donors makes planned gift > age 80


PLANNED GIFT RECIPIENTS

Who Receives Planned Gifts?

In d

esce

ndin

g or

der

of

pref

eren

ce • Local charities that provide basic needs

• Education• Arts• Health• Religion• Youth and Family• Environment/Animal

Care• International In

des

cend

ing

orde

r of

gi

ft a

mou

nt • Education• Religion• Arts• Health• Basic Needs• Youth and Family• International• Environment/Animal

Care


PLANNED GIFT FACTS

What Planned Gift Vehicles are Popular with the Affluent?

• In descending order of use:- Will or Trust with Charitable Provision- Endowment Fund- Charitable Remainder Trust or Lead Trust- Private Foundation- Community Foundation Donor-Advised Fund

or Bank Donor-Advised Fund- Charitable Gift Annuity

What Do They Fund?

• In descending order of donor-directed use:- General Operating Support- Long-term Investment in the Organization- Support the Growth of the Organization- Fund a Particular Program- Memorial Gift


PLANNED GIFT FACTS

Who Makes the Largest Planned Gifts?

• Estates > $5,000,000 give around 27% of their value to charity• Estates > $20,000,000 give around 40% of their value to charity

When Do You Get That Planned Gift Revenue?

• Decedents aged 80+- 80% of estate gift dollars are received after donors turn 80- Though, those who begin estate planning by the age of 55 provide 40% of

total deferred gift dollars eventually received

55-59 60-64 65-69 70-74 75-79 80-84 85-89 90-94 95+

Charitable Bequest Dollars Received by Donor Age at Death


PLANNED GIFT TRENDS

• Lowest birth rates for those currently 79 years old and older

• Baby bust 1924-1932 (approximate ages 80-90)

• Someone born in 1932 has a longer life expectancy than someone born in 1924• We should have expected to have decreases in bequests in the past decade

The Bad News is…….. Some of Us Aren’t Dying to Participate


PLANNED GIFT TRENDS

• Childlessness is the single strongest demographic predictor of including a charitable bequest in one’s estate plan

• Rate of childlessness for those 70+ will double over time

• Will occur at the same time we have a sustained rise in total population

• Most dramatic increases in actual dollars received by charities may not be seen for five years or longer

The Good News is…… Some of Us Aren’t Having Sex


PLANNED GIFT TRENDS

• Higher levels of education are associated with higher levels of charitable bequest giving

• Steep growth in education levels in the 55+ age population since 1970

• Means an increasing propensity to engage in charitable estate planning

‘Geek’ is the New Black


PLANNED GIFT TRENDS

• Increasing trend to include a charity as a legacy beneficiary among the U.S. population of adults aged 55 with a will or trust

• Between 1998 – 2008, including a charitable bequest grew by almost one fourth, from 8.28% to 10.12%

Younger Is the New Old… Proactively Identify a Younger Pool of Prospects


PLANNED GIFT TRENDS

• The generally positive trend in charitable planning among the 55+ is driven by the youngest demographic, ages 55-64

• In comparison, the 65-74 year olds are relatively flat and the 75+ group is declining in their estate planning activity

• Positive trends will eventually develop as the 55-64 year olds move into older age categories

• But that’s 10+ years away

Older is Not Necessarily Better… Share These Trends to Educate Your Team and Leaders


PLANNED GIFT TRENDS

• Steadily increasing levels of charitable giving and volunteering for population aged 55+

• Charitable engagement is a positive indicator of the propensity to leave a charitable bequest

Set The Alarm Clock for ‘Early’… Pass Along More Qualified Prospects for Engagement


ROLE OF PROSPECT RESEARCH & DATA ANALYTICS

Research and Analytics Lead the Development Office Effort

• Identify the organization’s best pool of potential prospects

- Ascertain who’s likely to have already made a planned gift

- Surface those that should be educated about planned gifts to your organization

- Segment top prospects who should be approached on an individual level

• Research top prospects to determine their potential capacity for a planned gift

- This might also be in conjunction with a current major or principal gift ask

• Suggest the gift type or types most appropriate for solicitation of a specific prospect


WHAT DATA IS USEFUL FOR PLANNED GIFT PROGRAMS?


PRIMER ON PLANNED GIFT VEHICLES

• Provision in your will or trust to pass money or other items to a charitable organization upon your death

• Wills are often the first estate planning tool

• 90-95% of planned gifts are currently made this way

• Two primary age groups

• Late 40s to late 50s

• Mid 60s to late 70s

• About 75% of wills are never changed or updated

• More than two-thirds of planned gift donors also make current annual gifts

• Planned gift donors are significantly more philanthropic than non-planned gift donors

Bequests



• An irrevocable contract between one or two donors and your organization.

• In exchange for making a gift to your organization, you promise to pay the donor(s) a fixed amount regularly for life

• 5%-6% of all planned gifts are CGAs

• Primary age group is mid 70s and older

• Average annuity is $60,000

• Over 4 in 5 annuitants learned about gift annuities through the organization’s own marketing and promotion – you can help the gift officers know who to approach

• Many gift annuitants do multiple annuities

Charitable Gift Annuities



• An irrevocable financial holding that moves liquid or illiquid assets out of an individual’s possession into a giving vehicle with charitable intent.

• The trust pays a specified annual amount to one or more people for a fixed number of years, or for the life of the individual(s) who benefit from the trust’s distributions

• At the end of the term, the remaining trust property is distributed to your organization and any other specified charities

• 1%-2% of all planned gifts are CRTs

• Primary age group is mid 50s - early 70s

• Many CRT holders make charitable bequests as well

Charitable remainder trusts



• Written provision in your life insurance policy, bank account, retirement funds account and the like that pass money or other items to a charitable organization upon your death

• Are becoming very popular with donors age 60 and younger

• These gifts cost no money to set up, do not require an attorney or financial planner to be involved

• Can make gifts such as these in more than one instrument

• Recent graduates, older alumni and grateful patients, Board members and Trustees, organizational insiders such as staff, faculty, physicians, etc. can make these beneficiary designation gifts in minutes!

Beneficiary Designation Gifts


3rd Party Vendor

Hire a company that knows and

creates planned gift-specific donor

models

Saves staff time and reduces time

to identify prospect pool

Donor models can be customized to

specific gift vehicles

Your Own Modeling

You know your data

Takes an extraordinary

amount of time and understanding

of analytic modeling process

Lack of robust outside data may

cause endogeneity

concerns

Data Appends

Basic data is abundant

Takes time to collect on your

own and may not be robust

enough; consider purchasing data

Data points are generic in their

identification and not specific to your prospect

pool

WHICH METHOD OF USING DATA IS RIGHT FOR YOU?


DATA YOU’LL WANT TO HAVE

• If you can only collect or purchase up to 4 data points:

- Age

- Household Income

- Known Public-Record Assets Range (no need to have exact $$ at this stage)

- Education Level/Degree

•Up to 8 data points:

- Marital Status

- Number of Children in the Home

- Yearly amount of charitable gifts to other organizations or philanthropic indicator flag

- Planned gift acknowledgement with another organization

•If you can collect this information from each individual:

- Volunteerism

- Planned gift already completed that includes your organization

Regardless of Where or From Whom Planned Gift Profile Models Originate


APPLY THE DATA – EASY

• Use data to find everyone in your CRM system with the following:

- Over the age of 50

- Household income of $50,000 or higher

- Known assets of $1,000,000 or higher

- College degree

•Rank your prospects by the following, in descending order in all categories:

- College degree

- Then by age

- Then by known assets / asset range

- Then by income

• Gift annuitants are typically over 70 years old and have incomes of $50,000 or higher

•CRT and LT grantors are typically 50-69 and have assets above $2.5 million

•The most active ages for creating bequests in estate plans are 40-59

•Those ready to share their estate plans with you are 80+

Use Data Points to Segment and Prioritize for Marketing


APPLY THE DATA – EASY

• Use data to find everyone in your CRM system with the following:

- Over the age of 50

- Household income of $200,000 or higher

- Known assets of $5,000,000 or higher

•Rank your prospects by the following, in descending order in all categories:

- Known assets / asset range

- Then by age

- Then by income

• Assign for Gift Annuities: Age 75-90 with incomes of $75,000+

• Assign for CRT and LT: Age 50-69 and have assets above $5 million

• Provide research and recommendations for possible planned gifts on all principal gift prospects and major gift prospects already validated for a potential gift of $100,000 or higher or any prospect with assets of $10,000,000 or higher

Use Data Points to Segment and Prioritize for Gift Officer Assignment


APPLY THE DATA – SOPHISTICATED

• Append as many of the suggested data points as possible to everyone in your CRM system

• NOTE: Analytic model-vendors use hundreds of additional data points related to financial and consumer habits, wealth and specific asset classes, biographical and socio-biographical information – the suggested data points in this presentation are not exhaustive

• In addition to gift information, other useful affiliation codes specific to your organization might include (this list is not exhaustive):- Events attended

- Subscription or member levels

- Committees or other leadership affiliations

- Patient status or family of patient status

- Connection to disease or no connection

- Clubs, auxiliaries, extensions and group membership

-Use a self-validating model process to specifically identify your organization’s unique planned gift donor profile, if possible

-Alternative, speak with a vendor about the data points you have available to determine if you should work together to create a custom model for your organization

Use Data Points to Build or Purchase Analytic Models


USE DATA AS A VISUAL AIDE TO REPORTING

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

Annual Revenue

$14 Million19%

$14 Million68 Gifts

18%

$48 Million17 Gifts

63%

Gifts of $1 Million +

Gifts of $100,000 +

All Other Gifts

60% of major gifts over $100K were

current major gifts; 40% were deferred

planned gifts

Show the Value of Planned Gifts in the Development Pyramid


USE DATA TO EDUCATE AND INFORM LEADERS

50%

20%

1%1%

6%

18%

4%Planned Giving Inventory

Known Expectancies

Open Estates

Life Insurance Policies

Life Estates

Testamentary Pledges

Charitable Remainder Trusts

Gift Annuities

Provide Graphically Vivid Reports to Easily Convey Planned Gift Information


OVERVIEW & TAKE-AWAYS

• Specific types of people are the most likely to make planned gifts

• The busiest people in estate planning are in their 40s and 50s

• However, most charitable bequest dollars realized come from those who die in their 80s

• Estate planning is changing and will continue to change

• Use of bequests in wills is declining; while bequests through life insurance proceeds, retirement funds and other financial cash reserve accounts in increasing

• Short-term planned giving trends appear rather negative, but…….

• Future trends in planned giving are positive for the following 25 years

• Invest time and donor-contact, have patience and the result will change your organization!


QUESTIONS AND CONTACT

Thank You!For a list of resources related to this presentation, please contact me:

Katherine Swank, J.D. 843-670-7278

(located in Denver, CO)

[email protected]

Twitter: @KatherineSwank LinkedIn:

http://www.linkedin.com/in/katherineswankSlideShare: http://www.slideshare.net/kswank

mailto:[email protected]

http://www.linkedin.com/in/katherineswank

http://www.slideshare.net/kswank

OPRN - Prospecting for Hidden Treasure: Finding Gold in Your Planned Gift Prospect...

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