Several years ago I worked on an estate plan for a gentleman with a fifty-plus million-dollar estate. His intention was to leave a sizable percentage to charity and much of it to a nonprofit he had once served as a board member. In the planning process, he notified the organization of his general intent.

Though our work for the gentleman was completed, he and I continued to have lunch about every other month. On more than one occasion he graciously commented, “You know, I never heard back from the organization. I’m sure they’ll get around to it sooner or later.”

Over the next few years, that organization went through numerous leadership changes, including a new Executive Director and an interim CEO. By the time a third leader was in place, the former board member and his bequest-notification letter were long forgotten.

A few more years went by without any contact. He finally said to me at one of our lunch meetings, “You know, I just don’t think they care about the gift.” I understood what he meant but didn’t want to admit that no one seemed to remember his many contributions to the organization, and seemingly didn’t really care about him or his bequest.

Not wanting to assume the worst, I tried to arrange a meeting with the third Executive Director. He didn’t remember him either. I suppose I would have gotten more attention if I had said, “Your organization is the beneficiary of a bequest in excess of $5 million from a gentleman who is about to pass away.” Since, however, my friend’s notification letter did not mention the size of the gift, neither did I. The third director and I never met. He was also fired about two months later.

The gentleman revoked the bequest before he died and (I think out of spite) redirected his gift to a competing hospital. In retrospect, the bequest notification was probably overlooked initially because it was not in the form of current cash or a short-term pledge. As time passed, staff transitions resulted in a loss of organizational memory—that is, anyone who knew the about the gentleman’s previous contributions or his bequest notification was no longer with the organization.

REVOCABLE BEQUESTS STATISTICS
The results of a twenty-year survey among donors with charitable gift commitments in their estate plans revealed that the retention rate at the ten-year mark was about 55%. In other words, almost half the respondents reported that they no longer had a charitable gift in their estate plans. Somewhere in that ten-year period they had revoked the revocable bequest.

That survey constitutes either bad news or good news, depending on whether your organization has a progressive or regressive perspective (see A GENERAL THEORY OF FUND-DEVELOPMENT: Five Decisions that Keep Your Organization on the Front Side of the Momentum Curve).

For many organizations it’s bad news for two main reasons:

1) They tend to be so driven by the need for current cash that they make only minimal investments in marketing and solicitation of estate bequests, even in an environment where charitable bequests more than doubled in real dollars over the last twenty years (Giving USA, 2011).

It’s bad news because long-term organizational health is the result of forward thinking—that is, transitioning from a hunter-gatherer form of fund development (bag the prey in order to live another day) to a long-term cultivation-based sustainability plan (systematic planting, cultivation, reaping a harvest). See INSTITUTIONAL SUSTAINABILITY: Transitioning from “Hunter Gatherer” to a Cultivation-Based Fund Development Strategy.

2) It’s also bad news for some organizations that operate with the underlying assumption that the retention rate of revocable bequests is out of their hands. They don’t always know who has made a bequest, they don’t know how long donors will live, and they can’t control donors’ ability to privately change their minds. So, many organizations take a wait-and-see approach, hoping for the day when a donor surprises them with an organization-changing gift.

Maybe that’s being too critical, and maybe it’s painting with too broad of a brush. But to one degree or another, a great many nonprofits struggle along with those two limiting perspectives—overemphasis on current gifts and the presumed inability to impact bequest-retention rate.

WHAT THE SURVEY ACTUALLY REVEALS
It’s important to note that the survey mentioned above was not a measure of the retention rate of any particular organization or category of organizations. Responses were tabulated from the general population of donors making bequests to any cause or nonprofit. The far more important question is, “What is the retention rate of bequests by your donors to your organization?”

Organizational leaders with successful planned giving programs understand that there are several ways they can impact the bequest-retention rate, either positively or negatively.

It would be naïve to assume that all bequests are created equal. The motivation behind a bequest, those who were involved in the process, the donor’s relationship with the organization, and the ongoing cultivation of existing bequests all can make a significant difference in retention rate.

In contrast, successful, forward-thinking organizational leaders see the 55% rate as good news for two reasons:

1) They know from their own experience that 55% retention rate among all donors with charitable gifts in their estate plans doesn’t necessarily apply to their organization. Even if the study had sorted donor bequests by organization, low retention rates at competing organizations force the average downward.

2) Organizational leaders with successful planned giving programs understand that there are several ways they can impact the bequest-retention rate, either positively or negatively. Consequently, they are invested both in the marketing / solicitation process and in the long-term follow through.

My story of the gentleman’s bequest notification illustrates the potential impact of executive turnover and a fixation on current giving. It’s an extreme example of what not to do. In a future post, I’ll share a few thoughts on what we’ve found does and does not benefit bequest-retention rates for a particular organization.

Eddie Thompson, Ed.D.
Founder and CEO, Thompson & Associates
Copyright 2016, R. Edward Thompson