Several years ago I posted a blog about the two big questions donors need to answer before pulling the trigger on a major gift, bequest, or planned gift. The first question regards what they would need to live on for the rest of their lives. Since most donors considering a major gift had been consulting with financial planners for decades on that particular issue, they often worked quickly through the first question only to get stuck on the second.
The second question is about the inheritance donors will pass onto future generations. That issue has always been a bit more complicated. In my interviews with donors of our nonprofit clients, I typically introduce that conversation with a statement followed by several questions of my own.
“The positive or negative impact your financial assets will have on your children is largely the result of how much, at what time, and by what means you pass on your wealth to them. Would you be interested in seeing how that works?”
Very seldom do they say anything other than “yes.” Often the response is an emphatic, “You bet I would!”
“Great,” I reply. “I have three questions I need to ask, then we can discuss your answers.”
See Helping Donors Answer Their Most Perplexing Questions for detail of the discussions that follow.
A DIFFERENT OPINION
We’ve had those discussions with thousands of donors in the process of creating estate plans, most of which contain charitable gifts from donors’ newly formed giving decisions. Concerns about the second question (leaving significant amounts of wealth to the next generation) have always lurked in the back of donors’ minds. What we are seeing over the last few years is that anxiety about the first question (what donors will need for the rest of their lives) is becoming more and more a primary concern.
Those financial anxieties include: the runaway cost-increases in medical care compared to near zero return on investments, political and economic uncertainty, a $20 trillion national debt, and the financial ramifications of another catastrophic terrorist attack. There’s also the increasing anxiety among many older donors regarding their inability to keep up with a dizzying pace of change in culture and technology.
These are just a few heightened concerns donors face as they sit in front of me contemplating those two questions, trying to decide about making a major gift or planned gift. In order to pull the trigger on a major gift, bequest, or charitable estate plan, they have to clear not just one hurdle (inheritance strategy) but two (inheritance and personal sustainability). Both hurdles seem to be getting higher.
GOOD NEWS / BAD NEWS
Some might see these trends as bad news for planned giving. However, as always, successfully navigating the future has a lot to do with long-term leadership philosophy and perspective. From a planned-giving standpoint, it’s actually good news because of your ability to answer both high-anxiety questions through planned giving. As you know, estate-planning techniques enable donors to create tax-efficient, lump-sum gifts or income streams for their heirs or themselves. The key is being able to combine those techniques in such a way as to specifically address the anxieties and objectives that are unique to every donor. Again, see Helping Donors Answer… for an example of how to do that.
MOMENTUM BUILDERS AND KILLERS
The trend among nonprofits is to combine responsibility for securing major gifts and planned giving into one position. Recently, I was speaking at a conference and took the opportunity to sit in on another presenter’s session. He asked how many fundraisers were wearing two hats—responsible for both major and planned gifts. The hands of most attendees immediately shot up.
From a planned-giving standpoint, it’s actually good news because of your ability to answer both high-anxiety questions through planned giving.
On the negative side: This dual responsibility often results in a concerted effort toward current gifts to the detriment of future gifts. The tendency is to go after the major gift as a first priority and the planned gift as distant-second option because of 1) demand for current gifts and 2) performance metrics that reward fundraisers professionally only for current gifts.
On the positive side: Wearing two hats actually puts fundraisers in the position of soliciting blended gifts—a mix of current and future gifts. By incorporating planned gifts and current gifts into blended-gift decisions, the overall solicitation process addresses the two big donor questions.
I’m bewildered sometimes at things I hear from institutional executives about their focus on current gifts (generally gifts from discretionary income) and the lack of focus on gifts from net worth.
As powerful as a long-term fund-development strategy can be in creating organizational momentum, the reverse is equally true with a shortsighted strategy (see: A GENERAL THEORY OF FUND DEVELOPMENT). In other words, the approach that has the potential of directly addressing donor anxieties is abandoned for a strategy that often increases it—that is, soliciting only current gifts from discretionary income.
THE BIG IMPORTANT POINT
We talk through these two big questions each year with thousands of client-organization donors in our estate planning discussions. We approach both questions from a position of disinterested benevolence—that is, we’re not soliciting for the organization but focusing exclusively on donor needs and desires, as well as giving objectives. Since we have no other agenda, they tend to unload anxieties about family and finances, as well as their anxieties about the nonprofits they support. SEE WEALTH AND HYPER-AGENCY.
The approach that has the potential of directly addressing donor anxieties is abandoned for a strategy that often increases it—that is, soliciting only current gifts from discretionary income.
Here’s the big point: Donors discuss their deep personal concerns and anxieties with me on a regular basis, even donors I’ve only known for a short time. That’s not because I’m so very smart or have such an engaging personality. It’s primarily because 1) I talked to them about future gifts, 2) I’m very attentive to their anxieties, and 3) I focus exclusively on their interests. This is not rocket science. It’s something any planned giving officer or any executive with the dual responsibilities for both planned giving and major gifts can do with a blended-gifts approach.
When I talk about knowing your donors, focusing on their needs, and understanding their concerns, the place where this happens naturally is in discussions about future-gift commitments. By scaling back on long-term planned giving initiatives, organizations, in effect, scale back on the opportunities for the deepest personal conversations with their donors.
Eddie Thompson, Ed.D.
Founder and CEO, Thompson & Associates
Copyright 2016, R. Edward Thompson