Is Planned Giving Part of Your Agency’s Program? part 2

(Part 2 of 2)

by Robert I. Evans & Avrum D. Lapin

Fact: approximately 8% of all charitable giving in the U.S. in 2008 ($22.7 billion) came in the form of testamentary gifts, according to Giving USA. This represents significantly more than all giving by business/corporate sources and almost as much as foundations provided.

Fact: the U.S. death rate has slowed significantly and people (including Jews) are living much longer.

With these statistics in perspective, we contend that too many Jewish nonprofits are not embracing the creation of a formal planned giving program, thereby offering donors opportunities to make contributions to a wide range of organizational programs and needs. Our previous planned giving commentary in eJewish Philanthropy emphasized that no fundraising effort is complete today without a meaningful planned giving component.

Perhaps as a result of the economic climate, charitable gift annuities and charitable remainder trusts have become even more attractive to potential older donors, especially as they are worried that they may outlive their financial resources . . . even though they would like to support organizations or causes that they hold dear. Therefore, as an excellent method for Jewish (and other) nonprofits to round out their pro-active fundraising options, CGA’s and CRT’s should be added to the menu of opportunities.

Our previous piece highlighted the importance of securing a financial firm that can manage the logistics and the investments required for an effective program of CGA’s and other trusts. Note that every state in the United States has established formal guidelines about managing annuities and there are many easy-to-find publications that delineate these. The State of New York probably has the most stringent regulations and these can serve as rules for everyone to follow. Guidelines vary and each nonprofit is responsible for adequate dollars set aside for payments against trusts.

Most important, however, is to consider who could be the best prospects for annuities. Generally, current donors in their mid 70’s are most likely to be interested. From our experiences working with nonprofits, we venture to say that these men and women are probably retired, uncomfortable with any personal debt, and do not believe they are wealthy. Most likely: they are either widows or widowers.

Do you understand the differences in various types of annuities? Probably your agency’s donors are confused about the alphabet-soup of options, but they are likely to welcome information from your organization’s “planned giving committee” or a group of knowledgeable experts who will offer seminars and various publications filled with free advice. Establish and populate a Legacy Society but be realistic about the timeframe for achieving results. Do not expect immediate returns from offering a “Legacy Society” concept as part of your formal program . . . but we cannot emphasize enough how critical this aspect is to complete an aggressive and well-conceived fundraising operation.

With pressures on donors to continue providing support for the organizations they love but with financial constraints hitting older Americans especially hard, planned giving is even more valuable than ever before. But it is probably more misunderstood by nonprofit executives than any other single aspect of charitable giving.

Some Jewish nonprofits have resisted offering annuities because of a perceived need for current dollars. Options like “reinsurance” do exist through which an organization would “sell” the annuity for current dollars; the potential benefit for donors is that they are able to see their gift used in their lifetimes even though reinsurance could significantly reduce the total gift for the organization in the long run. We stress that experts are much divided on this hot-button issue.

We would like to hear from you about your agency’s recent experiences in planned giving. How have you modified or constituted your program in recent months, especially as a result of the recent economic challenges? Have your donors embraced your planned giving program? Please share your thoughts with us and other eJewish Philanthropy readers. Also if you missed Part 1 from last week, we suggest that you check it out.

Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, of suburban Philadelphia, and are frequent contributors to EHL Consulting works with dozens of non-profits on fundraising, strategic planning, and non-profit business practices. Become a fan of The EHL Consulting Group on Facebook.