Scuba diving for bequests
You won't drown; you will find treasure
When I was in college - back when teachers wore togas - we had to take four semesters of phys ed to graduate.
It wasn't too bad. Mega State U., with a moneymaking national football contender, gave us lots of choices. I took swimming, wrestling, bowling... and scuba diving.
I suspect all my flippermates showed up the first day with the same vision: slipping seamlessly through colorful
Instead, the instructor herded us - shivering in our bathing suits (it was January in
For the next 45 minutes, we watched the many delights of drowning, the excruciating pain of the "bends", bleeding out of orifices we didn't know we had, being airlifted to emergency pressure chambers, exploding lungs and eardrums, empty tanks and fast air leaks, and so on.
And, we were reminded, these were not
The feature attraction over, the instructor flipped on the room lights and said, "This is what can happen in scuba diving. Anybody who wants to leave can do so now and still have time to sign up for another course." About a third of the class bolted out the door.
Yes, I stayed. I had closed my eyes through most of the film as I always do at horror movies, so I missed the worst. And yes, I nearly drowned a few weeks later.
But that's a different story.
Getting past the initial fears of bequest programs
Perversely, a few months ago I began a bequest marketing workshop for members of the Leave A Legacy Society of Connecticut in the same manner.
"You are about to enter a world of delayed self-gratification and complaining," I started.
Consider these realities about bequest programs:
- Only four to five percent of Americans leave charitable bequests.
- Your nonprofit won't see results for an average 10 years (people don't usually die right after they write you into their wills). Your boss, board, and co-workers will just love hearing you want to spend money for the next decade with no immediate return.
- If the bequest is in endowment form, the nonprofit only spends four to six percent of the total gift every year.
- Yes, some stingy people will feel that, having written you into their wills, they no longer "owe" you an annual gift during their seemingly interminably long lives.
- You will spend a good deal of your time obtaining promises the gifts from which your darn successor will take credit for after you've retired or died yourself.
- Even the most coddled would-be donor can - and will - simply change his or her mind with a flick of the pen (except in certain legal agreements). In a study of 26,000 folks aged 50 and older over a period of 11 years (linked below), 1,306 dropped a charity from their wills and 1,477 added one. (Remember, 95% of them ultimately will not have one at all!)
Still want to go scuba diving?
All said, the nonprofits with healthy bequest programs will survive this and future economic downturns. You will have a dependable income flow (people predictably die, whatever the economy). And with that income, you are also likely to be more courageous, to take risks, to try different approaches in your fundraising. Flexibility is a survival and a growth tool.
Did I mention the money? Giving USA reported bequests accounted for $22 billion in charitable contributions to U.S. nonprofits in 2006, about 8% of total charitable giving, all from only four or five percent of the Americans whose estates were settled that year.
Imagine what you could get from the other 95%!
Think of my (mythical) friend Chris instead.
My most important lessons in bequests over the past 10 years have come at the feet of my dear buddy Kim Butler, vice president, Gift Planning & Stewardship, The Rhode Island Foundation. (If you send her an email, in the subject line, write: Bequest question. Rick's fault!)
You don't have to be rich to leave a significant bequest, she reminds me. The truth is, most of us will be able to be more charitable at our deaths than we can be now.
Take my mythical friend Chris. Just shy of 60, Chris came from a family with little to spare, but was able to go to college, and has worked hard ever since. Chris married at 30, and the couple's two children were born over the next few years. In fact, the kids are out of college, and the school debts are all paid off. (They don't even live at home anymore!)
The couple lives modestly. Sure, they have traveled and the house has a wonderful addition and they don't worry about going out to eat when they feel like it. And, like 89% of American households, they are charitable and community-minded too. But no one would mistake them for being, well, you know...rich.
I hope they live a long, long time and enjoy their retirement and their grandchildren. They deserve to!
But when they pass away, they may leave significant assets that their children and even their grandchildren simply won't need. The house that has appreciated 15 times in value. The life insurance policy. The remainder of the IRAs they so carefully saved. Assets they inherited from family members who predeceased them, including paintings, pianos, and silverware their grown kids can't stand.
Those are potential charitable dollars, mi amigo!
By the way, the above-mentioned survey, Causes and correlates of charitable giving in estate planning, estimates folks without children are five times more likely to leave a charitable bequest than parents or grandparents, regardless of income or history of volunteering. Your childless attorney may be a better prospect than your largest donor. (Read the report. It's a bit geeky, but fascinating.)
The biggest mistake you can make is assuming anything!
Kim Butler and I have met hundreds of the most wonderful, most generous-of-heart people in
No surprise, really. As few as 42% of Americans leave wills at all, according to Thomson Reuters. And the four or five percent who give charitable bequests now (according to the Internal Revenue Service, who ought to know) traditionally come from a "class" of people who know about that sort of thing.
The rest of us can leave charitable bequests. But most nonprofits don't market to or convince the "average" person that he or she can leave a legacy, just like people with wealth.
No, they may not leave your organization a million dollars (but they sometimes have). I assume your nonprofit would accept a few $1,000, $5,000, $25,000, $100,000, or half million-dollar legacies every year. They add up.
A million rules to encouraging bequests;
here are my eight essentials
Okay, so I've teased you or even convinced you that your nonprofit has to take bequests seriously. A million brilliant people have a million right answers to make them work. Here are my eight:
- First, you have to introduce the whole idea of bequests to most of us. I didn't come from a neighborhood where anyone had ever heard of "charitable bequests" and I didn't learn about them until I got into the business at age 40. Again, don't assume your donor knows what you're talking about or that we think we could possibly afford it.
- Know what you're selling. You're not selling a person's ability to support your nonprofit forever. You're promising that students from the donor's beloved high school can always go to college; that the historical home on Main Street will still be there in 100 years; that low-income children will always have an advocate; that older adults can pass their senior years in the dignity they deserve, that the bay they swam in as children will remain full of fish. They will have a legacy. Whether you do advertising, brochures, public speeches, will-writing workshops, or wall hangings - and you should do all of those - the message is the lasting mark they can leave.
- Make all your "marketing" personal. By encouraging someone to write you into his or her will, you are asking to equate your nonprofit with his or her child, close relative, or best friend. Yours may be the only cause he or she remembers at death. Some cheesy, insincere ad won't cut it. Handwritten notes, regular phone calls, emotional experiences will. A 15-year-long study found that donors who received a personal letter asking them for a bequest were 17 times more likely to do so. Alternatively, one of my favorite clients just lost a couple million dollars it was sure to get. It had signed the folks up years before, then sort of ignored them. The couple decided to move to a different state and was easily wooed by a similar organization there.
- Be prepared to invest a bit of money that you won't get back for a while. Sorry, but I use the analogy of tire ads. You don't notice them, but they are in the Sports section of your newspaper every day. Why? Because tire shops know they better be there the day you do need tires. (We'll talk advertising sometime.)
- Understand "planned giving". Bequests are just one way to leave a legacy. Other options may make more sense for your would-be donor. Now we're getting into technical stuff that Kim, a former banker, understands and I don't. Either learn it all, have a great attorney nearby, or partner with your local community foundation. They nearly always specialize in planned giving.
- Insist that your board, your boss, and you establish measurements of success other than dollars raised, certainly for the first ten years. Use number of personal visits, meetings with estate planners, attendance at legacy events, etc. In other words, measure the relationships being built. (Besides, surveys suggest that one-third of your donors won't tell you anyway.) Identification, Death and Bequest Giving, another smart paper presented at this year's national AFP conference, offers some fine ideas for communicating with legacy society members.
- Stick with it. Bequest programs are not one of those "Let's try it and see if it works" situations that we nonprofits are famous for abandoning. This is a marriage without divorce.
- Finally, prepare yourself for a transforming experience. Truly honor the concept of bequests and care about the person you are working with. Because of a bequest's charged nature and the long relationship you will have, people will often share deeply personal matters. You are the keeper of what they have decided are their last charitable wishes. They will treat you differently from other development and communications people. Kim and I have mourned many people we grew to respect and admire. That's the toughest part of the job.
The bottom line about bequests? Dive in! The water's fine!
Well, that's as serious as I ever plan to be. Next month: self-conducted communications audits, money-saving tips from my favorite printer, or the second greatest, essentially free, communications tool ever invented. Haven't decided.
Always feel free to recommend a topic or just send an email to say 'hi'.
Rick
