Planned Giving Marketing

With the perspective of one year, here’s the way we see it…

Most donors weren’t looking to make outright gifts from their IRAs. What they wanted to do was roll their accounts over, tax-free, into a charitable life-income plan. They wanted to retain or increase their income, not give it away or reduce the value of their plan.

That is, unless they could afford to make any gift they wanted to. Who is the target market for outright-IRA gifts? They are 71 and older, and their retirement is so securely funded that they feel comfortable giving away some of their annual IRA distribution, or even dipping into the principal to make a charitable gift.� To some of these too-good-to-be-true prospects, IRA distributions are just a useless addition to their annual tax bill.

But as our real-life prospects watch the values of their homes decline and their investment portfolio teeter, how many fit the idealized profile described above?� Remember, under the rollover provisions, you’ve been asking them to make a gift as an act of pure charity – from which they’ll receive neither life income nor a charitable deduction. Think about that twice.

Wouldn’t IRA donors have made a gift anyway? It would seem so. Yes, the law made a new category of assets available for donation.� But most who benefit from it are loyal donors who have a variety of disposable assets to choose from when they make a gift.

Maybe that’s why actual gifts received have been modest. Respondents to NCPG’s survey reported a total of $104 million of outright-IRA gifts received in approximately 6,000 distributions. That makes for an average distribution of $17,350.� Sure, some gifts were larger.

But remember, by law, none could be higher than $100,000. And this after all the newsletters and e-mails we sent to prospects promoting this gift opportunity?

Should IRA distributions even be counted as planned gifts? Your organization receives an outright IRA distribution as a cash transfer. No planned gift was involved in delivering it. All you did was inform your prospects about the new opportunity.

A case can be made that IRA distributions are major gifts and not planned gifts. The donor merely substituted a new asset for others that she might have used to make an outright gift. If she had deleted a bequest and made an outright gift in cash, would planned giving have counted that transfer?� If not, why count outright IRA gifts?

Many PGOs aren’t even counting IRA transfers. The results of� our Fall, 2007 survey showed that just 31 percent of respondents counted outright IRA transfers in planned gift totals, while 49 percent counted them as major, outright gifts. A strong minority, 18 percent, did not even pursue IRA gifts.

Maybe that’s because they haven’t received many. For 83% of respondents, outright transfers from IRA’s represented 5% or less of planned and major gift totals.� For the most successful fundraising operations among our respondents, a 91% of respondents recorded those 5%-or-less results.

Now, what has the real cost been to the planned giving office?� �

Consider the time you have spent over the last year and a half getting up to speed on the Pension Protection Act; sitting through seminars and reading tax bulletins; and then trying to translate all that complicated information into persuasive marketing pieces for your prospects.� If your organization has received substantial IRA distributions as a result of those efforts, congratulations!

But even if you have been successful, remember that the time you spent learning about IRAs was time you weren’t doing your most important job – being face-to-face with prospects; that the IRA distributions you’ve received could/should be classified as major and not planned gifts; that they were made by donors who probably could have afforded to make a gift in the same amount or larger from other assets – and that, by stripping their retirement account, the donors have reduced their ability to make a significant estate gift that, without question, the planned giving office could have counted and promoted to its prospects.

Bottom line?� The IRA Rollover has encouraged prospects to look at non-traditional assets as sources for charitable gifts. It has delivered immediate cash instead of requiring the non-profit to wait for its gift until the death of the donor.

But let’s do a reality check: your bread and butter is still bequests and gift annuities!

And it’s not just us curmudgeons saying it:� over 50 percent of respondents to our survey told us that they did not expect outright- IRA-rollovers to significantly affect their fundraising totals.

Category: Planned Giving Marketing on February 4th, 2008