PlannedGiving.com - Planned Giving

A while back we wondered whether fundraisers really received much benefit from the much-hyped IRA Rollover.

A lot of sales materials were sent urging non-profits to get in on the coming bonanza in gifts; vendors sold seminars explaining the rollover and marketing pieces promoting it. But our survey data found that the actual number of new gifts inspired by the rollover opportunity – gifts that non-profits wouldn’t have received in another format if rollovers weren’t available – was modest at best.

It’s a few months later and we’re looking at another example of marketing hype and get-on-the-bandwagon optimism.

We’re talking, of course, about the campaigns to urge prospects to lock-in higher charitable gift annuity rates before July 1st. Some vendors pitched the rate decline as a once-in-a-career opportunity to close CGAs: take prospects nervous about fluctuations in the stock market and declines in CD rates and tell them they’d better set up a gift annuity while they could still get a decent rate of return from it.

Well, now. Cooler heads last spring (including us) looked at the reality of the rate decline and came away with a different response:

1. The difference between the old “high” rates and the new “low” rates was going to be small. The resulting drop in annual payments for most gift annuities in the $25,000 range would work out to about $100 or less. Fundraisers who sent out marketing pieces with scare headlines telling prospects to act before June 30th would have to explain in the fine print that prospects actually stood to lose, umm, $75 or so per year under the new rates. That reality check would undermine the effectiveness of over-the-top marketing.

2. Do-it-now campaigns might have the unintended consequence of persuading prospects that after July 1st, gift annuities would no longer be a worthwhile gift plan.

3. Focusing marketing on the ongoing positive aspects of gift annuities would have more long-term effectiveness than a now-or-never pitch, especially if the economy continues to be uncertain.

Thoughtful fundraisers who knew their constituency and took the time to understand the reality of the CGA rate decline could have decided to use it as a marketing tool, or not, and made the right decision for their organization. The problem lay with our friends who didn’t think, but merely reacted, when vendors cried that time was running out and that they’d better blitz their prospects now.

Procrastination + Fear = Bad Decisions

Yes, fundraisers have a lot on their plates. No, they can’t spend excessive time making marketing decisions. But faced with today’s reality of frozen or declining budgets, they at least have to analyze the likely results of a new marketing campaign before they allocate funds for it.

If you’re a procrastinator, as many of us are, you’re likely to ride along for years with the same marketing plan – or no marketing plan – and spend your time putting out fires in other parts of your fundraising program. Unfortunately, that leaves you wide open for the gurus and vendors who leap onto each new wrinkle in planned giving, and then play on your fear of missing out on the next big thing.

“Oops,” you think, “that salesman was right – all of my prospects need to know immediately that a declining Section 7520 rate makes lead trusts a better deal this summer. I’m sure the hospital down the road is already on top of this. I’d better put my order in today!”

We tell our clients to play it cool: to find their best prospects and then engage them with steady, consistent marketing. These “Order-by-Midnight-Tonight!” campaigns seem to mostly raise funds for the vendors behind them.