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For charities and nonprofits, finding and maintaining sources of funding can be the most difficult and time-consuming task of all. This constant search for money exhausts resources that could be better spent elsewhere.
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Yet there’s a key source of funding that many of these organizations ignore. And that’s compounding their money struggle in the process. That key source is planned giving.
Planned giving is, in its simplest form, a sizable donation given over time or as part of a donor’s estate. Developing a marketing strategy with a marketing plan to pursue planned gifts can literally change an organization’s financial landscape. This simple initiative alone will provide more secure long-term footing for the journey ahead. In fact, even financial advisors are advocating planned gifts to their clients (another reason we provide advisor-centric tools).
Not pursuing planned giving, on the other hand, is about as sensible as the decision by the Titanic’s captain to ignore those warnings about ice. Nonprofits, are, after all, just as prone to going under as that “unsinkable” ship — and planned gifts can be a veritable lifeboat when the waters get rough.
No peer pressure here, but consider this: Back in 2011, a report from financial giant Morgan Stanley stated that a growing number of nonprofits are successfully using planned giving, and that it’s often responsible for more than half of new capital campaigns. That number has only increased since then.
So, is planned giving important? You be the judge: Planned gifts are among the largest gifts a nonprofit will ever receive, often 200 to 300 times the size of a donor’s largest annual gift. Even those fundraisers that just dip a toe in the planned-giving waters are earning 50 percent to 100 percent more than those that aren’t.
Accordingly, this means if you don’t have a planned giving strategy (such as a simple 12-month marketing plan), you’re losing out on a boatload of funding. And certainly, it means that another group is getting funding that could have been yours — and there’s a lot of competition out there. The Urban Institute reports that over 1.78 million nonprofits are registered with the Internal Revenue Service. So, while your charity is investing time and resources just to find ways to stay afloat, another nonprofit is using planned giving not just to survive, but to thrive and chart a course toward growth and sustainability.
Oh, did we mention? Having a planned giving program in place also establishes respect and trust from prospects, donors, and society at large. And even from competing organizations.
Planned giving is also a retention strategy. However, not only does it help maintain donors, but those who make planned gifts are more likely to increase their donations over time.
Please view the video above for its 60 second message. It’s available for your use and your board will love it.
Here’s something else to consider: Financial experts predict that, over the next five decades or so, between $40 trillion and $140 trillion will pass from one generation to the next.
That’s trillion, with a ‘T,” and it represents the greatest wealth transfer in the history of the world. Here’s the kicker: Morgan Stanley predicts about a third of this money will likely transfer to nonprofits through — you guessed it — planned giving. In fact, it could be more by other estimates.
Yet the only nonprofits to get a piece of this pie will be the ones that pursue it. It’s rare for donors to seek out charities on their own. Instead, potential donors have to be identified and courted in order to establish a lasting relationship.
Throwing a monkey wrench into the works is a study from RBC Wealth Management. It found that 30 percent of Americans surveyed have done no wealth transfer planning at all. Quite simply, that means there’s going to be a staggering amount of money up for grabs. In 2015 alone, according to Giving USA, $373 billion was donated to charitable causes. Just imagine how much more is available. With a little effort, some of that money could be working to keep your nonprofit on course.
Giving USA reports that individuals make 71 percent of the charitable gifts in the U.S. Many, though, cannot make as large an individual gift as they’d like. Furthermore, according to Target Analytics, of those giving for the first time, just 29 percent become repeat donors.
Planned giving is the perfect solution, because it allows donors to have a much greater financial impact than if they’d given a single gift. Despite that fact, fewer than 10 percent of Americans utilize planned giving.
Why? Most of it boils down to simple awareness: If a donor has never been approached to set up a program, how will they know it’s an available option? By ignoring planned giving, nonprofits effectively close the door on the opportunity to reach a much larger section of the population. That, in turn, means those nonprofits are pulling from a much smaller funding pool.
Fewer than 10 percent of Americans utilize planned giving. Why? Most of it boils down to simple awareness.
Yet there’s a wide range of options for potential gift-givers to utilize, making it much easier to fit philanthropy into their budgets and long-term plans. Life insurance, bequests, annuities, trusts, retirement plan assets, securities, gifts of property — the list is long and offers flexibility for donors from a broad range of financial backgrounds.
As the economy fluctuates, so do gifts to nonprofits. And according to Blackbaud, which makes software for nonprofits, Baby Boomers are responsible for 40.4 percent of all charitable giving in the U.S.
Most of us have heard the saying, “Don’t put all your eggs in one basket.” But if your nonprofit is relying solely on annual giving and individual gifts, that’s exactly what you’re doing. And if that funding basket gets dropped, it will be hard — perhaps impossible — to recover from the mess.
Consider this: After the Great Recession, the number of charities seeking bankruptcy protection rose considerably. Such a move was once rare for nonprofits; they were far more likely to just fade into obscurity when faced with financial hardship. Today, though, bankruptcy protection is an accepted practice for charities.
That’s largely because wary donors are now pushing charities to operate more like businesses — and those that don’t make the cut will not only fail, but be held accountable for that failure. Where a charity could once float along through the lean years, head barely above — or slightly below — water, today’s charities have to show results, or else.
A comprehensive, planned giving strategy can guide your nonprofit through the rough waters. It can be a life preserver for times when sources of one-time charitable gifts are sinking. Planned giving can ensure a consistent, long-term source of funding, and maintaining focus on that revenue stream can help smooth the waves in the future.
If your charity doesn’t have a planned giving strategy in place, it’s time to reconsider. Proceeding without one makes about as much sense as re-arranging The Titanic’s deck chairs — and we all know how that turned out.
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