A Marriage Between Major and Planned Gifts
As fundraisers, we are blessed with the task of inviting donors to invest in the organizations that we represent. Of course, outright gifts are preferable as the funds can be put to use right away helping others. But planned gifts of all types can be an attractive addition to a donor’s commitment to a particular cause.
When considering how to approach a particular donor, we should always keep in mind the possibility of a blended gift: one that includes an outright commitment as well as a planned gift. Blended gifts can make a way for a donor to marry the very important long-term goal they want to accomplish while seeing that goal partially accomplished during their lifetime.
Know How to Count It
If you are in a campaign, it is critical that your organization have campaign counting guidelines that dictate what sort of gifts are able to be credited to the current campaign. Be sure that the guidelines allow for the counting of blended gifts and under what circumstances. For example, most campaign counting guidelines allow for bequest intentions of various types to be counted at full face value if the donor is above 70 years old, at a discounted rate between ages 50-70, and not at all for those below 50. Obviously, with these guidelines in place, most blended gift conversations are going to occur with older donors.
Creative Ways to Endow
Blended gifts are ideally suited for gifts to fund an endowment. The outright portion of the gift allows the donor to establish a new endowment or add to an existing one. The bequest or planned gift portion of the gift then is added to that same endowment when it is realized. Let’s say a donor to a university wants to support the faculty in a particular department. She cannot afford to establish an endowed chair for $2.5 million during her lifetime but really wants to do so in memory of her husband. You suggest that she pledge $500,000 over five years (which she can afford) to establish an endowed fellowship in that department and then provide for an additional $2 million to be added to the endowment through her estate which would fully fund the chair.
Income for Life Makes Everyone Happy
These types of blended gifts can also include a life income component. In the example above, that same donor could establish a charitable gift annuity with a portion of the $2 million balance toward the chair, which would provide her income for her lifetime and then the remainder of that annuity would be credited to the endowed chair upon her death. Of course, a provision would have to be made should the annuity remainder severely decline in value during her lifetime so that the threshold of $2.5 million is still met.
Consider Challenges Ahead of Time
When conducting a campaign for a capital project such as a new building, blended gifts can be more challenging as the remainder may not be received for some time, but the organization needs to expend current funds. A conversation should occur with the chief financial officer and the board of trustees before the campaign about the possibility of blended gifts being counted in such a campaign. Certain blended gifts could positively impact the borrowing capacity of the organization but typically only in limited circumstances.
Welcome to the Club!
Blended gifts can also be an effective way for a donor to reach a certain cumulative giving threshold. Many organizations have started cumulative giving societies with minimum threshold for inclusion at $1 million with significant recognition and exclusive events. A blended gift can allow a donor to reach that threshold amount and be included in that society. Consider a long-serving board member who is important to the organization but who does not have the same financial capacity as other members. A blended gift can be a way for him to be included in the society and recognized alongside his wealthier peers.
Our role is to encourage our donors to be as generous as they can and to deepen their relationships with our organizations. Blended gifts are an excellent method of accomplishing both of those goals.
As development professionals, one of our most important skill sets is the combination of asking meaningful questions and then actively listening to the responses from prospective donors. My standard is that if the development officer is speaking significantly more than 20% of the time, that development officer is not doing his/her job effectively.
Particularly when a planned gift is involved, these conversations require patience, active listening skills, a greater amount of time devoted to each prospective donor, and gaining a sense of what meaningful goal the donor wishes to accomplish.
Below are a few examples of how you might carefully begin a discussion with a donor about a blended gift:
“Mrs. Smith, you have indicated that you’ve included our college in your will and you are member of our legacy society. We cannot thank you enough for your generosity and commitment to your alma mater. But, you have not yet informed us how you wish the college to designate the funds when they are received. May we document your intentions in this regard so that we can insure that the college fulfills your wishes?”
“Mr. Jones, you have already informed us that we are a beneficiary of the trust that will be created through your estate and you are directing us to use the proceeds to create an endowed scholarship in memory of your wife. We cannot thank you enough for your generosity. You may not be aware, but many of our donors make annual gifts of an amount that is comfortable for them that fund an outright scholarship in the memory of a loved one to benefit a student today. If you were to do so, you could experience the joy of meeting a student who will benefit your generosity and help that student understand how important our university has been to you and your wife.”
“Dr. Weiss, you have been so generous to the museum over these many years. In fact, we just realized that you have been involved with us for more than five decades and you are among our most committed supporters. We are so grateful and hope that you continuously see the progress that you have made possible. You have already documented with us that we are an irrevocable beneficiary of your charitable remainder trust for an amount that was far beyond what we would consider asking you for. You have remarked numerous times that you know how important the new wing is to the museum. Would you consider allowing us to present you a proposal to place your names on our new wing that would be reflective of the amount that we will receive from your trust as well as a current pledge that combined reaches the requisite amount to name the wing that has been set by our board?”
These types of conversations lead to gifts that allow donors to achieve what is so important to them and meet the needs of an organization, present and future. A blended gift is a “win-win” for all parties involved.
By Stuart Sullivan
As Senior Vice President with Graham-Pelton, Stuart Sullivan provides senior level counsel on campaigns, strategic planning, various forms of giving, and management of programs and staff. He has served in executive positions at The Children’s Hospital of Philadelphia, Temple University, the University of Pennsylvania, and Roanoke College. firstname.lastname@example.org