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The Importance of Planned Giving

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What’s the Big Deal about Planned Giving Anyway?

When it comes to things we don’t understand, or may be intimidated by, there’s always a reason to avoid taking a closer look. This may work when it comes to getting too close to train tracks, but if you’re avoiding planned giving, you’re missing out on a good deal of funding. Why do people want to stay away? Here are some of the top reasons:

  1. “Cash is King.”

The truth, however, is that only 5% of this nation’s wealth is in cash. The other 95% is in assets like stocks and property.

  1. “Planned gifts aren’t worth all the effort they require.”

Guess what? The typical completed planned gift is 200 times the size of a donor’s largest annual fund gift. Is that worth effort to you?

  1. “Planned gifts take too long, and we need the cash now.”

The average time from inception to maturity for a planned gift is 7-10 years. Think about it—

that’s only a few years longer than most campaign pledge periods.

  1. “We are not ready for planned giving.”

“Someday” is basically a code word for “never.” Those who even dabble in planned giving, however, earn 50-100% more than those who don’t. If you wait for perfect circumstances you will never start. You are ready to begin.

  1. “I need to be an expert on gift plans and tax laws before I start asking for planned gifts.”

Planned giving is primarily a people business. If you love people and know how to talk to them, you can ask for planned gifts. You’ll have the help of attorneys and advisors when it’s time to work out the details.

  1. “Planned giving is expensive.”

Too many nonprofits are penny wise and pound foolish. You can easily give up $500,000 in bequests to save $3,000 in your budget.

  1. “If we ask people for a planned gift, they’ll stop giving cash now.”

Did you know, people who make gifts through their wills typically increase the amount of their annual support?

  1. “Planned gifts are a distraction in campaigns.”

Capital campaigns typically focus on 5% or less of the donor base while planned gifts reach the “hidden constituency,” your most loyal donors) Planned gifts provide up to 30% or more of comprehensive campaign totals.

  1. “Planned giving donors are wealthy.”

One of the best selling points of a planned gift is that it does not affect your cash flow—and that makes it accessible to people of
all income levels.

  1. “A bequest isn’t worth pursuing. People change their wills all the time.”

While 69% of donors change their wills, only 25% change a gift in their wills.

Definitely Worth the “Trouble”

For charities and nonprofits, finding and maintaining sources of funding can be the most difficult and time-consuming task of all. The constant search for money exhausts resources that could be better spent elsewhere.

Yet there’s a key source of funding many of these organizations ignore, compounding their money struggle. All together now—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 strategy to pursue planned gifts can literally change a charity’s financial landscape, providing more secure long-term footing for the journey ahead.

Need More Reasons to Pursue Planned Giving?

Planned gifts are among the largest gifts a nonprofit will receive, often 200 to 300 times the size of annual gifts.

The planned giving field is even profitable for fundraisers too. Those who just dip a toe in the planned-giving waters are earning 50-100% more than those that aren’t. This means if you don’t have a planned giving strategy, you’re losing out on a boatload of funding. Another group is getting the funding that could have been yours.

$40-140 trillion

Here’s something else to consider: Financial experts are predicting that over the next five or so decades, between $40-140 trillion will be passed from one generation to the next.

That’s trillion, with a ‘T.” This represents the greatest wealth transfer in the history of the world. Now hear this—Morgan Stanley predicts about a third of this money will likely be transferred to nonprofits through — you guessed it — planned giving.

The only nonprofits to get a piece of this pie will be the ones pursuing it — it’s rare for donors to seek out charities on their own. Potential donors have to be identified and courted in order to establish a lasting relationship.

A study from RBC Wealth Management reported that 30 percent of Americans they surveyed have done no wealth transfer planning at all. 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.

Individuals make 71% of charitable gifts

According to Giving USA, 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, says 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. Nevertheless, fewer than 10% 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?

There’s actually a wide range of choices 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.

Don’t put all your eggs in one basket

We’ve been warned about this a hundred times. But if your nonprofit is relying solely on annual giving and individual gifts, that’s exactly what you’re doing. What will you do if that funding basket gets dropped? You’re going to find it hard — perhaps impossible — to recover from the mess.

A comprehensive, planned giving strategy can guide your nonprofit through 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

What are You Waiting For?

If your organization 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.

[The above article along with this one, are powerful resources to share with your board.]

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