First, let me define the term “planned giving” so that we are all on the same page. Think of planned giving as the process of making a gift that requires an additional level of activity or planning due to a more complex set of issues. They require more negotiation or counsel than current gifts. Planned gifts are often “deferred gifts” because the income to the charity does not materialize until sometime in the future.
Planned gifts can be simple and provide immediate income to the charity such as a gift of securities (bonds, stocks, mutual funds, etc). They can also be quite complex, involving insurance, various types of charitable trusts, and more detailed estate planning. Planned gifts can be simple outright gifts to charity such as a securities gift or they can involve multiple family issues, planning for special needs, retirement income, etc.
If your charity accepts gifts of securities, and actively promotes those kinds of gifts, then you are well on your way to a planned giving program. But why should you consider other types/methods of planned gifts, especially if you don’t have the capacity for the traditional planned giving staff? Here are five things to consider:
- It’s about donor relationships. Planned giving initiates conversations with your donors in a deeper, more intimate setting. While you may not have the staff to engage with donors on the technical aspects of some of the gifting mechanisms, being able to provide resources to solve their challenges will help to cement the relationship you have built. Of course this also means that you have to be careful to properly steward those relationships.
- Reminding your donors that giving from their estate is a simple and easy way to make a legacy impact will cost you almost nothing. Add it in to any giving promotion, your website, your newsletter, etc. For the nominal “cost” of a few lines of text, your donors are reminded that they can express their appreciation for your organization even at death.
- In the past, it was thought that only large organizations could have planned giving programs because there needed to be someone to manage the process, invest funds, act as trustee, etc. With the growth of community foundations, there are now multiple ways for individuals to accomplish their goals without your organization needing to add staff. Establishing a relationship with a regional or national community foundation can be a very cost effective way of providing resources to your donors.
- Planned gifts that “mature” (or distribute their charitable remainder) can provide an unbudgeted source of income for special programs, additional initiatives or to offset expenses in the general budget. You can also set a corporate policy that deferred gifts will be designated for a specific fund or use.
- Planned gifts often provide the avenue to the largest gift the donor will make to your organizations. As you steward that relationship over time, older donors will gain an appreciation for your mission and may leave their ultimate gift to you to demonstrate that legacy lesson to their family and friends.
With these five considerations in play, is it time to implement a planned giving program for your organization? Contact me if I can help you develop a plan.
I have been thinking a lot about the scriptural principles for Christian stewardship and life applications. As I wrestled with my own understanding, and searched the Biblical texts, I have boiled it down to the following 5 principles that I believe are at the core of Christian stewardship.
- God, as creator, owns it all. In the beginning of Genesis, God creates the world and everything in it. He then creates Adam to steward, or care, for creation. (Genesis 1:1)
- Money management is only part of Stewardship. Our call to be wise stewards includes our time, our talents, our relationships, and our finances. (1 Corinthians 4:2) “Now it is required that those who have been given a trust must prove faithful” (NIV).
- Our possessions are temporary. During life they may be destroyed or lost. At death they cannot be taken with us. Therefore, what we do with them today becomes even more important. (1 Timothy 6:7)
- Every spending decision will be, at some level, a spiritual decision. Our checkbooks provide a story of where our priorities lie. Biblical stewardship does not require that a Christian despise money or discontinue earning it. Money is a necessity for basic living. The Bible does warn, however, that the love of money creates evil (1 Timothy 6:10).
- Giving is not about the Old Testament tithe (or 10%). It is about the heart. The story of the widow who gives her two small coins in Luke 21:1-4 is the demonstration of this principle. The amount seemed trivial but it demonstrated her devotion to God. 2 Corinthians 9:7 continues this theme: “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.” (NIV)
I hope that in some small way this list encourages you and is a basis for your own journey of understanding.,
Donors today want to know where their gift was used and what impact it had. The days where donors simply trust an organization to use their gifts where it knows best are rapidly disappearing. Organizations like Charity Water that do such a fantastic job of tracking donation to project have set the bar high. Child sponsorship organizations like Compassion International and World Vision have demonstrated the ability to show the direct impact of an individual’s gifts to a beneficiary.
Tracking individual gifts to a specific project is often problematic. Interestingly, larger organizations seem to struggle with this more than smaller organizations – usually due to the sheer volume of transactions that the larger organization is handling – both income (gifts) and expenditure (projects). The volume results in the organization struggling to effectively say, “your contribution was used on XYZ project and provided services to this many people”.
There are three options for linking donor contributions directly to a project:
- Acknowledge the realities of your organizational dynamics and set a minimum gift amount for which you will link projects to donations. This means that your chart of accounts will cover the general categories (e.g. medical services in Africa) but not specifics (e.g. Hospital Construction in Liberia) unless the project is large enough to warrant its own restricted account. A major donor who funds a significant project would then be linked manually or through the restricted account.
- Set up your chart of accounts so that specific projects can be tracked within major segments. This allows donors to give to a specific well or to a specific farm, etc. This takes a little more thought and planning ahead of time but in the end, the results can be powerful. Without care though, the chart of accounts can become unwieldy and difficult to manage.
- Configure your donor management software to provide you with a sponsorship system. This then allows your field team to work with finance and development to specify projects that can be “sponsored” by an individual or groups of donors. Reporting and tracking becomes simplified as your donors sponsor a project and the project is removed from inventory.
Since few donors will be able to travel to see your projects first hand (especially in the case of international non-profits), effectively creating systems to link donors to projects enhances the connection the donor has with your organization. Segmenting the communication about missional projects becomes more efficient and effective. The greater detail you can provide increases the chance the donor will be a vocal ambassador for you. It also improves the trust level that donors have as they can see how their gift was used and the impact that they were able to have.
Most of us are well aware of the 80/20 rule of fundraising – 80% of your income will come from 20% of your donors. Major donor programs are built to focus on the 20% of donors who can and do supply that high level of giving. This is good. But how do you increase the number of donors that fit in that 20%?
The logic would lead us to understand that if you add a donor to the 20% group then that will increase the dollar amount that makes up the 80% of income. The goal of moves management in development is to move donors from their current involvement to a higher level involvement. However, the majority of your donors, those in the lower tier, will be resistant to moving. And in general, their annual giving is so low that it probably isn’t efficient to invest a lot of resources to move them up. Does that mean you ignore them? Certainly not. However, you also should not overly invest in efforts to increase their participation. But monitor them along the way and watch for natural movement.
I would contend that there is an optimum zone of opportunity to move donors upwards into increased giving. Often referred to as mid-level donors, these donors are giving at high levels but not enough to be counted in that top tier. They are often overlooked as they fall between the major donors and the “direct mail” responders. If your organization provides opportunities to support specific program areas, these donors will likely take that opportunity rather than support the general fund. “Unknown” major donors will often test an organization by giving an initial gift that falls in this tier. They have heard good things about the organization and think they may want to support the mission at significant levels but want to make sure that the organization is capable of responding to them appropriately.
Larger organizations often have sophisticated donor groups (President’s Circle, Insider’s Round Table, etc) but smaller organizations can also gain from just a little bit of extra effort. Here are some simple steps you might consider to steward this group in particular:
- Watch for first time gifts that fall in this tier. Establish an acknowledgement process for that first gift that is similar to what you typically do for the top tier.
- Consider special insider reports that are different from that which major donors receive but are higher quality or more detailed than the standard direct mail or newsletter that the lower tier receives.
- If you have created recognition societies, consider an annual invite to upgrade their membership.
- Monitor this group in particular for lapsing donors. If their giving pattern changes, consider a special contact to re-engage them.
- Consider special planned giving/legacy giving communications to this group of donors, especially if you have donors who have given in this tier for a significant length of time.
Each of these are suggestions and are contextual to your organization in the sense that the giving levels for each organization may be significantly different. I have seen organizations that don’t quite match the 80/20 principle (they might be 80/10 or even 90/10) so you will also need to analyze your database to determine how many donors you have in each tier and how close your organization matches the 80/20 rule. Find the zone of opportunity within your particular organization.
If you have any questions about how to proceed with the analysis of your database or establishing a special program for acknowledging your mid-level donors, feel free to contact me and let’s start a dialog about how I can help.