Monday, May 6, 2013

Why Do Many Planned Giving Marketing Efforts By Nonprofits Fail?

Why Do Many Planned Giving Marketing Efforts By Nonprofits Fail?
By Norman Olshansky: President
NFP Consulting Resources, Inc.

Nonprofit fundraising, whether for annual, capital or endowment campaigns, is all about relationships.  This is one of the main axioms of fundraising.  (See Ten Basic Fundraising Axioms

Planned gifts are major gifts.  Like with other major gifts, they require proper prospect research by nonprofits related to the passions, interests and philanthropic goals of the potential donor, followed by a thoughtful cultivation process.

Since many planned gifts utilize giving techniques that can be technical or somewhat complicated, such as trusts, annuities, transfers of real property, insurance, etc., nonprofits have depended heavily upon the advice and input of financial services professionals (accountants, tax attorneys, investment advisors) for the development of their planned giving programs.  While financial advisors are a very important component within a nonprofit’s planned giving leadership, too often development professionals have focused too much on how to structure planned gifts rather than on how to engage qualified prospects to the point of willingness to consider making a planned gift.  As a result, marketing efforts have typically focused on charitable annuity tables, and a plea to “leave us in your will” rather than a focus on the interests and values of the donor.

The first step in obtaining charitable planned gifts is to identify prospects who care about your mission and have charitable intent.
The quality of a gift is directly related to the quality of the relationship between the nonprofit and prospect. Major prospects deserve personal attention. Your nonprofit’s relationship to the prospect has a direct impact on their gift. The more they know and trust the nonprofit and their representatives (volunteers and staff), the more comfortable they will be making a major gift. They need to know that they are getting accurate, current and reliable information about the organization and the impact of their giving. They also will be more comfortable knowing that the nonprofit, with whom they have a relationship, is  familiar with their background, interests and abilities than would a stranger. 

Planned giving is an opportunity for the donor to leave a legacy gift. 

The dictionary has two definitions for legacy.
1.  a gift by will especially of money or other personal property :
2.  something transmitted by or received from an ancestor or predecessor or from the past

As related to marketing of planned gifts, these definitions of “legacy” offer great input.  Why would a donor want to leave a legacy through a planned gift?  Is it the motivation for the gift to serve as appreciation for the work of the organization, or a memorial to a diseased relative, to honor someone, to set an example for others, to pass on their values of philanthropy to children and/or grandchildren, to sustain the organization about which the donor cares, to endow their annual gift, to fund a program or service or scholarship long term, to be recognized as a major donor while they are still alive, to thank the organization for its past service to the donor or a family member, to be able to make a more meaningful gift than they have in the past…. ?  The reasons may be different for each prospective donor.

Research has shown that the best prospects for planned gifts are:
1.    Long term donors and volunteers who have demonstrated a commitment to the organization (not gift size but more focused on length of giving)
2.    Those who are over 60 years old

Many of these prospects are living off of unearned income, have concerns about their ability to provide for themselves or other family members, long term. Their net worth may primarily be in property or other assets, which do not produce income or, at best, minimal interest. They are usually individuals who have been small or moderate long-term contributors to the organization.

While many charities have received bequests from individuals who had previously never made a gift to the charity, most donors of planned gifts fit the characteristics above when they made the decision to “plan” a gift.

Developing a “relationship” with the prospect so that conversations can take place that help the individual articulate what they care about, is the critical first step once they have been identified as a prospect.

Once the “solicitor” has acknowledged and demonstrated appreciation for their long term support, and has determined some of the potential interests and philanthropic motivations of the prospect related to your nonprofit, ask:  “If you were in a position to make a legacy gift to accomplish some of what you just mentioned, and you had the resources, would you want to make a legacy gift or gift in perpetuity to our nonprofit”?

Typically, they will respond that they are not wealthy or in a position to do so and don’t have the ability to make such a gift. 

Ask what they would want to accomplish with a major legacy gift to the nonprofit, if indeed they WERE in a position to do so.  Get them to talk about their passion for your nonprofit and their interests.

At the right time during that conversation, the solicitor can respond as follows:

“If we could show you a way that could enable you to make a legacy gift, without any cash out of your pocket and the possibility to receive income for the rest of your life greater than you are earning from some of your investments, would you be interested in learning more?

In most cases, long term supporters will be curious as to what you are suggesting and will be willing to learn more.

If the solicitor is a planned giving professional they can continue the
conversation.  If it’s a volunteer or a staff member without significant financial services knowledge, they should ask if it’s ok to have one of the
organization’s advisors set up a time to discuss with the prospect some of the ways they can make a legacy gift and also receive income and significant tax advantages.

The next step or meeting, once their interest has been established, would be to determine what are the primary assets of the prospect (residence, collectibles, life insurance, other appreciated assets, etc). Use of appreciated assets for gift planning offers the donor additional advantages.  In addition, a determination should be made regarding investments in low performing instruments. (money market funds, CD’s, bonds, etc.) With that information, the professional/advisor can suggest some of the techniques that might best fit that individual. (Gift annuities, trusts, life insurance, bequests, stock transfers, bequest, etc.)

It is important to encourage the prospect to engage their own financial advisors to make sure what is being discussed is appropriate based on more detailed knowledge of their unique financial situation and needs.

The nonprofit’s representative should offer to contact the prospect’s financial advisor once the prospect has had a chance to initiate the discussion with their advisor.

Marketing for planned gifts is primarily a one-on-one engagement of the prospect, their financial advisor and in many cases, their family. 

Establishing legacy societies and ways to recognize those who sign letters of intent to leave a bequest by will, or have committed to a planned gift, are critical components of a planned giving program.  The more planned gifts are recognized for the reasons the gift was made without emphasis on the amount of the gift, the more such recognition will encourage others to consider planned gifts.  

However, emphasis on marketing should primarily be on ways to identify and engage those who fit the legacy gift profile.  Brochures, emails, gift tables seminars and engagement of financial advisors, while helpful, are not sufficient for the development of a successful planned giving program for your nonprofit.  The key to marketing your planned giving initiative is to get good conversations with appropriate prospects started, which is all about “relationships”.

How would you rate the marketing for your nonprofit’s planned giving program?


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