Planned Giving Study Sponsored By Pentera Inc. Breaks New Ground

New research on planned gifts and the donors who make them shows that legacy society members make more gifts, larger gifts, and a wider variety of gifts—demonstrating that legacy societies are a significant way for nonprofits to connect with and steward donors. “The 2016 Planned Giving Study: Building Lasting Legacies: New Insights from Data on Planned Gifts,” was sponsored by Pentera, Inc., and researched by the Lilly Family School of Philanthropy at Indiana University.

We spoke about the study with Pentera President & CEO Claudine Donikian, who is also a member of the advisory board of the Women’s Philanthropy Institute at the Lilly school. Pentera is the nation’s leading planned giving marketing firm, specializing in full-service integrated marketing communications for more than four decades. A planned gift is any sizable charitable contribution made with forethought about the benefit to the charity and the financial implications to the donor and the donor’s family.

OA Online:  Why was this the right time to initiate this research?

Claudine Donikian: Several years ago I realized that there was very little research about the behaviors of actual donors who made actual planned gifts or actual gift intentions, so I approached the Lilly school to initiate and underwrite this national study that is the first to look at institutional data from a sampling of top university planned giving programs. Until now, most research has just used surveys or tax return data.

OA Online: What was the impetus behind Pentera supporting this research study?

Claudine Donikian: Looking at these top planned giving programs will help us discover best practices that can be used to guide all types of planned giving programs at various organizations.

OA Online: How was the research conducted?

Claudine Donikian: The study analyzes actual data on planned gifts and donors from case-study universities across the country. This unique data set includes information on planned gifts made from 1972 to 2015 (the date range varies by university).

OA Online: What are the top takeaways from the research?

Claudine Donikian: According to the study, 90% of the top 120 higher education institutions in the U.S. had an institution-wide legacy society exclusively for individuals who make planned gifts to the institution. The study found that legacy society members make larger gifts, with an average gift size more than twice that of non-members. They also make more gifts and use more different types of gift vehicles.

The study also found that these donors are likely to make multiple gifts: More than one-fifth of them did so. And schools are getting a lot of money from those repeat gifts, which on the average were about the same size as single gifts.

OA Online: So who are these planned giving donors?

Claudine Donikian: The study found that planned giving donors:

1. Start making planned gifts at about 50 years of age, with the likelihood increasing as they age.
2. Are likely to live in the same state as the university they are giving to.
3. Are members of the Silent Generation or the Baby Boomers (79% combined).
4. Make larger gifts if they are childless (average gift size more than double).
5. Tend to use a wide variety of gift vehicles, especially when making repeat gifts.

OA Online: In regard to that wide variety of gift vehicles: Aren’t most planned gifts bequests?

Claudine Donikian: You are correct, and the finding on the wide use of gift vehicles is particularly significant because many nonprofits limit their planned giving programs to bequests based on the knowledge that they are the most popular gift and account for 80% of all planned gifts. Our study confirmed that most gifts came from bequests—but the percentage was much lower at just 54%. That means a lot of money is coming in through other types of gifts. Bequests brought in about $1.7 billion in this study, while other gift vehicles brought in just over $1 billion. So if all these schools had bequest-only programs, they would have left a billion dollars on the table!

The gift variety is even more significant among repeat donors. They made less than half as many bequests (25% to 54%) and twice as many gift annuities and charitable trusts (59% to 29%). This shows how important it is for nonprofits to accept and encourage a wide variety of gift vehicles.

OA Online: Were there other findings offering new insights?

Claudine Donikian: Yes, the study showed in a number of areas that unexpected groups account for a significant amount of planned gift revenue. Here are three examples:

• Gifts from non-alumni: Alumni are the primary donor group to universities, as one would expect, representing about three-fourths of donors. But we found that family and friends of donors, faculty, and even those with unknown relationships with the university made gifts that were just as large as the gifts from alumni. In addition, those non-alumni were just as likely to make multiple gifts. So it is crucial to steward those who have all different levels of “linkage” to the nonprofit.

• Gifts from other than the top donors: We found that the 80/20 rule of fundraising applies, with 82% of the planned giving funds coming from the top 20% of donors. But we also found that a significant amount of money—more than $330 million—came from the middle group of donors (between the top 20% and the bottom 50%). Ignoring those donors—like by leaving them off your mailing lists—is leaving money on the table.

• Gifts from other generations: As expected, almost half (48%) of planned giving donors are members of the Silent Generation who are currently aged 71-88—but a large and growing percentage (31%) are Baby Boomers, and they will soon become the largest group of planned giving donors. And the marketing strategies for Baby Boomers are quite different from the Silent Generation.

OA Online: So what does this research mean for those who oversee planned giving?

Claudine Donikian: It’s important to study the top programs, as this study does, to discover best practices and also to see what is possible when nonprofits prioritize planned giving. These universities have robust planned giving programs—they promote all of the gift types and have the staff to cultivate and steward a large number of donors—and other schools as well as other types of nonprofits can then see what is possible when you do planned giving in the most strategic way. That is, they can see the value of having a comprehensive program, and they can look at how their own programs might expand—whether it might be adding a legacy society, offering more gift vehicles to donors, increasing their staff and budget to cultivate and steward donors, and other strategies.

OA Online: One more question: With the speculation about changes in the tax laws next year, should donors take any action before December 31, 2016, if they are doing estate and tax planning for the New Year?

Claudine Donikian: Yes, donors should always take action before the end of the year. We don’t know what next year holds; we have to wait to find out. But for those who are charitably inclined, of course you should make a gift before year-end—and enjoy receiving the tax benefits. Charities need your help. So make the gift.

Learn more about Pentera and the research study by visiting www.pentera.com/plannedgivingstudy. And follow Pentera on Twitter @PenteraInc