Major gifts and “planned gifts” (charitable donations made through one’s Will, through insurance vehicles, through gifts of property and the like), are essential components of nonprofit fundraising that can be supported by social media communications and advanced technologies.
A trend discussed in Baby Boomers and Seniors is that older generations - the age group(s) normally interested and involved in making Wills and developing estate plans - are sectors of the population that are swelling in numbers.
These age groups are also increasingly “online” and making significant connections – and transactions – using their computers and other “high tech” devices. They have also arrived at a time of life when many consider making major financial contributions to charitable causes.
This suggests that planned giving in particular should be a more significant focus for forward-looking nonprofit organizations. In terms of both major and planned gifts, however, nonprofit organizations should also educate and cultivate professional advisors. Here is why.
Erich Hamm of Bank of America suggests that regardless of where your organization stands in terms of fundraising, it is an excellent idea to build relationships with professional advisors like bankers, trust officers, attorneys, insurance professionals, accountants, and the like. An ever-growing number of donors prefer consulting professional advisors before making significant charitable commitments during their lifetime, and later via estate plans.
One long understood role of professional advisors has been to work out an orderly and desirable arrangement for the disposition of a donor’s estate. The ultimate result is a plan that fulfills the donor’s wishes regarding the security of their family, and others they wish to benefit (which could include your charity). Although tax consequences are secondary, tax considerations are an important part of estate planning, and are often directly related to the accomplishment of the donor’s primary goals.
In addition, professional advisors are sometimes asked to conduct research regarding the financial health of nonprofit organizations, in preparation for the awarding of major gifts by their clients. In my work, I have found these trusted advisors are also sometimes tasked with following-up to make sure the charitable gift given is being properly used.
In Philanthropy Journal, Erich addresses this subject thoroughly in, “Building Relationships with Professional Advisors.”
According to the Bank of America Study of High Net Worth Philanthropy 2012, conducted in partnership with the Center on Philanthropy at Indiana University:
“Forty percent of wealthy donors consulted at least one type of outside advisor about their charitable giving in 2011. Among those donors who sought advice from at least one source last year, most consulted accountants (53 percent), followed by financial or wealth advisors (37 percent) and nonprofit personnel (33 percent).”
“With regard to the transmittance of philanthropic values, the 2012 study found that a family’s personal efforts and those of their network of friends or peers continue to be the leading sources by which children, grandchildren and other younger relatives learn about charitable giving (51 percent), followed by religious organizations (34 percent) and nonprofits themselves (21 percent). Given the unprecedented intergenerational transfer of wealth in the coming years, advisors to the wealthy also have a significant opportunity to guide the current and next generation of philanthropists.”
An article by Donald Liebenson of Spectrem’s Millionaire Corner For Investors About Investors underscores this same trend. In “The Ultra-Wealthy: Primary Advisors” Donald notes,
“Ultra-wealthy households are more likely to use a primary financial advisor than they were two years ago, according to a new Millionaire Corner wealth level study of households with a net worth of at least $25 million (not including primary residence)” (dated September 11, 2012).
From Rick Cohen for The Nonprofit Quarterly comes another supportive discussion, “Donor-Advised Funds Soared at 2012′s Close” (January 23, 2013). “Amidst all the uncertainty around the fate of the charitable deduction, marginal tax rates, and capital gains taxes, something happened with the major national donor-advised fund (DAF) managers. Schwab Charitable, for example, reported a tripling of contributions and a doubling of new donor-advised fund accounts in the fourth quarter of 2012 compared to the same period of 2011.”
Hence, be sure to include professional advisors in your social media and other communications plans. The more they know about your good work, the more likely they will view your organization favorably when the time comes to advise people considering significant donations and preparing planned gifts.
~ The Foundation Center has posted an article, “Wealthy Families Using Family Offices to Manage Giving” (November 4, 2012).
“Wealthy American families increasingly are considering family offices — private entities that manage investments, trusts, and other financial planning — to manage their philanthropic giving, a report from the National Center for Family Philanthropy finds.”
~ To guide your planned giving efforts specifically, you might consider visiting the websites of the Partnership for Philanthropic Planning (pppnet.org/); The Planned Giving Design Center (pgdc.com); Planned Giving Resources (pgresources.com/); and the like, as well as companies that provide services designed specifically for nonprofit planned giving programs. Two of my favorite companies are Crescendo Interactive, Inc. (crescendointeractive.com), and The Stelter Company (stelter.com).
~ Pew Research Center: The Data Bank provides statistics on retiring Americans. The report notes, “for every day for the next 19 years, 10,000 baby boomers will reach age 65. The aging of this huge cohort of Americans (26% of the total U.S. population are Baby Boomers) will dramatically change the composition of the country.”
~ The Center on Philanthropy at Indiana University has produced an important research report, “Financial Literacy and Knowledge in the Nonprofit Sector,” February 2012, underwritten by The Moody’s Foundation.
“For the past two decades, a growing wealth of economic and financial data has become available to help inform effective decision-making within the nonprofit sector. It has become increasingly important for nonprofit organizations to have the knowledge and skills that are necessary to apply and use this data for decision-making and benchmarking.”
As mentioned earlier, one reason philanthropists involve professional advisors in decision-making is to ensure solid financial decisions are being made by the nonprofits they are being asked to support.
~ Another report of note is the National Philanthropic Trust“2012 Donor-Advised Fund Report.” If you had any doubt that more people are looking to professional advisors and community funds to assist with and manage their philanthropic activities, think again!
~ I would be remiss if I did not mention Fidelity Charitable, which manages one of the most successful donor advised funds in the world. On this page, you can read about one growing trend by independent, private foundations to terminate their operations and turn over the reigns to donor advised funds, “Making the Transition Out of a Private Foundation.” I discuss an interesting social media activity by Fidelity that is specifically related to professional advisors on the following page.
In addition, I found this report by Fidelity Private Foundation Services to be insightful, “Expanding Charitable Giving by Easing the Burdens of Foundation Management.” “Private foundations have grown in popularity since first introduced in 1917, and today account for almost 10 percent of the $200 billion that Americans donate to charities each year and hold more than $400 billion in assets. As the nation’s largest transfer of wealth continues, trillions of dollars will flow from one generation to the next over the next decade and, the number of private foundations may significantly increase.”
Please continue reading about this noteworthy subject on, “Building Relationships ~ Additional Information.”