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Legacy Giving: How to attract the right prospects

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A lucrative opportunity is right in front of Canadian fundraisers but is being largely ignored. Over the next 10 years, more than two million more Canadians will move into their prime retirement and estate planning years. According to Benefaction Foundation, “We have over 85,000 charities in Canada today and that number is expected to double by 2050 largely due to the country’s baby boomer demographic and wealth transfer factors. That wealth transfer is expected to be $8-10 trillion by 2050 ($40 trillion in the US).” This will be history’s largest inter-generational wealth transfer. In a 2008 Vancouver Sun article, author Gillian Shaw stated that the charitable component of this wealth transfer is estimated to be between $150 to $625 billion dollars.

Despite this glaring opportunity, most charities are so stretched for funds that their only focus is on fundraising to meet their operating funds and legacy giving is only an after-thought for them. Therefore they take a reactive approach to legacy giving and treat it as a pleasant surprise that happens out of the blue, every so often.

According to Penelope Burke, in her 2013 book, Donor-Centered Leadership, “Most not-for-profits are not negotiating planned gifts as part of their fundraising strategy. Among the minority who are, under resourcing their planned gifts operation relative to potential is commonplace. Lack of appreciation for the net value of these gifts, and failing to understand how willing their donors are to offer them, contribute to the sector’s failure to capitalize on this lucrative fundraising opportunity”.

Canadian charities and nonprofits face a number of challenges in the current environment. Some of these are challenges posed by their donor base. According to Canada Revenue Agency (CRA) records, there are more than 86,000 charities registered in Canada and this number is increasing rapidly with 458 new charities being registered in 2013 alone. Therefore, it is a crowded market place and charities need to stand out in the crowd. To compound the problem, the number of Canadian tax filers who claim charitable donations has been steadily decreasing in recent years. While in 1990, 30 per ent of tax filers claimed charitable donations on their tax returns, this number decreased to 21 percent in 2014.

Demographics is having a marked effect on the philanthropic sector too. According to Statistics Canada, “By 2036, the number of seniors would be more than double the number observed in 2009 and would vary between 9.9 and 10.9 million persons.” In addition, “the number of people aged 65 years or over would surpass the number of children aged less than 14 years or under. This shift, a first in the history of the Canadian population, would occur between 2015 and 2021.”

According to the 2011 Census, 9.6 million persons, or close to 3 Canadians out of 10 (29%), were baby boomers. Canadians age 55 plus are the most generous segment of the population and give the most. In 2013, Canadians aged 55 and older accounted for 34% of the total population aged 15 and over and 35% of donors. However, they contributed 47% of all donations made during the year.

This section of the population also happens to be the most affluent and numerous. However, they also typically ignore direct mail, detest telemarketers, do not like to be sold to and enjoy face-to-face contact, which happens to be the most expensive method of fundraising. They are also extremely busy, pressured for time, bombarded with marketing messages, and hounded by all sorts of charities. So the quandary for planned giving professionals is how to reach this vast population of philanthropic Canadians that are their best prospects with limited resources and time.

The fact of the matter is that baby boomers are very concerned about their approaching retirement, healthcare and long-term care costs, outliving their money, and reducing their tax burden. Boomers are in the stage of life when they need to reposition their assets, create a lifetime income and leave a legacy. Gift planning offers all the solutions that they need.

Charities need to adopt a balanced approached to their fundraising and put equal weight on major gift fundraising and planned giving. They need to be proactive and donor centric and become a resource for their donors. Most of all they need to make efficient use of their limited time and resources.

They can do this by multiplying their contact with their donors, reducing the cost per contact and leveraging their fundraising professionals’ time. The most important and productive activity for a fundraising professional is to have face-to-face conversations with qualified donors.

While it might be possible to have phone and face-to-face conversations with all of your top donors, it would be impossible for any fundraising professional to be able to afford the time to talk with all donors regardless of the size of their donation. However, when it comes to planned gifts, research from Good Works has shown that direct mail donors are twice as likely to make bequests as those who don’t give money to charity by mail.

Besides face-to-face meetings, an estate planning presentation attended by a group of donors can be the most effective way of leveraging the time and resources of planned giving professionals. While many charities have tried organizing estate planning seminars using the free services of an estate planning lawyer, accountant or financial planner, the results have not been stellar in most cases. The majority of these seminars are too technical in nature, the delivery is not attractive, they do not engage and motivate donors, they do not entice enough donors to attend and the ones who attend are often not qualified to give at this level. Most importantly, due to lack of time, there is not proper follow up after the event by the charity staff and the events are held very sporadically so there is no sense of consistency.

To be successful, it is vital that a donor-centric presentation engages major donors and attracts new ones, motivates them to take action and delivers predictable results and leverages the time and resources of the organization in the most effective way.

The key is to find a system that can cut through the message clutter by delivering an easy-to-understand message that motivates donors but also that works on auto-pilot and makes efficient use of the time and resources of your planned giving professionals. Creating a steady stream of conversations with your most qualified donors can ensure success and multiply the results of your planned giving program.

Want to learn more on this topic? Register for our free webinar on July 25. Can't make the live session? Everyone who registers gets a full copy of the recording! 

Tina Tehranchian is a planned giving consultant at Donor Motivation Program in Toronto and can be reached at (905) 707-5220.

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