Have I got a gift for you: The state of planned giving today

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When it comes to fundraising, charities have a number of options available to them. Direct mail is a common one and events are popular. But ask any expert in the field and they’ll tell you that the biggest bang for one’s charitable buck can be found in planned giving.

Also referred to as gift planning [experts differ as to which term is correct and some point out distinctions between the two, but for the sake of simplicity I will use them interchangeably] this fundraising technique typically requires advanced planning, where a financial commitment is made now but funds are available at a future time. The most popular type, of course, is the bequest of property or funds through a will.

Technically speaking, this has never been a better time for charities to pursue planned giving – and for fundraisers with expertise in this area to find career opportunities. With a sluggish economy, high competition among charities, and an ever-increasing demand for resources and government constraints, charities need to focus their efforts on the most cost-effective fundraising channels. And compared to more traditional tools, planned giving is much more efficient to retain growth, says Malcolm Berry, VP of major gifts at the SickKids Foundation and chair of the Canadian Association of Gift Planners (CAGP) board.

What’s more, donor prospects have never been stronger. With the huge boomer cohort — 20 million in Canada alone— moving into retirement, the proliferation of assets that ordinary taxpayers have to offer, and the rise in high net-worth individuals and entrepreneurs selling their business and creating huge tax events, charities have many reasons to leverage these programs.

But are they? Some larger organizations like SickKids seem to be pursuing planned giving with relative success. But for many others, specifically small and medium sized charities, planned giving opportunities appear to be somewhat out of reach. But what exactly is standing in their way?

The name says it all

Interestingly, many experts are no longer fans of the terms planned giving or major gifts - and their critique may say something about the challenges. Berry says the tool is better exemplified by CAGP’s revised vision: A better world through strategic charitable giving. “It’s about helping create healthier communities, doing it charitably and in a strategic manner,” he says.

Simon Trevelyan, president of S.T. Legacy Group also has a problem with what he calls outdated terminology. Eschewing the old terms, he adopts in their stead the phrase “legacy giving” and says the distinction is critical. “It’s donor-centric and focused on helping someone leave something behind with great meaning to make a difference in the world.” Planned giving, on the other hand, calls to mind one’s demise and saving taxes, neither of which a prospective donor wants to think about. That switch in approach can help a charity find more success, he adds.

Making long-term planning a priority

Terminology aside, other challenges stand in the way of charities adopting planned giving to the extent they should. For one, they’re often focused on the now, more apt to invest in areas with immediate returns. “But you have to wait at least seven years for legacy giving to be realized,” says Trevelyan. Charities need to adopt a longer view for it to garner the uptake it deserves, he concludes.

Daniel Lichty would agree. A former fundraiser at a charity, Lichty now works as a stewardship consultant at the Mennonite Foundation of Canada (MFC), a faith-based donor advised fund (DAF) that helps clients design their own ‘Generosity Plan’. “Not every organization has the luxury of having a long-term perspective when immediate needs are now,” he says, explaining why many small-to-midsize organizations lack gift planning expertise in-house. But he believes things are changing as charities start to see that without a stronger focus on things like estate planning and bequests, they’re missing out.

The value of strategic thinking

That missed opportunity brings up another challenge that many allude to – and that CAGP’s revised vision calls to mind: the need for strategic thinking. Think about it: we’re witnessing the single largest transfer of wealth from generation to generation in history. Yet, less than half of people have a will. What’s more, says Lichty, many don’t have any charitable intent in their will simply because they weren’t asked to put it in.

Most lawyers won’t bring it up, it’s not really in the financial planners’ interest to do so and accountants, though focused on tax relief, aren’t always forward-thinking, he explains. “That leaves few voices that will speak for a charity when it comes to estate planning,” says Lichty. “And if charities or MFC aren’t doing it, donors will opt for a standard will that isn’t strategic and doesn’t accomplish charitable goals.”

The need to be strategic is vital to the fundraising industry, echoes Trevelyan, who claims that fundraisers have missed the mark on this issue. Interestingly, one of his biggest beefs is over a tactic considered integral to gift planners’ efforts: the face-to-face solicitation. Trevelyan recalls the low rates of success he had doing the same while a fundraiser, claiming the conversations were overly focused on saving taxes and money, with less regard to passion and meaning of gifts. Besides, it was impossible to visit all the charity’s donors face-to-face. “I said to myself, ‘there has to be a better way.’”

So he surveyed people he visited, came to some conclusions and devised a whole new system focused on emotions and a multi-channel marketing approach. “I realized if I can talk to them about their passion, not face-to-face, and then link it to our mission and vision, I would be in a much better position to engage them and get commitments,” he says, adding that the new approach has seen a ten-fold increase in commitments and expressions of interest among his clients so far.

Finding the right fundraiser

What would also help engage donors is the right fundraiser – yet another challenge for organizations. “Most charities are looking for people with experience with financial planning, legal matters etc. but those are the wrong type of people to have in that field,” says Trevelyan. What’s needed, he believes, are good marketers with sales experience.

For Phil Gerard, president of Gerard Consulting, a Vancouver-focused fundraising talent management agency, finding the right hire is his bread and butter. Having worked for years in HR and fundraising, he also knows well how charities in Vancouver struggle looking for employees with gift planning expertise.

“There’s a huge demand for face-to-face fundraisers,” he says. Vancouver is not traditionally a market for major gifts, he adds, but even smaller organizations are starting to develop these programs, realizing the potential benefit in cultivating prospects. Problem is, says Gerard, “there’s a talent crunch in the area of frontline fundraisers experienced with prospecting and establishing relationships with donors which will result in major gifts.” And the many recent graduates of fundraising programs are still needing to build a track record to prove they can have the impact these charities are looking for.

Solutions for the planned giving puzzle

What needs to happen for there to be greater success among charity’s planned gift programs? Start by understanding your prospects, say the experts, like the fact that they enjoy giving to multiple charities and require a significant amount of trust before sharing their plans. These are just some of the insights Lichty has learned since approaching donors as part of a more neutral MFC. “These are conversations I would’ve only dreamt of having when I represented one charity,” he says, adding third parties with expertise can be very helpful for charities looking for assistance.

Berry agrees, adding Canada Helps as another example. He says smaller organizations — with less time or resources to create a fulltime planned giving department — can still make it work even without a dedicated person thanks to the use of intermediaries. What’s more, organizations should try to let go of their very traditional structures, where planned giving is in one office and direct mail another. Integration among the entire fundraising department is beneficial.

There also needs to be a focus on leveraging donors from annual to monthly to major gifts, says Gerard. “People can give money to an event and think about planned gifts too,” echoes Berry. “You must always think about how one donor can be integrated as another type of donor.” A charity should also build competency across the organization to allow for more engaged conversations about how folks can strategically connect with their charity of choice, he adds.

As for the talent crunch, it will improve in time as the pipeline gets built, says Gerard. It takes a while and requires a number of steps, including developing specialized educational programs with clear educational pathways (e.g. a Bachelor of Business with fundraising specialty) that set graduates up for success. Where nonprofits can help is giving them the chance to build a track record. “We need to make it more attractive for new fundraisers to choose this as a profession.”

Elisa Birnbaum is a freelance journalist, producer and communications consultant living in Toronto. She is president of Elle Communications and Publisher & Editor-in-Chief of SEE Change Magazine and can be reached at: info@ellecommunications.ca.

Photos (from top) via iStock.com. All photos used with permission.

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