Important Numbers You, Your Boss & Your Board Need To Know About Planned Gifts – Part II 4821

Important Numbers You, Your Boss & Your Board Need To Know About Planned Gifts – Part II

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In June, I started to share a series of interesting numbers around planned giving programs that help us to better understand planned gifts, our donors that make them, the marketing that we create and the collection and application of data surrounding all of these. You can read my original blog here.

To summarize so far:

  • In the next 20 years, there may be $30 trillion or more inherited by the Baby Boomer population’s children and grandchildren with an estimated that $1.5 - $6 trillion in charitable gifts going to non-profits in the U.S. between 2017 and 2030.
  • 95% of all planned gifts are in the simple form of a bequest in wills, trusts or through beneficiary forms designation gifts.  I’ve written a glossary of planned giving words to help you get familiar with these and other terms.

Here’s two new numbers I think you’ll find useful: 

75%

According to research by Dr. Russell James, donors who make bequests increase their current gift amount in the 5 years following the planned gift creation by 75%.

Absent statistical analysis that uses predictive analytics to identify planned gift prospects at your organization, let’s take a look at how this might work to find them in your house-file of donors:
  • 75% increase in a $20 annual gift is $35. The increasing gift pattern may look something like this:
    • Year -4 = $20
    • Year -3 = $20
    • Year -2 = $30
    • Year -1 = $35
    • Current year = $35
  • 75% increase in a $100 is $175
  • 75% increase in a $1,000 gift is $1,750
  • 75% increase in a $10,000 is $17,500, and so on…..
If you’re looking to use simple data to find suspected planned gift donors, look not for age or number of gifts in a certain time-frame, look instead to increased gift amounts within a 5-year period of time.  If you did this at the end of each year, you’d have a new batch of planned gift prospects every 12-months to add to your marketing cadence. 
 

So, who in your database has increased by 75% within the last 5-years? 


2.74

A study on IRS data found that charitable bequests are the largest type of deferred gifts – by far.  They average 2.74 times the total lifetime giving of a donor.  Let’s look at that another way. 
  • Tom has been a loyal donor for 20 consecutive years to your organization.  Starting at $20 a year, he’s increased his gift over time to $10/month ($120 annually).  In total, Tom has given your organization $1,135. Based on the IRS data findings, Tom’s planned gift to your organization should be around $3,000.  But it’s not the Tom’s in the world that were studied in the paper.  Only decedents with large estates – required to file estate tax information were included. So, this information is applicable only to qualifying estates and according to the then, applicable tax laws.  Let’s take another look at the formula.
 
  • Jane has inherited some family wealth but is also a successful business-woman.  We can estimate her estate at well-over $5 million.  She’s a well-known donor to you over the years, but her giving isn’t consistent.  She’s made donations to your annual campaign from time-to-time and provided a $200,000 gift to your capital campaign 5 years ago. Her lifetime giving to you totals $225,000.  According to the IRS data, her planned gift will be 2.74 times her lifetime giving = $616,500. 
The moral of this tale of two donors is to prompt you to look more closely at your own multiplying factors.  Here’s your homework:
  • For each matured planned gift donor to your organization over the past 5-10 years, calculate the total amount of gifts given = lifetime cumulative gifts
  • Add up the total lifetime cumulative gifts of all matured planned gift donors and then divide that result by the number of matured planned gift donors you have.  
  • This will then be the current multiplier for estimated planned gift donors when you are notified of their intent to leave one to you.  As they continue to donate during their lives, the value of their expected planned gift increases as well. 
If each planned gift to your organization equates to an average planned gift of $616,500 – what sort of treatment, attention, cultivation and gratitude would you give to each planned gift expectancy donor?  More than you’re giving now?    
 
News ARCHIVED | Blackbaud Target Analytics® Tips and Tricks 07/04/2018 11:28am EDT
Added by Katherine Swank
  

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