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Initiating The Legacy Conversation And Getting To The Ask
Planet Philanthropy 2015
June 7-9, 2015
The Hyatt Regency in Jacksonville, Florida
Jonathan Gudema, Esq., Principal, Planned Giving Advisors LLC
What we’ll cover today
Why Legacy Giving for your organization?
Who do you need to be initiating conversations with?
What do you need in place to get started?
What are the key concepts for legacy conversations?
How do you prep your prospects?
How do you start the actual Legacy conversation?
How do you lead initial conversations to a closed gift?
2
Why Legacy Giving for your organization?
America is aging
So is your database!
Baby boomers are moving into retirement years
Generation X’ers and Y’ers are not poised to replaced their contribution dollars
3
The Future of Nonprofits
4
Planned Giving Endowments Long-Term
Viability
The Future of Nonprofits
5
“…over-reliance by nonprofits on just “keeping the lights on” is a short sighted strategy that steadily erodes the long-term survival of the organization. As important as annual giving campaigns are in the fundraising practices of the nonprofit sector, developing a steady stream of sustained long-term financial security deserves at least equal – if not the greater – priority.”It Matters…But Is It Working? A White Paper Series on Our Region’s Nonprofit Sector Fiscal Health & Sustainability The Philadelphia Foundation, July 2010
Charitable Bequests represent Since
1971
7.7%
Revenue Potential
Of all U.S. Fundraising
6
IRS data over 10 years (1987-1997) showed that
On average
left2.7
times their
lifetime charitable
giving in their estates
Revenue Potential
Estate tax payers who left
charitable bequests
7
So-Called Giving Life Cycle
Annual Giving
Major Giving
Capital Giving
Legacy Giving
8
Reality
Annual Giving or Major Giving
Legacy Giving
9
Why Planned Giving?
10
100
150
200
250
300
350
Inflation Adjusted U.S. Giving 1972-2013$ in billions
Inflation adjusted dollarsSource: Giving USA 2014
What changed
?
Why Planned Giving?
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2.2%2.4%
1.9%
11
Individual Giving as a Percentage of Disposable Personal Income
Adjusted for Inflation, in current DollarsSource: Giving USA 2014
Why Planned Giving?
12
100
150
200
250
300
350
Inflation Adjusted U.S. Giving 1972-2013$ in billions
Inflation adjusted dollarsSource: Giving USA 2014
2011 Oldest Boomers Age
65 Youngest Boomers
Age 47
1991 Oldest Boomers Age
45 Youngest Boomers
Age 27
Why Planned Giving?
70,000
90,000
110,000
130,000
U.S. Non-Farm Employment 1972-2013
13
in thousands
Source: U.S. Bureau of Labor Statistics
Rhode Island
Alaska8.1%
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
Colorado
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North DakotaMinnesota
Wisconsin
Illinois
Iowa
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Vermont
Georgia
Florida 17.8%
Mississippi
Kentucky
South Carolina
North Carolina
MarylandOhio Delaware
Indiana West Virginia
New Jersey
Connecticut
Massachuttes
Virginia
New Hampshire
Why Planned Giving?
Hawaii
Source: U.S. Census Bureau
13.0 % of US Population Over 65 -- 2010
Utah
5.7% - 9% 9.1% - 13% 13.1% - 17% 17%+
Maine
14
Rhode Island
Alaska
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
Colorado
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North DakotaMinnesota
Wisconsin
Illinois
Iowa
Missouri
Louisiana
Arkansas
Alabama
Tennessee
Michigan
Pennsylvania
New York
Vermont
Georgia
Florida 19.5%
Mississippi
Kentucky
South Carolina
North Carolina
MarylandOhio Delaware
Indiana West Virginia
New Jersey
Connecticut
Massachuttes
Virginia
New Hampshire
Why Planned Giving?
Hawaii
Source: U.S. Census Bureau
14.5% of US Population Over 65 -- 2015
Utah10.1%
5.7% - 9% 9.1% - 13% 13.1% - 17% 17%+
Maine
15
Rhode Island
Alaska
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
Colorado
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North DakotaMinnesota
Wisconsin
Illinois
Iowa
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Vermont
Georgia
Florida 21.8%
Mississippi
Kentucky
South Carolina
North Carolina
MarylandOhio Delaware
Indiana West Virginia
New Jersey
Connecticut
Massachuttes
Virginia
New Hampshire
Why Planned Giving?
Hawaii
Source: U.S. Census Bureau
16.3% of US Population Over 65 -- 2020
Utah11.4%
5.7% - 9% 9.1% - 13% 13.1% - 17% 17%+
Maine
16
Alaska
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
ColoradoUtah
12.6%
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North DakotaMinnesota
Wisconsin
Illinois
Iowa
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Vermont
GeorgiaMississippi
Kentucky
South Carolina
North Carolina
MarylandOhio Delaware
Indiana West Virginia
New Jersey
Connecticut
Massachuttes
Maine
Rhode Island
Virginia
New Hampshire
Why Planned Giving?
Hawaii
Source: U.S. Census Bureau
5.7% - 9% 9.1% - 13% 13.1% - 17% 17%+
Florida 24.7%
17
18.2% of US Population Over 65 -- 2025
Alaska
Washington
Oregon
California
Nevada
Idaho
Montana
Wyoming
ColoradoUtah
13.2%
New MexicoArizona
Texas
Oklahoma
Kansas
Nebraska
South Dakota
North DakotaMinnesota
Wisconsin
Illinois
Iowa
Missouri
Arkansas
Louisiana
Alabama
Tennessee
Michigan
Pennsylvania
New York
Vermont
GeorgiaMississippi
Kentucky
South Carolina
North Carolina
MarylandOhio Delaware
Indiana West Virginia
New Jersey
Connecticut
Massachuttes
Maine
Rhode Island
Virginia
New Hampshire
Why Planned Giving?
Hawaii
Source: U.S. Census Bureau
5.7% - 9% 9.1% - 13% 13.1% - 17% 17%+
Florida 27.1%
18
19.7% of US Population Over 65 -- 2030
Why Planned Giving?
19
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
0
50
100
150
200
250
300
350
400
450
Non-Bequest $ Bequest $$ in billions
1996 – Oldest Baby Boomers reach age 50
2011 – Oldest Baby Boomers reach age 65
Source: Giving USA
2018 – Oldest Baby Boomers reach age 72
Who do you need to be initiating conversations with?
Who are most likely to include your nonprofit in their estate plans alongside family and loved one?
Long-term givers or volunteers?
Alumni or beneficiaries of your services?
Retired staff or local community?
Who are the people you can identify who have the highest likelihood to go from supporter/friend to family/legacy?
20
Top Ten Predictors of Charitable Bequests
I. # years giving
II. No offspring
III. Highest levels of giving
IV. Funded living trust
V. Female
VI. Last reported wealth
VII. Not married
VIII.Last reported giving
IX. Growing wealth
X. # years volunteering
Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 201421
Who Leave Charitable Bequests?Data Confirms that Wealth Ranked Donors Are Strong
Prospects
22
% LeavingCharitable Bequests
PopulationSegment
4%-5% Everyone
10% Givers of $500 or more annually to charities
20%Moderately wealthy
passing away with $3.5 million to $10 million
28%Pretty wealthy
passing away with $10 million to $20 million
40%Very wealthy
passing away with over $20 million in assets
Sources: IRS Data as reported in Giving USA 2012, Russell N. James III, J.D., PH.D.
Boomers Differ From Their Predecessors
Think about the differences between those age 68 and younger versus those just a few years older…
Women’s liberation movement
Women started having more successful careers
Having children later, if at all
Much higher divorce rates
Generally smaller families
23
1998 2000 2002 2004 2006 2008 2010 2012p5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
GrandchildrenChildren onlyNo Offspring (unmarried)No Offspring (married)
U.S. Pop. Age 55+ Charitable Estates Among Those With Will or Trust by
Family Status
Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 2014
U.S. Childlessness Rates Women Ages 40-44
1970 (85-89)
1975 (80-84)
1980 (75-80)
1985 (70-74)
1990 (65-69)
1995 (60-64)
2000 (55-59)
2005 (50-54)
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
21.0%
8.6%
10.2% 10.1%11.4%
16.0%
17.5%
19.0%
20.4%
25
Current Ages:
Baby Boomers!
Source: U.S. Census Bureau/U.S. Bureau of Labor Statistics
What Wealth Transfer?
1920
(age
95)
1923
(age
92)
1926
(age
89)
1929
(age
86)
1932
(age
83)
1935
(age
80)
1938
(age
77)
1941
(age
74)
1944
(age
71)
1947
(age
68)
1950
(age
65)
1953
(age
62)
1956
(age
59)
1959
(age
56)
1962
(age
53)
1965
(age
50)
1968
(age
47)
2,300,000
2,500,000
2,700,000
2,900,000
3,100,000
3,300,000
3,500,000
3,700,000
3,900,000
4,100,000
4,300,000
26
Current Age:
Birth Year:
# U.S. Births
Boom
Years
Bu
st
Years
Today’s PG $
Today’s PG
Prospects!
Source: U.S. Census Bureau/U.S. Bureau of Labor Statistics
What do you need in place to get started?
Legacy society or other “tool” for initiating conversations
Clear reasons why supporters should want to take this big step
Staff and board commitment to long-term nature of planned giving
Campaign or other time incentive for pushing people to commitment
27
What are the key concepts for legacy conversations?
Less than 50% of Americans have any estate planning documents
And that percentage is increasing with Baby Boomers!
Why is there such a big gap between donor and bequests donors?
Generally, only about 10% of your decent donors will include your org in their estate plans
What about our big planned giving failures?
How many times do we see boards refusing to push planned gifts among its members?
How many times have seen beautiful planned giving mailings produce barely any response from a clearly ripe audience!
28
Seminar Tonight:Estate
Planning
What you see
Seminar Tonight:
Your Upcoming
Death
What the subconscious sees
What are the key concepts for legacy conversations?
What is 1st-stage defense to death reminders/one’s mortality?
AVOIDANCE (1st stage defense)
Distract
Differentiate
Deny
Delay
Depart
How do we sidestep avoidance?
30 Inside the Mind of the Planned Giving Donor, Profession Russell James, 2013
Brain reaction studies confirm:
What are the key concepts for legacy conversations?
How do we sidestep avoidance?
Donor organ donation question in Europe:
Opt-in – Want to donate your organs? MOST SAID NO
Opt-out – Want to opt out of organ donation program – MOST SAID NO
How about mixed packaging?
Help us secure our future good works (like we are doing today) through joining our Legacy campaign (or society or whatever)
Try sidestepping direct death reminder with carefully designed Legacy message that emphasizes other things besides direct death reminders
31 Inside the Mind of the Planned Giving Donor, Profession Russell James, 2013
Brain reaction studies confirm:
What are the key concepts for legacy conversations?
In any case, it may not be us who have to break through 1st stage avoidance
It could be:
Illness
Injury
Advancing age
Death of a family member
Intentionally planning for one’s death through estate planning
Keep in mind that your prospect may already be beyond 1st stage avoidance
32 Inside the Mind of the Planned Giving Donor, Profession Russell James, 2013
Brain reaction studies confirm:
2nd stage defense to death reminders:
Symbolic immortality
Supporting and being remembered by one’s surviving “in-group”
I will die, but my values, beliefs, story will live on, through my influence and support of my “in-
group” [family, interest group, community]
Autobiographical Heroism
Symbolic Immortality
COMMUN I TY
VALUES
Will live beyond them
Something reflecting
the person’s life story
(community and values)
Permanence is psychologically
attractive
H
What are the key concepts for legacy conversations?
Bequest decision making emphasizes “visualized autobiography” brain regions
Bequests to friends/family engage “memory and emotion” brain regions more than charitable bequests
2nd-stage defense to death reminders is to seek symbolic immortality or “autobiographical heroism” by supporting one’s “in-group” community
Some part of one’s self – one’s name, family, community, achievements, values, goals, etc… – will persist after death.
Leave a Legacy that will be remembered
35 Inside the Mind of the Planned Giving Donor, Profession Russell James, 2013
Brain reaction studies confirm:
What are the key concepts for legacy conversations?
Tell life stories of donors who will live beyond their death through bequest giving – PREFERABLE FROM LIVING INDIVIDUALS
Remind donors of life story connections of friends/family with the charity/cause through tribute bequest opportunities
Emotion and memory stronger with family/friends
Connect that emotion/memory to a your prospect’s legacy gift
“Permanence” bolsters the message
36 Inside the Mind of the Planned Giving Donor, Profession Russell James, 2013
Brain reaction studies confirm:
What are the key concepts for legacy conversations?
Add something to get prospects from YES to NOW
Time limits
Matching gift time limit
Campaign time limit
Participation time limit
37 Inside the Mind of the Planned Giving Donor, Profession Russell James, 2013
Brain reaction studies confirm:
What are the key concepts for legacy conversations?
38 Inside the Mind of the Planned Giving Donor, Profession Russell James, 2013
Brain reaction studies confirm:
Visualized Biography
Family Emotion
AvoidanceSymbolic
Immortality
Life Stories
Tribute Bequests
Mixed Packaging
Bequest Permanenc
e
1 2 3 4
Top ten factors that triggered charitable addition to estate plans:
1. Approaching death
2. Becoming a widow or widower
3. Diagnosed with cancer
4. Decline in self-reported health
5. Divorce
6. Diagnosed with heart problems
7. Diagnosed with a stroke
8. First grandchild
9. Increasing assets
10. Increasing charitable giving
7 out of top 10 triggers for adding charity to estate plans relate to
addressing one’s mortality!
39 Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 2014
Top ten factors that triggered REMOVING charities from estate plans:
1. Decline in self-reported health
2. Approaching death
3. Becoming a widow or widower
4. Divorce
5. Diagnosed with cancer
6. Diagnosed with heart problems
7. Diagnosed with a stroke
8. First grandchild
9. First child
10. Exiting homeownership
Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 2014
The same 7 out of top 10 triggers for adding charity to
estate plans relating to one’s mortality were the same for
REMOVING charities!
40
When To Start The Conversation
Mid-30s to 50
Climbing Early Acquisition Phase
• Annual giving• Recruitment for future leaders
50s to Early 60s
Top of Hill Late Acquisition Phase
• Major gifts• Leadership positions
60s to Mid 70s
Retirement Planning Early Preservation Stage
• Campaign/planned gift combo• Estate plans are formulating
Late 70s and up
Health Concerns, Legacy Late Preservation Stage
• Annual/major giving slows down• Keep involved and keep in estate
41
How do you prep your prospects?
Messaging done properly works
Announcements and updates at board meetings and other events
Articles in publications about “heroic” planned giving donors
Anything that creates any extra sense of urgency
42
How do you start the actual Legacy conversation?
Prep in form of updates, marketing, etc.. has happened
Get in-person meeting
Bring another legacy donor, if applicable
If possible, have other legacy donor share why they made his/her legacy decision
Any non-death reminder incentives would be great!
43
Frame Conversation Around Legacy
Conversations must be about your prospects’ personal LEGACY
Not about their deaths
Can we tap into their nostalgic org-connected memories through initial chit-chat?
How can we ensure that we can continue our mission for the next generation?
Not about how we need your bequest today
Have you thought about your own legacy with this org/community?
What kind of legacy do you picture for yourself?
44
Initiating The Conversation
Goal: Introducing the idea and starting the conversation
Your goals: simply communicate the legacy case (legacy elevator pitch?) and get your prospect thinking about their legacies (these take months, if not years, to develop!)
Have a “legacy” opener ready that challenges your donor to think about his/her impact beyond their live(s)
Have you ever given thought to your own legacy with ….?
Also decide in advance what you are asking the prospect to consider
Would you consider being a founding member of our Legacy challenge?
Gauge the response for continuing the conversation
45
Your Legacy Case Statement
Why a legacy case statement?
Website and other communications
A call to action
Articulation of the reasons why your institution’s members, friends, alumni, etc.. should include your organization in their estate plans
46
Your Legacy Case Statement
Different than your organization’s case statement for giving
Your case for giving today should emphasize what you are accomplishing today and in the near future
Your legacy case emphasizes how your donors’ legacy giving can ensure the future of the institution
Elements of a legacy case statement link:
Past experiences/benefits/memories (words or imagery)
With current success
And need to secure the future
Challenge for your donors’ to establish their own personal legacy
47
Making The “Ask”
Your goal is to ensure that the prospect knows that he/she has been asked to do something
Don’t expect an answer on the spot
Write a game plan and script for yourself, other staff and volunteer solicitors
Know how you are going to start off the conversation
Have an idea of what you will say to transition the conversation towards an ask
Have your ask memorized and ready to go
Put the ball in your prospect's court and listen
Gauge the response for continuing the conversation
48
Training Yourself
No training replaces just doing it
In person meetings are a must
Never be overly aggressive
But make sure your prospect at least knows he/she is being asked to consider joining the legacy effort
Start with getting the commitment to the idea (details not needed now)
Build into your efforts follow-up for later years for more details
49
Initiating The Legacy Conversation And Getting To The Ask
Planet Philanthropy 2015
June 7-9, 2015
The Hyatt Regency in Jacksonville, Florida
Jonathan Gudema, Esq., Principal, Planned Giving Advisors LLC