Debunking the Myths About Legacy and Planned Giving
THERE ARE MANY MYTHS about the field of planned giving. Some of the myths are about organizational and personal approaches to legacy giving, and some are about legacy donor prospects.
Do these myths sound familiar? Would you like to hear the truth behind these legacy myths?
JCamp 180 held a Webinar on Jan. 25, 2011 that explored each of the myths below, looking at how they came to be and the actual truths that lie behind them.
The list below is a rundown of what was learned during that webinar.
PLEASE NOTE: Legacy giving is a deliberate, planned, and formal action taken by a donor to share a portion of assets with a charity. Often, but not always, the gift is provided after the donor's lifetime. This article uses the terms "legacy" and "planned giving" interchangeably.
Myths About Legacy Giving
MYTH: Soliciting legacy gifts is the same as raising money for an endowment.
TRUTH: When an agency raises money for their endowment, gifts are requested for the present time---usually with a targeted goal---to build a pool of funds in which the principal is not used. Legacy gifts, on the other hand, are specifically designed to be a part of a donor's estate planning, but are not usually to be given in present day.
MYTH: All planned gifts are deferred gifts.
TRUTH: A planned gift might indeed be an outright gift of funds to your organization today rather than in the future. This depends on the way in which the donor sets up the gift. For example, the donor could give an outright gift to your agency's endowment with restrictions to tapping the principal. Or the gift could be a gift annuity in which the donor gives funds (or an asset) to the organization now in exchange for specified income given from the agency to the donor during their lifetime.
MYTH: Getting a legacy gift is like taking away someone's inheritance.
TRUTH: In the vast majority of cases, legacy gifts to charities are only a percentage of the entire estate. There are usually plenty of funds or other assets given to heirs. On a philosophical note, a legacy gift to a charity could be seen as a part of the inheritance bequeathed to a philanthropic family.
MYTH: If there is no will, there is no planned gift.
TRUTH: Legacy gifts can be a portion of retirement funds, life insurance and many other planned giving vehicles that are not necessarily a part of a person's will.
Myths About Organizational Barriers
MYTH: Planned giving hurts annual giving.
TRUTH: Studies have illustrated that donors who make legacy gifts to a charity actually increase their annual giving. They are literally more invested in the agency's organizational health.
MYTH: If people make a legacy commitment, they'll stop giving annually because they think they are "off the hook."
TRUTH: If your legacy donors are properly stewarded by your agency, they will understand your annual needs and will continue to give.
MYTH: We need money now and cannot possibly think about legacy giving.
TRUTH: As stated previously, legacy donors will give more annually. Additionally, if your agency gets involved in a community-wide effort, such as Grinspoon's Camp Legacy initiative, there is an annual incentive grant for obtaining legacy pledges. Remember: The best time to plant a tree is 20 years ago; the second best time is now.
MYTH: Planned giving is not appropriate for a young organization.
TRUTH: Even young organizations have a base of loyal donors---founders, former board members, and staff---who believe in the mission and can be approached for a legacy pledge.
MYTH: We just don't have the time to do planned giving.
TRUTH: You can't afford not to be cultivating strong relationships with your most loyal donors for present day financial needs. Therefore, you are probably already spending time on donor relations. Doing so without the additional layer of legacy conversations would be a missed opportunity.
MYTH: We can't launch a successful legacy program without an experienced planned giving officer on our staff.
TRUTH: You do not need to have this expertise on staff. It is important, however, to create a relationship with an organization, such as a Jewish community foundation or federation, that does have planned giving expertise on staff in case a donor has a complicated estate planning situation.
MYTH: Legacy lay leaders need to be tax attorneys or financial advisers.
TRUTH: Remember that the job of your legacy team is to have mission-based conversations with donors, not to get into the details of planned giving vehicles. The details need to be worked out by the donor's own financial advisers. Therefore, you need some familiarity with the vehicles, but you certainly don't need detailed expertise on your team.
MYTH: A legacy letter of intent should be required of every Board member.
TRUTH: We believe that each Board member should be willing to have a legacy conversation, but not be required to make a legacy pledge. Considering a planned gift is a very personal decision. Some individuals do not philosophically believe in planned giving.
MYTH: We can't ask someone to join the legacy society AND ask for a capital gift in the same year.
TRUTH: Many donors would prefer to know all of the different solicitations you have in mind for them at one time. For other donors, it is best to separate the requests. Ultimately, you need to have a specific approach for each individual donor based on who they are and your relationship with them.
MYTH: Planned gift marketing should be passive.
TRUTH: Outreach for legacy giving should be multi-faceted. It should include:
- Agency-wide marketing to the full donor base through newsletters and the website.
- Targeted communications to select groups, such as alumni.
- Direct one-on-one conversations with select legacy donor prospects.
Myths About Legacy Prospects
MYTH: Only seniors over 65 years old are planned giving prospects.
TRUTH: A donor of any age can be a legacy donor. For example, some of the most willing donors are those young professionals who are just beginning a retirement account and can designate the agency as a small percentage beneficiary.
MYTH: Only wealthy people are planned giving prospects.
TRUTH: Planned giving is perhaps the most egalitarian of all fundraising because anyone at any wealth level can leave the agency a legacy gift. Your most loyal donors---not necessarily the wealthiest---are your best legacy prospects
MYTH: If a donor doesn't have an "estate," they cannot or will not make a legacy gift.
TRUTH: Most of us don't consider ourselves wealthy enough to have an estate to plan. But we do have assets, such as cars, homes, savings, retirement accounts, and life insurance from which we can designate a small percentage to our favorite charities.
MYTH: Single people/people without heirs have no need for a will. So, so they're not going to want to talk about legacy.
TRUTH: In fact, donors without heirs are often more willing to provide for a planned gift. Parents may consider their children their primary legacy; donors without heirs may consider a planned gift to a charity theirs.
MYTH: The donor is just going to leave everything to their kids. So, there is no point in asking.
TRUTH: If a donor has demonstrated a commitment to your agency, they are very likely to want to illustrate that philanthropic relationship to their children by leaving a percentage of their estate.
MYTH: The donor only gives $50 a year and has never raised her gift in all the years she's been giving. So, she obviously doesn't have anything to give us in her will.
TRUTH: We all have read of the retired librarian or custodian who left a million dollars to their favorite charity. Approach every consistent donor as a legacy prospect no matter what level of giving.
MYTH: Just signing a letter of intent will not lead someone actually including us in their wil.
TRUTH: The key to turning a legacy pledge into an actual commitment is continual and appropriate donor stewardship. Only by staying in relationship with your legacy donor will you assure the future gift will occur.
MYTH: The children of the donor will object if the donor bequests something to an organization.
TRUTH: Most children will be well taken care of by their parent's estate and will not begrudge a charitable gift, especially if the family was included in the ongoing relationship-building and in honoring the parents.
MYTH: The donor wants to leave it to his kids to decide if they want to support the camp after he dies.
TRUTH: This might be true with some donors, but you shouldn't let this assumption prevent you from having a legacy conversation with your loyal donor. Take the opportunity to remind them of their lifetime commitment to your mission.
Myths About Personal Walls
MYTH: Having legacy conversations means I have to talk about death, and I emotionally cannot handle that.
TRUTH: The legacy conversation is not about death; it is about the shared values you have with the donor, including the core mission of your agency and the vision of the future impact.
MYTH: I need more technical training - I need to be a planned giving expert to be involved in gift planning. I shouldn't start a legacy program unless I know all the legal nuances about the various giving vehicles. Otherwise, I could get our agency sued.
TRUTH: Your job is not to be an expert on estate taxes or financial planning. In fact, you need to emphasize that you are NOT an expert and that the donor needs to seek their own personal technical advice. Your job is to share the passion of your agency's mission and to remind the donor of their commitment.
MYTH: I'm too young to do this. Who would listen to me anyway? We need older people to make legacy requests
TRUTH: Passion and personal commitment are the only requirements to seek legacy pledges from donors.
MYTH: I don't have to make my own legacy gift because I am on staff.
TRUTH: Every member of the legacy team needs to give their own personal legacy pledge. Making your own pledge will put you in a spiritual place to ask others what you have already done yourself.