Initiating The Legacy Conversation And
Getting To The Ask
National Capital Gift Planning Council
22nd Annual Planned Giving Days
May 29-30, 2014
Jonathan H. Gudema, Esq., Principal, Planned Giving Advisors, LLC
What We’ll Cover Today
Part I
Why Planned Giving?
Part II
Initiating The Legacy Conversation and Getting to The Ask
Part III
Planned Giving Prospects by the Numbers
2
Part I
Why Planned Giving will be
extremely important for U.S.
nonprofits in the next decade?
3
The Future of Nonprofits
4
The Future of Nonprofits
“…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
5
Revenue Potential
Charitable Bequests represent
Since 1971
7.7%
6
Of all U.S.
Fundraising
Revenue Potential
IRS data over 10 years (19871997) showed that
2.7 times
their lifetime
charitable giving
in their estates
7
On average
left
Estate tax payers
who left charitable
bequests
Why Planned Giving?
Inflation Adjusted U.S. Giving 1972-2012
$ in billions
350
300
250
200
150
100
1972
1977
Inflation adjusted dollars
Source: Giving USA 2013
8
1982
1987
1992
1997
2002
2007
2012
Why Planned Giving?
Individual Giving as a Percentage of Disposable Personal Income
4.0%
3.5%
3.0%
2.5%
2.4%
2.2%
1.9%
2.0%
1.5%
1.0%
0.5%
0.0%
1972
1977
1982
Adjusted for Inflation, in current Dollars
Source: Giving USA 2013
9
1987
1992
1997
2002
2007
2012
Why Planned Giving?
Inflation Adjusted U.S. Giving 1972-2012
$ in billions
350
300
1991
Oldest Boomers Age 45
Youngest Boomers Age 27
250
2011
Oldest Boomers Age 65
Youngest Boomers Age 47
200
150
100
1972
1977
Inflation adjusted dollars
Source: Giving USA 2013
10
1982
1987
1992
1997
2002
2007
2012
Why Planned Giving?
in millions
U.S. Non-Farm Employment 1972-2012
140
125
110
95
80
65
1972
1977
1982
Source: U.S. Bureau of Labor Statistics
11
1987
1992
1997
2002
2007
2012
Why Planned Giving?
13.0 % of US Population Over 65 -- 2010
Maine
Washington
Vermont
Minnesota
Montana
North Dakota
Massachuttes
Oregon
Wisconsin
South Dakota
Idaho
Illinois
Kansas
Kentucky
Oklahoma
Arizona
New Mexico
Alaska
8.1%
Texas
Hawaii
Source: U.S. Census Bureau
Virginia
Georgia
Alabama
Louisiana
5.7% - 9%
9.1% - 13%
13.1% - 17%
17%+
New Jersey
Delaware
Maryland
South
Carolina
Arkansas
Mississippi
West
Virginia
North Carolina
Tennessee
California
12
Indiana
Missouri
Rhode Island
Connecticut
Ohio
Nevada
Colorado
Michigan
Iowa
Nebraska
Utah
New York
Pennsylvania
Wyoming
New Hampshire
Florida
17.8%
Why Planned Giving?
14.5% of US Population Over 65 -- 2015
Maine
Washington
Vermont
Minnesota
Montana
North Dakota
Massachuttes
Oregon
Wisconsin
South Dakota
Idaho
Utah
10.1%
Kansas
Indiana
Kentucky
Missouri
Oklahoma
Arizona
New Mexico
Virginia
Georgia
Alabama
Alaska
Texas
Hawaii
Source: U.S. Census Bureau
13
Louisiana
5.7% - 9%
9.1% - 13%
13.1% - 17%
17%+
New Jersey
Delaware
Maryland
South
Carolina
Arkansas
Mississippi
West
Virginia
North Carolina
Tennessee
California
Rhode Island
Connecticut
Ohio
Illinois
Colorado
Michigan
Iowa
Nebraska
Nevada
New York
Pennsylvania
Wyoming
New Hampshire
Florida
19.5%
Why Planned Giving?
16.3% of US Population Over 65 -- 2020
Maine
Washington
Vermont
Minnesota
Montana
North Dakota
Massachuttes
Oregon
Wisconsin
South Dakota
Idaho
Colorado
Kansas
Indiana
Kentucky
Missouri
Oklahoma
Arizona
New Mexico
Virginia
Georgia
Alabama
Alaska
Texas
Hawaii
Source: U.S. Census Bureau
14
Louisiana
5.7% - 9%
9.1% - 13%
13.1% - 17%
17%+
New Jersey
Delaware
Maryland
South
Carolina
Arkansas
Mississippi
West
Virginia
North Carolina
Tennessee
California
Rhode Island
Connecticut
Ohio
Illinois
Utah
11.4%
Michigan
Iowa
Nebraska
Nevada
New York
Pennsylvania
Wyoming
New Hampshire
Florida
19.5%
Why Planned Giving?
18.2% of US Population Over 65 -- 2025
Maine
Washington
Vermont
Minnesota
Montana
North Dakota
Massachuttes
Oregon
Wisconsin
South Dakota
Idaho
Colorado
Kansas
Indiana
Kentucky
Missouri
Oklahoma
Arizona
New Mexico
Virginia
Georgia
Alabama
Alaska
Texas
Hawaii
Source: U.S. Census Bureau
15
Louisiana
5.7% - 9%
9.1% - 13%
13.1% - 17%
17%+
New Jersey
Delaware
Maryland
South
Carolina
Arkansas
Mississippi
West
Virginia
North Carolina
Tennessee
California
Rhode Island
Connecticut
Ohio
Illinois
Utah
12.6%
Michigan
Iowa
Nebraska
Nevada
New York
Pennsylvania
Wyoming
New Hampshire
Florida
24.7%
Why Planned Giving?
19.7% of US Population Over 65 -- 2030
Maine
Washington
Vermont
Minnesota
Montana
North Dakota
Massachuttes
Oregon
Wisconsin
South Dakota
Idaho
Colorado
Kansas
Indiana
Kentucky
Missouri
Oklahoma
Arizona
New Mexico
Virginia
Georgia
Alabama
Alaska
Texas
Hawaii
Source: U.S. Census Bureau
16
Louisiana
5.7% - 9%
9.1% - 13%
13.1% - 17%
17%+
New Jersey
Delaware
Maryland
South
Carolina
Arkansas
Mississippi
West
Virginia
North Carolina
Tennessee
California
Rhode Island
Connecticut
Ohio
Illinois
Utah
13.2%
Michigan
Iowa
Nebraska
Nevada
New York
Pennsylvania
Wyoming
New Hampshire
Florida
27.1%
3000000
2000000
Boom
Years
2500000
Bust Years
3500000
1913 (Age 100)
1915 (Age 98)
1917 (Age 96)
1919 (Age 94)
1921 (Age 92)
1923 (Age 90)
1925 (Age 88)
1927 (Age 86)
1929 (Age 84)
1931 (Age 82)
1933 (Age 80)
1935 (Age 78)
1937 (Age 76)
1939 (Age 74)
1941 (Age 72)
1943 (Age 70)
1945 (Age 68)
1947 (Age 66)
1949 (Age 64)
1951 (Age 62)
1953 (Age 60)
1955 (Age 58)
1957 (Age 56)
1959 (Age 54)
1961 (Age 52)
1963 (Age 50)
1965 (Age 48)
1967 (Age 46)
1969 (Age 44)
1971 (Age 42)
1973 (Age 40)
1975 (Age 38)
1977 (Age 36)
1979 (Age 34)
1981 (Age 32)
1983 (Age 30)
What Wealth Transfer?
4500000
# Births by Year
4000000
Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 2014
Why Planned Giving?
Non-Bequest $
$ in billions
400
350
300
Bequest $
2011 – Oldest Baby Boomers
reach age 65
2018 – Oldest Baby Boomers
reach age 72
1996 – Oldest Baby Boomers
reach age 50
250
200
150
100
50
0
1990
18
1994
1998
Source: Giving USA
2002
2006
2010
2014
2018
2022
2026
2030
Part II
Initiating The Legacy Conversation
And Getting To The Ask
19
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
7 out of top 10 triggers
for adding charity to
estate plans relate to
addressing one’s
mortality!
10. Increasing charitable giving
20
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
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!
10. Exiting homeownership
21
Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 2014
Frame Conversation Around Legacy
 Conversations must be about your prospects’ personal LEGACY

Not about their deaths
 How can we ensure that we can continue our mission for the next
generation?

Not about how we need your bequest today
 What kind of message/legacy do you want to be remembered for?
22
Top Ten Predictors of Charitable Bequests
I.
# years giving
VII. Not married
II.
No offspring
VIII. Last reported giving
III. Highest levels of giving
IX. Growing wealth
IV. Funded living trust
X.
V.
# years volunteering
Female
VI. Last reported wealth
23
Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 2014
When To Start The Conversation
Mid-30s to 50
Climbing
Early Acquisition Phase
50s to Early 60s
Top of Hill
Late Acquisition Phase
60s to Mid 70s
Retirement Planning
Early Preservation Stage
Late 70s and up
Health Concerns, Legacy
Late Preservation Stage
24
• Annual giving
• Recruitment for future leaders
• Major gifts
• Leadership positions
• Campaign/planned gift combo
• Estate plans are formulating
• Annual/major giving slows down
• Keep involved and keep in estate
3500000
3000000
2000000
Boom Years
2500000
Bust Years
4500000
Source: Russell James, J.D., Ph.D., CFP®, Webainar “Wills That Won’t”, 2014
1913 (Age 100)
1915 (Age 98)
1917 (Age 96)
1919 (Age 94)
1921 (Age 92)
1923 (Age 90)
1925 (Age 88)
1927 (Age 86)
1929 (Age 84)
1931 (Age 82)
1933 (Age 80)
1935 (Age 78)
1937 (Age 76)
1939 (Age 74)
1941 (Age 72)
1943 (Age 70)
1945 (Age 68)
1947 (Age 66)
1949 (Age 64)
1951 (Age 62)
1953 (Age 60)
1955 (Age 58)
1957 (Age 56)
1959 (Age 54)
1961 (Age 52)
1963 (Age 50)
1965 (Age 48)
1967 (Age 46)
1969 (Age 44)
1971 (Age 42)
1973 (Age 40)
1975 (Age 38)
1977 (Age 36)
1979 (Age 34)
1981 (Age 32)
1983 (Age 30)
Our Planned Giving Prospects?
U.S. # Births by Year
4000000
Learn To Ask The Right Questions
Your
investments?
Your
family?
Retirement?
Your real
estate?
26
How is your
business
going?
Art or
collectables?
Listen…
 Passion for the cause, of course!
 Learn to start identifying financial concerns

Taxes

Income

Assets

Dependents other than spouse

Major changes in family situation or health
 Develop a fuller picture of your prospects
27
Clues – Options – Timing
Clues
Options
Timing
“Can’t afford a gift right
now” but wealthy
Maybe unusual asset gift
prospect
Leverage for campaign
giving
Death of spouse or other
close relative
Redoing estate plan and
contemplating own
mortality
Give space but not too
much – Legacy thinking is
happening now!
Retiring
Redoing estate plans
Best time for a planned
gift
Selling a business or
property
Life income or major gift
Sooner the better
Known bequest
expectancy
Irrevocable bequest
pledge
Campaign conversation
28
Types of Planned Gifts
29
Testamentary Planned Gifts
Lifetime Planned Gifts
Bequest in Will
Charitable Gift Annuity
Living Trust
Charitable Remainder Trust
IRA/401(k) Beneficiary
Charitable Lead Trust
POD Account Beneficiary
IRA Rollover Gift (expired 12/31/13)
Life Insurance Policy Beneficiary
Ownership of Life Insurance Transfer
Specific Bequest of Property
Retained Life Estate
U.S. Savings Bonds Bequest
Pooled Income Fund
Categorize Your Prospects
Testamentary vs. Lifetime Planned Gifts
Higher Education Planned Gift Breakdown
2005-2012
Lifetime
Gifts
18.8%
Testamentary Gifts
81.2%
Source: VSE
30
Categorize Your Prospects
Testamentary Giver or Lifetime Giver?
 Testamentary givers driven by:



Retention of assets “just in case”
Great Depression mentality, fear of poverty
Fear of running out of money in retirement years – baby boomers?
 Lifetime givers driven by:




31
Immediate tax benefits
Immediate income benefits
Illiquid, unique/unusual assets
Recognition
Initiating The Conversation
 Introducing the idea

Your goal is to simply communicate the legacy case (legacy elevator pitch?)
•
These gifts may take months, if not years, to develop
 Decide in advance what you are asking the prospect to think about

Hybrid: Have you ever thought about combining a gift from your estate with your
campaign gift?

Planned gift only: Would you consider joining the our Legacy Society?
 Put the ball in your prospect's court and listen
 Gauge the response for continuing the conversation
32
Your Legacy Case Statement
 Why a legacy case statement?
33

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
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
34
Your Legacy Case Statement
35
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
36
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
37
Part III
Planned Giving Prospects by the
Numbers
38
Who Leave Charitable Bequests?
Data Confirms that Wealth Ranked Donors Are Strong Prospects
% Leaving
Charitable Bequests
4%-5%
39
Population
Segment
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.
Who Leave Charitable Bequests?
74%
70%
60%
60%
50%
50%
40%
40%
30%
23%
20%
10%
0%
10%
5%
Everyone
$500 Annual Givers
% Charitable Bequests
12%
Non-Jewish
$100k+Earners
Jewish $100K Earners
% Estate Plans
Sources: Jumpstart Labs – 2013 Connected to Give: Jewish Legacies www.connectedtogive.org
40
Who Leave Charitable Bequests?
% Leaving
Charitable Bequests
Jewish Population
Segments (Age 40+)
23%
All $100K+ earners
19%
Women $100K earners
27%
Men $100K+ earners
17%
Earners of $100K-$199K
31%
Earners of $200K-$299K
39%
Earners of $300K+
Sources: Jumpstart Labs – 2013 Connected to Give: Jewish Legacies www.connectedtogive.org
41
U.S. Pop. Age 55+ Charitable Estates Among
Those With Will or Trust by Family Status
55%
50%
45%
40%
Grandchildren
35%
Children only
30%
No Offspring (unmarried)
No Offspring (married)
25%
20%
15%
10%
5%
1998
2000
2002
2004
2006
2008
2010
2012p
Source: Russell James, J.D., Ph.D., CFP, www.encouragegenerosity.com
Childless Rates Among Boomers
 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
43
U.S. % Childless Women Ages 40-44
21%
19%
17%
15%
13%
11%
9%
Year (Current Age Range)
Source: Russell James, J.D., Ph.D., CFP, www.encouragegenerosity.com
U.S. Pop. Age 55+ with a Will or Trust
62%
60%
58%
56%
54%
52%
Source: Russell James, J.D., Ph.D., CFP, www.encouragegenerosity.com
U.S. Pop. Age 55+ with a Will or Trust by
Age Segment
80%
75%
70%
65%
60%
55%
50%
45%
40%
Source: Russell James, J.D., Ph.D., CFP, www.encouragegenerosity.com
55-64
65-74
75+
U.S. Pop. Age 55+ Use of “Will Alone” by
Age Segment
65%
60%
55%
50%
45%
40%
35%
30%
Source: Russell James, J.D., Ph.D., CFP, www.encouragegenerosity.com
55-64
65-74
75+
Takeaways
 We need to branch out into other planning options beyond wills!

Beneficiary designations

IRAs

Bank accounts

Insurance policies
 We need to promote estate planning as much as planned giving
48
U.S. Pop. Age 55+ inclusion of charitable
recipient by education level
16%
14%
12%
10%
Grad School
College Grad
8%
Some College
HS Grad
6%
<HS Grad
4%
2%
0%
1998
2000
2002
2004
2006
2008
2010
2012p
U.S. Pop. Age 55+ Charitable Recipient Among Those
With Will/Trust by Giving/Volunteering
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Donor & Volunteer
Donor only
Volunteer only
Neither
Source: Russell James, J.D., Ph.D., CFP, www.encouragegenerosity.com
Initiating The Legacy Conversation
And Getting To The Ask
Presented to PPGGNY
April 23, 2014
Jonathan H. Gudema, Esq., Principal, Planned Giving Advisors, LLC