Asking the Right Questions: The Mysteries and Metrics of Planned Giving Programs

1. Asking the Right Questions: The Mysteries and Metrics of Planned Giving Programs Kathryn W. Miree Kathryn W. Miree & Associates, Inc.

2. The Premise • Charity CEOs, COOs, and CFOs may find planned giving mysterious and elusive • Metrics allow managers to: • Put planned giving programs into perspective • Measure growth • See warning signals when the program is lagging

3. The Premise • In this session we’ll discuss: • The role of planned giving in building donor commitment, organizational revenue, and development success • Program structure • Infrastructure necessary for success • Measuring the opportunity • Key reports and metrics • Best practices in the field

4. The Revenue Opportunities

5. The Revenue Opportunities • Revenue is the central measure of success for every fundraising activity • Planned giving can’t be measure solely by annual revenue – especially in the early years • Yet, the donor’s last gift is critical in perpetuating charitable mission

6. Giving USA 2007 Corporations $12.72 Foundations $36.5 Individuals $222.89 Bequests $22.91 Total: $295.02 Billion

7. The Giving USA 2006 Numbers

8. Recipients of Charitable Gifts

9. 2007 Statistics of Income Bulletin (2005 Returns)

10. Boston College Social Welfare Institute • Intergenerational transfer of wealth from 1998-2052 • $41-$136 trillion in total dollars • $6-$25 trillion in gifts to charity • Interesting observations on giving attitudes and practices of wealthy

11. Estimated Estate Wealth 1998-2052

12. Center on Philanthropy at IU Bequest Study • Report in March 2007 • Combined high net worth with surveys in Indiana, St. Louis, Memphis • Goal to identify potential bequest donors, and donor motivation • 48.4% had a will • FindLaw 44.4% (2002) • NCPG 42% (2000)

13. Age Demographics for Those with Bequest in Place

14. Age Demographics for Those Willing to Consider a Bequest

15. Annual Giving and Bequests

16. Annual Giving and Bequests

17. Bequest Intention Potential

18. Planned Giving in the United States 2000 – Age Demographics

19. Planned Giving in the United States 2000: Income Demographics

20. Bank of America High Net Worth Philanthropy Study • 2006 Study • Focused on philanthropic profile, motivations and goals of high net worth individuals (income >$200,000, assets >$1 million) • 3.1% of all U. S. households • 98% of group made gift to charity in 2005

21. Important Motivations for Giving

22. Factors That Would Prompt Additional Gifts

23. Types of Gift Vehicles Used

24. The Importance of Planned Giving to Nonprofit Development Programs The Internal Case for Support

25. Diversification of Revenue – Where Does Your Charity Stand? • Individuals • Corporations • Foundations • Government grants • Special events • Direct mail • Bequest/deferred gift revenue • Endowment/investment income • Other?

26. Expanding Options for Donors • Meeting donors where they are • Current gifts – cash or non-cash assets • Gifts that pay income • Deferred gifts • Options • Combinations

27. Leveraging Donor Relationships • You invest time and money in establishing donor relationships – why not maximize? • Will strengthen – not diminish – annual giving (unless you tell them otherwise)

28. Building Permanent Revenue Streams • You will lose donors to mortality eventually – how will you replace? • The larger the donor, the greater the impact • Permanent streams allow long-term planning • Will increase revenue at a higher rate than focusing solely on annual giving

29. Planned Giving Management Hurdles The Most Common Obstacles to Success

30. The Process • 80-85% of planned gifts are revocable – for new and established programs • Therefore, negative images come to mind: • Chasing the dead – ghoulish! – difficult to discuss • Commitments are revocable – what’s the point? • Gift commitments are vague – donors don’t provide details – therefore, results difficult to analyze

31. Lack of Control • Can’t control the cash flow • Donors seem to want control – we want it all to be unrestricted • Those pesky, secretive advisors won’t tell us what they know

32. The Cost • Head count • Data management • Marketing (including Internet) • Travel and entertainment

33. Dashed Dreams • Show me the money (What do you mean there may not be money for 7-10 years?) • Mega gift focus • Campaign nightmare – when can we spend the money?

34. The Temptation to Shut Down the Program • Not impressed by the pipeline (or there is no pipeline) • Reduce the program • Eliminate the program

35. Fear of Liability • Assets • Compliance • Lawsuits • Robertson Family • Barnes Foundation • Maddox Foundation

36. The Key Elements for Success

37. The Key Elements • Gift acceptance policies and procedures • Donor management policies • Data input standards • Limitations on who makes changes • Staff to oversee – ensure quality • Great software that tracks the details • Broad reporting options

38. The Key Elements • Counting and valuation policies • Endowment and endowment policies • The role and purpose • Parameters for new funds • Administration parameters • Donor stewardship • Spending policy • Investment policies

39. Report Metrics

40. What You Should Assess Annually • Growth rate of annual gift donors • Donor ages • Donor retention rate • Number of multi-year donors at the 5, 7, 10 year levels • Growth of major gift donors • Annual calls on donors • Single? • Team? • Volunteers?

41. What You Should Assess Annually • Annual receipts • Estates (may come in over several years) • Types of gifts • Known/unknown • Size • Average gift size • Compared to largest annual gift • Compared to years of giving

42. Non-Financial Metrics • The number of Legacy Society members Growth in new Society members • Repeat gifts from Society members • Calls made (stewardship, cultivation, solicitation) • Major gift calls with legacy idea • Planned giving proposals • Gift commitments • Training events • Marketing articles or asks

43. Financial Metrics • Annual deferred gift revenue by type • Year over year analysis of planned gift revenue to identify trends • Annual giving rates of increase for donors with deferred gift commitments • Consistency in giving rates for donors with deferred gift commitments

44. Annual Program Health • Planned gift pipeline • Marketing response rates • Year over year revenue trends

45. Ten Things You Can Do To Guarantee a Successful Program

46. Ten Things • Understand and embrace the internal case for planned giving • Use the right metrics to measure opportunity and success • Use accounting codes that track results • Oversee trust and estate management to maximize returns to charity

47. Ten Things • Ensure the planned gift (endowment) investment team works with the planned giving team to appropriately invest deferred gift assets and communicate results • Make a regular review of policies affecting planned gifts • Remove internal, staff roadblocks to planned giving success

48. Ten Things • Ensure regular reporting on planned giving at the board and staff levels. • Allow planned gift officers access to board members. • Take part in donor cultivation, stewardship, and solicitation • 5 calls • Call • Attend thank you events

49. Final Thoughts • Success is not serendipitous • Planning • Preparation • Placing value on donor relationship • Use these metrics and keys to success • Support from the top is essential and will lead to success