• Stein Strategies LLC

Most planned gifts are revocable – so why are we calling the post-gift stage stewardship?

Updated: May 27, 2020

There’s a lot of talk within fundraising that now is the time to build and/or refine planned giving programs and to be soliciting planned gifts. I don’t disagree, my first blog post was about this very subject! Unfortunately, identifying, qualifying, cultivating, and soliciting are the bulk of an organization’s planned giving efforts, with very little to no strategy around "stewarding" those gifts. It’s so common, planned giving experts and thought leaders have a term for it - “Count It & Forget It” syndrome and it’s not best practice.

When I work with clients, planned giving stewardship is a vital component to the strategy: here’s why:

With 80%-90%+ of planned gifts coming in the form of revocables (bequest/beneficiary designations), we’re not really stewarding a gift, but an intention to give a gift. So I ask, why do we, as an industry, frame the post-intention phase as stewardship, the same moves management term we would for a gift where the asset is in hand already? And statistically, donors DO revoke their intentions.

Russell James’ work in The Timing of Final Charitable Bequest Decisions found that 10-year retention rates of charitable bequests were between 51%-61% (note, this is not the retention of a specific charitable beneficiary, but the retention of a charitable component in the estate plan). In the 2018 The Burk Donor Survey, 20% reported removing a charity from their estate plans at one point. The majority of those respondents, 59%, said it was a due to a lack of communication and relationship with the charity.

There’s a myriad of reasons for these statistics (and lack of more statistics), some of which we as an industry can control (stewardship) and some we can’t. Let’s start with what we can’t control - revocation could be the result of changing financial and/or economic conditions, changing family structures, death during a recession and overall loss in the estate, or unanticipated expenses.

But the limited data we have suggests the majority of revocations are due to the relationship with the charity itself, so what are the barriers to planned giving stewardship on the nonprofit’s side?

For one, it’s difficult to convince leadership in the ROI of stewardship efforts when the gift may not be realized for decades. Staff turnover, leadership changes, and budget windfalls and constraints all happen between commitment and realization – and without a written stewardship strategy in place – the stewardship is piecemeal at best. Moreover, planned gifts are not tied to immediate impact, making impact reporting challenging. Add to that, performance metrics are focused on acquisition and totals, not stewardship.

Perhaps most salient in my experience is that there’s extremely limited public data on the fulfillment rate of charitable bequests by sector. Why? Many institutions have counted commitments and overall realization, but ignored counting realizations tied to known commitments. Few organizations have been tracking fulfillment rates and the lack of industry average makes it difficult to understand an organization’s planned giving stewardship effectiveness.

Yet, we know from the data that stewardship and early inclusion increase the likelihood of a bequest realization.

What am I getting at? There’s a lot of barriers to implementing a thoughtful stewardship strategy for planned gifts, but it’s not impossible. I submit we as an industry start by reframing what we are trying to address here – which is firstly addressing the risk of revocation and secondly encouraging more gifts – it’s not really stewardship, it’s more akin to post-cultivation.

By reframing stewardship as post-cultivation, what we’re telling leadership and ourselves is that investment and efforts after solicitation are about safeguarding the bequest and the investment is worthwhile (considering planned gifts are often the largest gift a donor will ever make, planned gifts are inherently tied to increased annual giving[1], and some statistics show that people make multiple planned gifts to the same institution[2]).

Our efforts would be more donor-centric, more strategic, and more long-term if we reframed planned giving stewardship as cultivating the bequest to realization. If you’re getting planned giving commitments now, make sure you have a long-term plan on how to see them to fruition.

[1] The Indiana University Lilly Family School of Philanthropy has cited annual giving increases as much as twice annually after a bequest is made and Russell James’ work found that the donor’s annual gift went up by an average of $3171 after making a planned gift. [2] The Indiana University Lilly Family School of Philanthropy found 21% of donors gave more than one planned gift to the same institution in their lifetime.

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