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How-to Library • Featuring articles from past issues of Contributions

Annual Donations and Charitable Bequests: What's the Connection?
Our new national study looks at Americans aged 40 and older who name charities in their wills and dissects when and why they choose to give.  

by Larry Stelter

Sometimes I envy the folks in annual giving departments who can use hard dollars to tally their success at the close of each campaign. In the planned giving field, where we often wait decades to see the fruits of our labor, it’s harder to evaluate what works and what doesn’t.

I’ve long suspected, however, that we have much to learn from our comrades in annual giving, since it’s their donors who typically made planned gifts as well. But how likely is it that an annual giver will make a charitable bequest? What are the best indicators of annual giving and how do they compare to the best indicators for bequest giving?

Recognizing the need to find answers to questions like these, my company recently looked into the connections between annual donors and bequest givers. As part of a scientific survey done in spring 2008 – the largest national study of its kind on record – we looked at Americans aged 40 and older who name charities in their wills and dissected when and why they choose to give. We also spent time asking questions about the annual giving habits of Americans and linked those results to those we received on bequest giving behavior.

How to Raise Planned Gifts by Mail
OF RELATED INTEREST: As Larry Stelter makes clear in his new book, How to Raise Planned Gifts by Mail, most people have it all wrong when it comes to planned giving. And he should know - he heads the largest planned giving marketing company in the U.S. While executing a planned gift can be complicated, that’s irrelevant really. Attorneys, financial planners, and CPAs can (and should) handle the paperwork. Your simpler, and far more pivotal, job is to arouse your prospects' interest, fuel their desire, and lay the groundwork for closing the gift.

Our Key Findings

In a room of 100 annual givers:

  • Eight have included a bequest in their wills;
  • Five have a will and plan to add a bequest in the future;
  • Five do not have a will but will “definitely” or “probably” name a nonprofit at some point in the future; and
  • Eighty-two are unlikely to make a charitable bequest.

Charitable giving is part of American life. Bequests and the decisions to make them play out against a backdrop of smaller gifts that Americans make routinely. Ninety percent (90 percent) of U.S. residents aged 40 and older reported making a contribution to at least one nonprofit in the past year or so. This included a majority (58 percent) who report contributions to three or more charities, with about one in five (19 percent) giving to five or more organizations.

For virtually every type of charity, postgraduate work is the best indicator of annual giving. As one may expect, higher educational attainment generally correlates with higher household income, so we frequently see these groups show up in pairs when looking at the likelihood to donate annually.

Education is the strongest indicator of bequest giving. The majority of bequest givers (34 percent) report having earned a college degree, compared to 26 percent of the general population. Following closely are those who report having completed at least some postgraduate work or degree (31 percent), compared to 16 percent of the general population.

Annual Giving Behavior

As we saw with bequest gifts, churches and other religious organizations are the most common recipients of annual giving, with 69 percent saying they made a gift to such a nonprofit within the past year. Also receiving donations from a majority of Americans are human service groups (53 percent) and disease-related organizations (51 percent).

We also discovered that different demographic groups favor different types of charities:

  • Older Americans give to religious organizations and disease-related organizations in proportions greater than average.
  • Younger Americans are more likely than average to give to educational institutions.
  • Americans with children under age 18 in their homes are more likely than average to report annual gifts to disease-related nonprofits, educational institutions, and nature and science organizations.
  • Affluent Americans are more likely than average to give to human services organizations, arts and cultural organizations, and nature and science nonprofits.

Giving also varies by region. The southwest is above average for giving to religious organizations; the midwest is stronger for human service groups, educational institutions, arts and cultural organizations, and science and nature groups; and the east is home to greater-than-average giving to disease-related organizations, educational institutions, and hospitals or providers of health services.

Bequest Giving Behavior

Americans aged 40 and older who currently have bequests in their wills are more likely than average to have made an annual donation to every category of charity, exceeding the norm by at least five percentage points. For three types of charities, however, bequest givers exceeded the average by 10 percentage points or more.           

  • Nature and science organizations: 24 percent, compared to 11 percent overall (13 points)
  • Educational institutions: 51 percent, compared to 38 percent overall (13 points)
  • Arts and cultural organizations: 28 percent, compared to 16 percent overall (12 points)

The prospect pool for bequest giving can be split into two groups: people with wills in place and those without. Americans who have a will and say they will “definitely” or “probably” include a charitable bequest in the future (5 percent) tend to be notably more likely to donate an annual gift (exceeding the average by 10 percentage points or more) in a majority of categories. The most popular nonprofit recipients of annual gifts among this group are as follows, in order from the greatest difference from average:

  • Arts and cultural organizations: 37 percent, compared to 16 percent overall (21 points)
  • Educational institutions: 57 percent, compared to 38 percent overall (19 points)
  • Disease-related organizations: 64 percent, compared to 51 percent (13 points)
  • Hospitals or organizations that provide health services: 35 percent, compared to 25 percent overall (10 points)
  • Religious institutions: 79 percent, compared to 69 percent overall (10 points)

And differing less from average (5 to 9 points):

  • Organizations devoted to animals or pets: 29 percent, compared to 21 percent overall (8 points)
  • Nature and science organizations: 18 percent, compared to 11 percent overall (7 points)
  • Human services organizations: 59 percent, compared to 53 percent overall (6 points).

A second group of good prospects, those without wills, do not deviate much from average when it comes to annual giving. The only category they give to at a notably higher-than-average rate is hospitals or organizations that provide health services (34 percent, 9 points higher than the average of 25 percent), to which they all but match both bequest givers and prospects with wills. 

What Does It All Mean?

These results assure us of a solid link between annual giving and bequest giving. Therefore, those who market planned gifts would be well-served to break down any barriers that might exist between the various fundraising arms of your organization. Rather than discriminate between annual, major and planned giving, recognize the opportunity to share learning and combine appeals to your best prospects.

Historically, the mood of the nation is generally quite supportive of philanthropy. We can conclude that the efforts put forth to persuade individuals to consider annual gifts is not really necessary. Almost all Americans give to at least one charity, so this is already part of their routine behavior. About two in three already have wills in place, so the stage is also set for bequest giving. Individuals simply need to be asked. So get to work!

For a complete copy of this report, go to www.stelter.com/connections.
Larry Stelter is president and CEO of The Stelter Company, the world’s largest gift planning marketing firm, and author of How to Raise Planned Gifts by Mail, published by Emerson & Church.

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