Planned Gift Donors Journey

Part
01
of three
Part
01

Planned Gift Donors - User Journey

The planned giving donor journey consists of three decision stages. Planned giving offers substantial tax savings to donors, which can truncate their income tax liabilities and avert capital gains tax.

The Major Stages In The Journey

  • The planned giving donor journey is similar to that of a buyer’s journey and primarily consists of three decision stages, which are awareness, consideration, and decision.
  • In the awareness stage, donors veer their attention to the problem and the need for a solution. Various charitable organizations endeavor to get themselves identified with the donors at this stage and project themselves as a potential part of the solution.
  • The consideration stage of the journey is very donor centric and it is where giving donors are more decisive, as they begin to believe that they can make make a difference. The donors in this stage shift their focus and begin to deliberate and mull over the various ways in which they can make the biggest impact.
  • The decision stage is the final step in the journey of a planned giving donor. At this stage, the donors have already sieved through the various charitable options available to them and have zeroed-in-on the organization that is best suited to them to solve the problem.

The Rewards

  • One of the key rewards of planned giving for the donors is the satisfaction that they garner from the act of giving a legacy to a philanthropic support that is close to their heart. The satisfaction arises from the fact that their contribution can help ensure the future health of the organization.
  • Another key tangible reward of planned gifts/giving is that it offers substantial tax savings to donors, especially on appreciated properties and securities. The donors can truncate their income tax liabilities and avert capital gains tax through planned gifts.
  • Planned gifts also offer the donors the opportunity to support their charitable organization in a meaningful way without giving a large outright gift.
  • Some rewards associated with planned gift/giving include providing inheritances for scions at a reduced tax cost, diversifying investment portfolio, receiving income from residence, and act as a potential alternative to averting the probate process.

The Barriers

  • Inattention, insufficient income, over-spending, and fear of charity failure are some common barriers that people donating planned gifts encounter and which prevent them from planned giving.
  • Planned gift donors are rarely able to articulate consistent, evidence-based approaches to choosing the right recipients of their aid and, hence, rarely give as much as they would like.
  • According to SSIR.org, small hassles, such as finding a stamp, filling out a form, providing payment information, or searching for the right website can easily prevent people from following through on giving.
  • As reported by a survey, 81% of donors have concerns around the transparency of the non-profit organization they plan to donate to and also the impact of their giving. In addition, 48% of the respondents had concerns that their charitable donations will not be put to good use.
  • Also, 75% of the planned giving donors have concerns or questions about engagement with charities that act as a barrier for them and 33% of them averred that it is hard to find an opportunity to get more involved with charities or issues.
  • Organizing and tracking their charitable giving (65%), concerns about social and familial obligations around giving (45%), and personal finances and the ability to fund their giving (75%) are among other major barriers for planned gift donors.
  • Baby boomers in a survey highlighted that their inability to identify the starting point for their estate planning acts as a major barrier in planned giving.

Questions The User Has Along The Way

  • As stated in a survey by Fidelity Charitable, one of the key questions/dilemmas that the donors have during their giving journey include "How much can I afford to donate and still have enough funds for myself and my family’s needs and wants?"
  • In addition, some 81% of donors have questions around the ways their donations are utilized and put to use by the charities.
  • Few donors also stated that they have difficulty identifying new nonprofits to support.

Research Strategy:

We began our research by consulting various media articles from Forbes, WSJ, Business Insider, Bloomberg, etc; surveys around US planned giving donors from Pew Research, Deloitte, Nielsen, etc; various planned giving information blogs and charity information blogs such as Charity Navigator, NCF Giving, SSIR.org, etc; and websites, blogs, and filings of some organizations involved in the field of planning giving, such as Campell Company, Fidelity Charitable, etc.
Based on all the above sources, we were able to collect detailed insights around the journey of planned donors in the US and the details around the various stages of the decision-making process, key barriers to giving planned donations, major rewards that donors seek from giving such planned gifts, and the various queries and dilemmas they have during the donation journey.
All the detailed insights found were regarding planned donors in general, rather than targeted towards Lutheran or Christian individuals specifically. During the research, we found sources that stated that the information was applicable for all types of planned donors. For example, something like tax rewards or benefits is a reward during the journey for all kinds of planned giving donors, despite their faith or religion.
Part
02
of three
Part
02

Planned Gift Donors - Demographic Profile

The average age at which planned gift donors decide to give large planned charitable gifts or legacy gifts is between 40 to 54 years. Women are more likely than men to offer large, planned charitable gifts or legacy gifts.

Age

  • About 60% of planned gift donor prospects fall into the age group of 40 to 54, and the majority of people aged over 54 years have already decided on how to gift or will their estates.
  • Millennials are significantly more likely to be part of an "impact investing."

Gender

  • An article on donor-centered planned gift marketing in America reveals that women are more likely to be planned givers of large charitable gifts or legacy gifts. They (women) donate about 3.5% of their wealth, while their counterparts (men) contribute/give about 1.5% of their wealth.
  • High-income earning women are more likely to utilize innovative giving vehicles like donor-advised funds as well as charitable remainder trusts. About 16% of high-income women have once used or currently use a charitable remainder trust, donor-advised fund, or private foundation when compared to 10% of high-income men. About 7% of high-income women have made philanthropic gifts in the past using securities, while a lower percentage of men (3%) have engaged in similar practices.
  • The study assumes that giving through a charitable remainder trust is one way through which Americans give planned charitable gifts or legacy gifts.
  • Women are "significantly more likely" to take part in an impact investing activity.

Race

  • There is limited information publicly available on the race/ethnicity of planned gift donors or individuals who give large planned charitable gifts or legacy gifts.
  • A recent study aimed at understanding the "age, gender, sexual orientation and race" of gift donors (including planned legacy givers) reveals that giving has been shaped by a broad category of donors across different ethnic backgrounds/races. Irrespective of race, about 12% of wealthy Americans intend leaving the majority of their assets/wealth for individuals that are not their heirs, while about 14% of high net worth individuals plan to give out/donate 23% of their assets or wealth to charities.

Income

  • High-income women that make an annual household income of about $150,000 or more are more likely to be planned charitable givers of legacy gifts. They demonstrate some high-level of sophistication when giving by seeking expert advice. The study assumes that seeking the counsel of a specialist before giving indicates that planning charitable gifts is vital to this group of donors.
  • At 7%, high-income women (those earning above $150,000) are more likely to make charitable gifts using securities, than men (3%). "Securities/stock" or real estate often get used during planned giving to maximize philanthropy.

Religion

  • There is limited information on the religious inclination of planned gift donors or individuals who give large planned charitable gifts or legacy gifts.
  • According to Planned Giving web resources, religion and education received about 50% of all donations/contributions in 2014. These statistics indicate that a significant number of donors have religious inclinations.
  • Religious people that have college degrees are "more likely to be planned givers."

Level of Education

  • A recent study on American generosity, those who give and why they give reveals that religious people with college degrees are "more likely to be planned givers."

Research Strategy

The study researched the demographic profile of planned gift donors, such as individuals who give large planned charitable gifts or legacy gifts. Resources reviewed include academic/scholarly publications of the Yale School of Forestry & Environmental Studies. This strategy examined the age, gender, race, income, religion, and education level of these individuals. Insights revealed that the school has several planned giving options. Further, studies to uncover the demographics such as the educational level and religion of those engaging in Yale's planned giving activities did not disclose the required statistics. Alumni members are the ones donating planned gifts for sustainability. Yale does not reveal such demographics, like religion, age, among other investigated parameters.

The study also reviewed Bank of America publications for the demographic profile of planned gift donors (individuals who give large high net-worth planned charitable gifts or legacy gifts). The study assumes Bank of America handles several gift donations. The study reviewed their gender, age, education, religion, among other demographics. This strategy revealed that giving (including legacy giving) is being shaped by donors of various ages, ethnic backgrounds as well as gender identities. Additional studies for the breakdown of the demographics into classes and group reveals that women, along with millennial, are more likely to be givers of high net-worth gifts. There were no insights specific to religion or race of donors.

Expert analysis of the demographics of individuals giving planned gifts was studied. This strategy included an investigation of the demographics of individuals who give large planned charitable gifts or legacy gifts. One of the resources reviewed is Michael Rosen Says web resource. This strategy revealed that high-income women that make an annual household income of about $150,000 and above are more likely to give charitable gifts using securities than men (3%). The study assumes that "Securities/stock" or real estate often get used during planned giving to maximize philanthropy. Additional insight to uncover the race and educational level of women with an average income of over $150,000 that are giving charitable gifts did not uncover any helpful finding.

The study also includes marketing services organizations such as Mini Matters. An investigation was conducted to uncover the demographics of planned givers (donors who give major charitable gifts or legacy gifts often in the context of financial or estate planning). This strategy reviewed their age, educational level, race, among other demographics. Insights revealed that about 60% of planned gift donor prospects are in the age group of 40 to 54, and the majority of them decide on how to gift or will their estates on or before they attain the age of 54 years. Further research to uncover the educational level of donors as of when they decided to plan charitable gifts or legacy gifts did not reveal the required statistics. Such details are not made public.

Due to limited information on the education, and race of planned gift donors, the study reviewed a few resources slightly older than the usual 4-month credibility range. This strategy reviewed books posted on Google. An investigation was conducted to uncover the age educational level and religious affiliation of planned gift donors. Insights revealed that religious people that have a college degree are "more likely to be planned givers." Additional studies to uncover their specific religions were not successful. Such details were not made public.
Part
03
of three
Part
03

Planned Gift Donors - Psychographic Profile

Planned gift donors, who often demonstrate a great sense of loyalty to their non-profit beneficiaries, believe that with their planned gifts, they are leaving a lasting legacy for which they will be long remembered. They typically consult family members, financial planners, tax advisers, colleagues, and lawyers before making a planned gift, and when they do make a planned gift, they often keep said gift secret from their non-profit beneficiaries. Planned gift donors, whose interests often lie in making the biggest social impact possible with their planned gift, respond better to solicitations that evoke positive emotions rather than solicitations that sound or read too technical, legal, or formal.

Values and Beliefs

  • When deciding on planned gifts, donors' priorities and values vary depending on their life stage or their career background. The priorities and values of a retired married couple differ from those of a young married couple with young children, and the priorities and values of a retired C-suite executive differ from those of a working hedge fund manager. The end goal, however, is always to achieve the largest possible social impact with the planned gift.
  • Planned giving donors typically have a high level of loyalty to their non-profit beneficiaries. Although a few donors give planned gifts to organizations they have no history with, non-profit beneficiaries of planned gifts are often organizations or causes that the donors have regularly engaged with, donated to, or volunteered for in the past.
  • According to fundraising consultant Laura Fredricks, donors with planned gifts for organizations are of the opinion that "their gift will be perpetuated well into the future and that they will have a long and lasting legacy through the organization." They trust said organization's leadership, and they find said organization's fiscal management satisfactory. They believe in the mission, direction, and priorities of the organization they are giving to.
  • Most planned gift donors with dedicated planned gift officers believe these officers are stewards who can effectively assist them in selecting and implementing the best planned gift.

Habits

  • Planned gift donors give when their economic or financial circumstances allow them to do so. When giving, they do not compromise their comfort level or the welfare of their loved ones.
  • Planned gift donors are inclined to give a number of planned gifts in the course of their lifetime.
  • Before making or giving planned gifts, donors seek the advice of family members, financial planners, tax advisers, colleagues, and lawyers.
  • Planned gift donors tend to keep their planned gifts secret from their non-profit beneficiaries. In fact, a survey of 7,700 donors with a will revealed that of these donors, over 50% have not informed non-profit beneficiaries of their planned gifts.
  • If planned gift donors were to have planned gift officers, they would prefer young planned gift officers, particularly those below the age of 30.
  • Planned gift donors often make planned gifts when ironing out their estate plan or will.

Interests

  • When it comes to planned giving, donors are more interested in the eventual impact of their planned gift than in the mechanism by which that eventual impact will be realized.
  • As far as planned giving is concerned, interests and needs vary. Some planned gift donors are interested in giving only at death, while some planned gift donors are interested in making a gift in exchange for regular fixed payments.
  • Some are interested in paying the least estate or gift tax possible, while some are interested in giving mortgaged property. There are several types of planned gifts, namely, bequests, gift annuities, charitable remainder trusts, charitable lead trusts, life estate reserved gifts, pooled income funds, and bargain sales. The needs and interests of the planned gift donor dictate the best planned gift option.
  • More than a third of donors have no planned charitable gift in their estate plan or will but express interest in making one.

Likes and Dislikes

  • When approached for solicitation, planned gift donors do not like to see or hear technical, formal, or legal terms. They are turned off by terms such as bequests, charitable remainder unitrusts, charitable remainder annuity trusts, and charitable gift annuities.
  • Dr. Russell James, a Texas Tech University professor of charitable financial planning, found that of prospective donors, 23% express complete disinterest in charitable remainder trusts, but 36% express immediate interest in a similar solicitation that is worded in the following manner: "get an immediate deduction and still receive income from your investments for the rest of your life by making a gift."
  • Of prospective donors, 19% express complete disinterest in charitable gift annuities, and only 23% express interest in charitable gift annuities, yet 50% express immediate interest in a solicitation with the following wording: "receive a tax deduction and make a gift that pays you income for life."
  • As Dr. James found, planned gift donors respond better to 'gift' than to 'donation,' 'a gift in your will' than to 'bequest,' 'a gift that pays you income' than to 'charitable remainder unitrust' or 'charitable remainder annuity trust,' 'a gift that pays you income for life' than to 'charitable gift annuity,' and 'make a gift' than to 'enter into a contract with our charity.'
  • Planned gift donors respond better to terms that remind them of positive emotions, inform them of benefits, or make them feel they are just talking with a family member. Terms such as 'death' and 'die' turn off prospective donors, as donors approached for planned gift solicitations view these terms as distasteful.
  • Planned gift donors respond better when conversations around planned giving start with questions along the lines of "how they would like to be remembered."

Research Strategy

Because psychographic profiles are often determined through surveys and interviews, we began our research by finding surveys and interviews of planned gift donors. While there are surveys on planned giving, including those published by philanthropy experts Giving USA and the Blackbaud Institute, and research firm Cygnus Applied Research, survey results only briefly touched on planned giving, and most survey results centered on demographic characteristics. To build a psychographic profile of planned gift donors, we pulled together insights from sources covering how organizations effectively encourage donors to make planned gifts, such as those published by LinkedIn, non-profit Chorus America, and tax service provider RSM US. From these articles, we were able to gather insights about the interests, likes, and dislikes of planned gift donors. Lastly, to find additional information, we checked what experts have to say about planned giving and planned gift donors. With this last strategy, we were able to find Michael Rosen, a fundraising expert with extensive experience working with non-profits, and his write-up covering the characteristics of planned gift donors.
Sources
Sources