Bequests to nonprofits from high net worth individuals are up 12%

Ruth McCambridge and Mike Keefe-Feldman, Nonprofit Quarterly, 6/20/12

Much has been made of the intergenerational transfer of wealth and its possible effect on charitable giving and now a new U.S. Trust (a division of Bank of America) report of high (and ultra-high) net worth individuals has found an interesting gap between age cohorts on the subject of inheritance. While 76% of those aged 18-46 think leaving an inheritance to children is important, as do 73% of those over the age of 67, among Baby Boomers in the middle of those two demographics, only 55% of respondents said that leaving an inheritance to their children is important. That may be distressing news for some children of Boomers out there, but possibly somewhat heartening news for nonprofits who are already in good relationships with those sixtyish folk. Among the Boomers who don't think it is important to leave money for their children, 31% "said they would rather leave money to charity," according to the report. This is an interesting finding in light of the fact that, according to the Giving USA report, giving by bequest is up an estimated 12.2%, reaching $24.4 billion in 2011. Are we, in fact, due to see that windfall to charity that some have been predicting for years? In a recent interview with NPQ, Patrick Rooney of the Center on Philanthropy at Indiana University said that the increase in bequests is driven by the wealthiest 100 or 200 people who die each year, whether they are philanthropic, and how wealthy they are. The question is, "Who will they give to?" Stay tuned to NPQ for more on this, but in the meantime, make sure you are nice to your sixtyish family and friends because, also according to this report, high net worth people do not always say just how rich they are -- even to their kids.

IRS data shows charitable bequest donors triple their giving at death

Jonathan Gudema, Planned Giving Blog, 4/24/12

Thank you to David Joulfaian, an economist/researcher at the U.S. Dept. of Treasury, for unearthing the following statistic:

On average (based on IRS data from 1986 through 1997), charitable bequests during those years exceeded donors' total lifetime charitable giving by 2.74 times. In other words, IRA data showed that the charitable bequests of estate tax paying donors/decedents on average were triple their during-life giving to charities.

A few caveats on the data - the analysis looked at estates that were required to file estate tax returns and their giving histories (as recorded by the IRS - all presumably itemizers).  This means that not included in the numbers would be smaller estates.  My guess is that the lower value gross estates might have higher rates of estate giving exceeding their lifetime giving. This is not news to planned giving folks.  I have always found it amazing how a simple bequest donor (someone who gave small amounts over life) might easily leave a bequest of hundreds of thousands of dollars and could exceed the total lifetime giving of the most VIP major gift donors - and by a lot!  One person is on the radar, gets lots of attention and the other is off the radar, gets virtually no attention.  Pretty ironic, if you ask me.  In the end, the few dollars spent on promoting planned giving to the masses can sometimes go a lot further than all of the staff time and angst spent on the "high end" donors. Take a look at this U.S. Treasury research paper if you want to see the details.

Commentary: How to identify the best planned-giving donor prospects

Timothy D. Logan, Philanthropy Journal, 10/28/11

When I talk with clients about planned giving, the question that I am asked most often, and the one that is the most important to answer for your program, is: Which of my donors are the best planned-giving prospects?  When you consider analyzing your [donor database] for planned giving, you should consider two things: Identifying the most likely planned-giving prospects; and controlling your planned-giving direct-marketing costs. Many clients choose a data-analysis package or a scoring service. In my opinion, using these services alone represents a "quick fix." Sound planned-giving data analysis is built on three levels: Giving analysis; enhanced data scoring; and segmentation.

> Giving analysis: Focus on frequency of giving -- the single most important indicator for planned giving. Group and rate your donors based on their age and number of gifts they have given over specific periods. Once you have rated your donors, you are ready for the "art" of planned-giving donor segmentation. Are there donor behaviors unique to your institution that signify affinity: attendance at events, donations directed to a specific area, service on boards, committees, etc.

> Enhanced data scoring: The widely known ratings for wealth and planned-giving scoring are designed for working with individual donors. The process described here takes these scores into consideration, if available, but it is important to note that this process is designed to form calling pools or direct-mail segments. These are groups of individuals who are more alike than different.

> Segmentation: By combining giving results and enhanced data scores you can develop two segmentation models: One is created based on the type of planned gift you are marketing (gifts of age vs. gifts of wealth); the other is based on the prospect's life stage. By targeting the right message to the right audience, the gift-type segments allow you to control costs when sending a mailing about a particular planned-giving subject.

If you rely on data analysis alone, you run the very likely risk of missing important potential planned-giving donor prospects.

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Commentary: The dos and don'ts of visual artists' bequests

Christine J. Vincent. The Art Newspaper, July/August 2012 issue

The Robert Rauschenberg Foundation's recent announcement that it aims to surpass the grant-making pace set by the wealthy Andy Warhol Foundation for the Visual Arts is one more sign that the previously little-known field of artist-endowed foundations has moved into the spotlight. The proliferation of these entities is a shot in the arm for the flagging cultural philanthropy field, and for that we are grateful. It would be a mistake, however, to assume that they are the only means artists are using to realise their philanthropic visions and heritage stewardship goals. In fact, recent years have seen remarkably generous bequests by visual artists in the US made directly to museums and universities without the intervening apparatus of a private foundation. Bequests offer an important alternative for the majority of artists concerned with the beneficial disposition of their life's creative works and, as such, deserve closer attention. What makes for a successful bequest?

• The guidance of expert trust and estate counsel is essential. This is true particularly of bequests that establish endowed funds and add works of art, which must be conserved and maintained, to a collection, as well as those that commit an artist's facilities for future or ongoing use.
• If the artist's intellectual property is included, the testamentary documents should be drawn up by counsel knowledgeable about that tricky topic; failure to do this properly can produce a tangle of conflicting interests among beneficiaries and statutory heirs to copyright termination rights.
• Likewise, museums and universities change leaders at a surprising pace, so an artist's intentions should not assumed to be sustained in the years ahead by personal agreements.
• Museums and universities are not likely to consider bequests lacking sufficient resources to fulfil obligations for care and use. Museums must separate their own exhibition activities from sales programmes to handle works intended to generate funds.
• Accounting standards in the US stipulate that the financial value of works intended for sale be reported in museums' annual financial statements. Some museums have faced public criticism for selling bequeathed works of art to support activities other than art acquisitions and direct care of collections, the sole uses permitted by deaccessioning guidelines. An artist's intent, particularly concerning sales of works and use of the proceeds, should be stated explicitly and the nature of the gift communicated transparently by the museum to the public.