Episode 57: Planned Giving Part 4 - Infrastructure, Marketing, Communication, and Blended Gifts

Welcome to another edition of “Around with Randall”, your weekly podcast making your non-profit more effective for your community and here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.

Thanks again for joining me here on “Around with Randall”.  Today, the fourth part of our four-part series on planned giving. The first session we talked about the importance of why planned giving should be a piece of our arsenal, no matter who we are or what we're doing in the nonprofit sector. Number two was a breakdown of a couple of the key most likely planned giving vehicles. We talked about bequests and annuities. We then, in the third, broke down a little bit about trusts and how they are a little bit different, charitable remainder trusts, and also threw in bargain sales because it seems to come up. In this edition, we're going to talk about five or six different issues that surround planned giving and why sometimes I think we make this more challenging and maybe these are really tactical things that you need to have kind of ready to go as a part of this process. So, that will include things like a gift acceptance policy. Who are the most likely people to want to think about planned giving in your world. Also, we'll talk a little bit about blended gifts - the idea of metrics. And we'll kind of do a final close on the marketing efforts that go along with it. Maybe some of the language that occurs when you're in a situation and dealing with a donor. The idea is is to give you a couple of things to check mark and maybe to add to your quiver arrows, in that quiver that you can pull out at appropriate times and that will then conclude this this series on planned giving.

So, let's start with a basic premise. I’ve said this for many years . I don't view planned giving as a separate revenue stream in terms of how we view philanthropy. Planned giving is a subset of major principle gifts. Part of the problem is philosophical in that we try to segment it because it looks and feels so differently, but what we know is that many of our donors, by some estimates recently there's 70 percent of our individuals in our country, so some of those obviously being your donors over 70 years old have some type of estate plan with charitable gift in it. So it's not as if we have to treat them differently, we just have to have the right conversations. What are some of the things that you can do to make it more integrated into your major gift thought process? 

So let's start with the first and that's a gift acceptance policy. Any and every nonprofit needs to have a formalized policy that's approved either by the organization, if you're a large health system or a university, or by the board if you're a smaller nonprofit but every nonprofit should have a gift acceptance policy. And really, this is the playbook of how and what gifts look like and come into the organization, what happens. I’ve written, I can't even tell you how many of these, but I think the thing I would comment on as it pertains to planned giving is is that you need something in the gift acceptance policy that is a third party outside of the development, foundation office, a small group that can help you with complicated gifts, things like land or odd charitable instruments like trusts or annuities. And here's why. It's not meant to be punitive. It's not meant to hold the foundation back. It's actually a protection mechanism. 

Even though I went to law school, and even though I studied this, and even though I think about myself as a little bit of an expert on planned gifts and deal with them quite frequently with clients, I would never want me to be the sole arbiter of making a decision whether somebody's piece of land that they've left to the organization becomes part of the organization if we accept that estate gift because there's complications with it. There are great and legendary stories about organizations accepting certain gifts and they actually become an expense because they can't get rid of it, or it adds - there was a liability to it or it was an environmental issue, which makes you part of superfund, so you're having to pay for now cleanup. There are stories like this. I always wanted a small group, could be a board committee could be a couple people inside your organization, if you're a large organization, the CFO, head of facilities, maybe an outside expert in in commercial property, if that’s, or residential property. You want a small group because they're going to help guide you as a gift officer, or the chief development officer, to not make a bad mistake and those are the kinds of mistakes that can be mission critical. So a gift acceptance policy, which would have parameters around what are the limits of age for charitable remainder trusts or how do we accept certain trusts or having a group that can help walk us through the complications of gifts. Give you one more. You might accept some piece of art that’s, I hope for your sake, like a Picasso, but that comes with all kinds of insurance issues. It comes with where are we going to store it? Are we going to sell it? How do we sell it? 

There's a lot of minutiae that goes into complicated gifts, not cash, not stock transfers, the ones that we're talking about here that group will help protect you. So make sure you have an outside group of three or five people that can approve of these things. Certainly the CDO or the president of the foundation or the executive director would sit on that group as well to really help guide those complicated conversations. The second thing that I hear most often is, well you know, we've we're not sure where our planned gift opportunities are, who are most likely. And this one I always find to be the most startling because they're literally right in front of you. So let me give you some numbers. Giving USA, many years ago, found that there were three major factors that really identified who were the most likely planned giving prospects for any organization. they are the ones who value your mission and your cause, that they believe in your ability to make an impact. They understand what the goals are. And lastly, it's that they want to make a bigger gift. And then on top of that, Giving USA went further to find that 50 percent of planned gifts that they can identify immediately come from your donors. They are people who have made either a certain number of gifts or gifts over a certain period. 

Stelter, which is a planned giving company in Des Moines, Iowa, who I’ve been affiliated and knowledgeable about for… I don't know almost 25 years, Larry Stelter always talked about that the most likely planned giving opportunity are people who have made smaller gifts to your organization over a longer period of time. They don't have to be the biggest donors. They're the most consistent donors. There's something about what you do in this that is critical to their being. That's why they keep making these gifts.

I think about myself, my wife and I. I’m not, I would say it's public knowledge, but it's not private. Where I went to law school is critically important to me. It’s given me great advantages. We're very consistent donors there so the most likely place that we would think of charitable gifts outside of the first level we talked about this in bequests and certainly into trust, our children come first and then you know taking care of our family, but if something would happen to all of us there are provisions for that law school because what we want them to - it’s important to me - we make that gift every month. You have those kind of donors. Are you running reports of people who have made consecutive gifts, who've made the most amount of gifts? Those are your most likely planned giving opportunities, even if they're low. Don't forget, it's not about the amount it's about the consistency.

The other group that you can turn to, and this is particularly true in healthcare, and i'm always amazed at how this group of people isn't involved in a planned giving thought process, are the volunteers. Now during Covid, this has become really hard because we've had really strong restrictions on who can get into our organizations, but volunteers are making gifts of their time. They're consciously saying, “I want to come to your organization.” So if you have a group of volunteers in a university or you're a smaller non-profit, consistently people showing up, you should be paying attention to those things because they're also investing of themselves to be around you and your organization and your mission, and that's a great indicator. So it's those consistent donors and those volunteers - easy pickings in terms of figuring out those opportunities very quickly.

The third thing i want to cover is the idea of blended gifts this is one that has been discussed more and more but frankly isn't executed very well a blended gift is nothing more than a gift of cash or some type of immediate transfer of of of assets cash stock and paired with a plan gift i can give you ten thousand dollars today but i need to give you the other ninety for the hundred thousand dollar gift as a part of my state particularly when you get into major gifts people want to maximize that impact they want to make a difference what we have to do is give them that opportunity many gift officers i've dealt with have come back from various donor meetings we've talked about strategy and they come back and say, “Gosh, you know, they really want to do it but they couldn’t, you know, they were a little concerned about how much money it would be immediately and their situation wouldn't allow them to do it.” My first question every single time is well they indicated they wanted to do more. Did you bring up a deferred opportunity planned gift? And it's probably 99.9% of the time the answer is, “Well, no.” I’m like, “They told you how important your organization was. All you had to do is add something like, well I would never want to do anything that would cause financial harm, but there may be another option if you really like this level of giving. Could we add something into your estate that would pay off the remainder upon you not needing it anymore?” it's interesting how often people aspire to the more and yet we become the challenge or the hurdle for them to get there.

Every major gift - nearly every major gift should have at least some thought of a blended component, at least as a mention, at least as an option. And most the time it's just the opposite. We don't even consider it blended gifts when you make the ask. Always say, and if if you sense that this is not a cash opportunity or a total in cash, we have another way of doing this. If this is that important to you and that will lead you down a path of another conversation this also then bleeds into the idea of metrics. 

So the fourth thing I want to bring up is how metrics need to be set up to support the idea of planned giving. There were three numbers I always wanted as a Chief Development Officer. When I would run those or have my staff run the monthly reports and then I would have that conversation with the CFO and with the CEO, my boss and the board, there was accounting, there was counting, and there was cash. So let me pick these apart for just a second because the first and the third are really easy. Accounting is how finance, through accounting standards, is going to count gifts, pledges, count this year’s estate gifts. Unless they're irrevocable meaning they're permanent, generally do not count. A young CDO will fight this and they will lose every time because accounting has parameters set by national standards and there's no real variance or variation. On that same vein, if we go to the third, which was cash, that's easy. How much cash came into this year? How much cash did we account for? And cash could also include publicly traded instruments. Things that we were going to show and be able to be used almost immediately. The final one is the nebulous one and that's counting, and this is where planned giving ,I think, needs this three numbers on an annual basis. I always wanted to find a way of incentivizing planned giving because they could be the largest gifts. If we don't incentivize in a counting way, not unaccounting but counting, if we don't incentivize that then gift officers will only do the things that they get credit for, which are cash or pledges, and the counting number were the plain gifts ,those were the things that accounting wouldn't recognize. Somebody says “I’ve left you in my estate for $100,000 and it's a big quest. Accounting will not give you credit for that $100,000 not until you receive the money, but that gift officer wants credit for the work and you want to show productivity of that work, not only for that gift officer but for the whole office. 

That's where that middle number comes in. So in a CRM I would say it's $100,000 gift. If we had the documentation it just can't be verbal, there has to be some declaratory statement on paper, or better yet, a copy of the instrument. The request will trust whatever that would give us, a number to put in there, and it would almost be like a soft number and we would then add that up and what that would do is it would allow me to give bonuses to the gift officers because if someone closes a $5 million estate gift I want them to receive credit for that. But the accounting number won't be there. The cash number won't be there, and this is why metrics are really important. I advocate you having these three numbers every month and at the end of every year an accounting number that is by finance standards, a cash number because that's really what the organization wants most often, an accounting number to really give credit in these nebulous kind of in the middle-type gifts that accounting doesn't want to see but you know are critically important.

The final thing i want to talk about here is the idea of marketing and language. Stelter has done some great, and I mentioned them as a company out of Des Moines, has done some great research. It takes several years worth of continuous communication globally, whether it's postcards, e-newsletters, things of that nature, for people to think about it in your nonprofit. Connecting the idea of a planned gift. And if you add to that the more aggressive appropriate conversations with - get with gift opportunities prospects - you then have a built-in planned giving program. You don't need a planned giving officer per se, doesn't mean they're bad, they can be very effective in large organizations, but it's really small organizations that aren't taking advantage of planned giving. So what's a couple suggestions on the language? Well the first and foremost is, don't mention money or death. We talked a little bit about that in the first edition. Those are people, don't make planned giving decisions based on money. They make them based on values, and death is a hard subject for a lot of people. So, you might consider some euphemisms things like after your lifetime or what about your assets or eventually what would you like to do. Is there something that should happen would you like to leave that legacy? These euphemisms will take away a lot of the issues involving both money and death. The second thing is is to concentrate on involvement and support. Why is it that you've given to us so long and 95% of the time they'll tell you exactly what that reason is, and that's the reason the estate gift is possible. Or why are we so important to you? When did we do our very best that you felt the the greatest about our organization? 

You might think of those questions in that language as simplistic. I would tell you that simplistic language will open emotional doors for you as a gift officer to walk in and join that donor in that emotion, to figure out how they might like to think of the organization and their estate. We don't have to make this more complicated. Some of the biggest estate gifts I’ve ever worked on came from the simplest of starting point. Involvement and emotion, and it's constant things, constant thought process, constant mentioning about planned giving, inappropriate ways, whether it's your magazine, whether it's the bottom of emails or letters, whether that's at bottom of remittance envelopes. And blended gifts - it's constant, individual conversations that will lead you into that pipeline, so remember planned gifts aren't separated, they're part of the major gift opportunities, principal gift opportunities. You need that gift acceptance policy, particularly in this case with a group that can help you with those difficult non-cash-type gifts that the most likely people are the people that are closest long-time donors, volunteers. That metrics are important and you needed that, you need that counting middle ground we all should be talking about. Blended gifts and the simplest of language is what's gonna drive success.

Part four of our planned giving - and this is just a highlight - tough to do it all in four 15-to-20 minute podcasts. Hope this gives you a better sense of what's possible for your organization. Don't forget to check out the website that's hallettphilanthropy.com. If you'd like to send me an email that's podcast hallettphilanthropy.com, or if you think what I said was no good or you didn't agree that's reeks r-e-e-k-s at hallettphilanthropy.com. Also recommend you check out the blogs - two or three a week, 90-second reads about what's going on in the world, maybe give you something to think about, challenge your day, maybe think about the world or your work just a little bit differently. Don't forget what you're doing is critical. Nonprofit work is all about changing the world. That's what philanthropy means, love of mankind -  how do I make the world a better place. It doesn't mean money, and I hope you feel that. Which brings me to my favorite saying so I conclude every podcast. Some people make things happen, some people watch things happen, then there are those who wondered what happened. At the end of the day, philanthropy is about people making things happen. Those of us who work, those that give with those, for those ,excuse me, who are wondering what happened, and I don't know a better way to live life. I don't know a better way to wake up every morning thinking gosh I’m making a difference and I hope you feel the same. I’ll look forward to hearing, seeing, being with you next time right here on “Around with Randall.” Thank you for your time today, and don't forget make it a great day.