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Planned giving prospects demonstrate significantly different wealth and philanthropy characteristics from major gift prospects. Traditional wealth markers, such as value of real estate, are not accurate indicators of planned giving. The philanthropic activities, such as significant political giving and prior major gifts, that are strong predictors of future major gift philanthropy, are also not accurate indicators of planned giving.

The key factors in identifying planned giving prospects are loyalty to the nonprofit, as evidenced by the number and frequency (not the dollar amount) of gifts, and the age of the prospects.

This article will not differentiate between gifts given before death and gifts given at death. There is currently no methodology to predict what type of planned giving program will most appeal to any specific donor. The information in this article is applicable to all types of planned giving, including bequests, trusts and other planned giving vehicles.

Planned Giving: A Significant and Growing Source of Revenue

According to Giving USA, in 2011 giving by bequest increased by 12.2% to $24.41 billion over 2010. The Council for Aid to Education (CAE)’s Voluntary Support of Education (VSE) survey shows that the 10 biggest higher education fundraisers received 10.5-31.1% of their gifts from planned giving from 2005 to 2010.

Because age is a significant factor in identifying planned giving prospects, aging trends can help predict future giving trends. As of 2010, only one state (Florida) had over 17% of its population over the age of 65, and 26 other states reported that 13.1-17% of their population was over 65, according to the US Census Bureau. By 2030, the same study predicted that all but four states would have 17+% of its citizens aged 65 or older.

Key Trends in Planned Giving

Often, planned giving involves two factors: a desire to support an organization, cause or mission, and an unwillingness or inability to provide a significant gift in the present.

Much of that unwillingness to donate today is driven by fear, uncertainty, and doubt about financial security. According to a 2011 survey by the American Association of Retired Persons (AARP), 57.4% of older Americans are somewhat to much less confident that their income will remain steady, while only 5.6% predicted their income would increase. For planned giving, which asks donors to promise a future gift that will cost them nothing now, this is good news. Donors can support nonprofits in the future without jeopardizing their present financial circumstances.

A second significant trend, a 2009 survey by the Hartford Financial Services Group, shows that 76% of Americans ages 50+ support charitable causes, compared to 60% for Americans ages 49 and younger. As Baby Boomers age, Giving USA expects non-bequest giving to flatten, while bequest giving increases.

View more prospect research statistics.

Wealth and Planned Giving

While wealth is not the most significant predictor of planned giving, the likelihood of a planned gift rises with the size of an estate. According to IRS data as reported in Giving USA 2012, 4-5% of all Americans leave a charitable bequest in their will, but that percentage is significantly higher for those that leave larger estates:

Wealth and planned giving chart

In fact, for estates large enough to file estate tax returns and their giving histories, charitable bequests far exceed lifetime giving. According to David Joulfaian, a U.S. Dept. of the Treasury economist/researcher, a study of 11 years of IRS data concluded that charitable bequests exceeded donors’ total lifetime charitable giving by 2.74 times. Development officers who’ve seen large bequests given by donors whose lifetime donations were much smaller will not be surprised by that statistic.

Development officers will also not be surprised to learn that giving by bequests has risen much faster than the general level of giving. According to Giving USA 2012, total estimated charitable giving by individuals rose by 4.0% from 2010 to 2011, while giving by bequests rose by 12.2% during the same period.

One more significant fact: 78% of planned giving donors gave 15 or more gifts to the nonprofits named in their wills during their lifetimes, according to a survey by Lawyers.com and the CAE VSE survey.

Learn more about the limits of wealth screening.

Understanding the Differences Between Planned Gifts and Major Gifts

The methodologies that effectively identify planned giving and major gift prospects vary, with six of the eight methodologies DonorSearch routinely uses differing significantly between the two groups of prospects:

Planned and major gifts table

Screening methodologies that are effective at finding major gift (and, by extension, capital campaign and annual giving) prospects cannot accurately identify planned giving prospects. Married couples, for example, are much more likely to give major gifts than single adults. However, there is no evidence to show that widows, widowers, and adults who are divorced or never married are more or less likely to include planned giving in their estate planning.

Learn more about major gift prospects.

Planned Giving and Major Gift Markers

The markers that identify planned giving and major gift prospects also show significant variations:

Prospect identification markersDonorSearch Planned Giving Prospect Identification (PGPID)

Because the engagement strategy for planned giving prospects can be lengthy, and development office resources must be used as efficiently as possible, identifying the strongest planned giving prospects is critical.

DonorSearch has developed a specialized prospect research tool, Planned Giving Prospect Identification (PGPID), to more accurately find planned giving prospects. In a project for a major university, PGPID identified 2,259 planned giving prospects based on loyalty, which was 9.5% of the total file which included 23,827 records.

Using a proprietary process that classified every record with a rating of A (most promising) through G, the results made a planned giving program much more manageable for the university:

PGPID chart

Loyalty ratings can be overlaid with location (by state), age, wealth, known philanthropy or other factors, for further analysis and action.

Planned giving is a significant and growing source of gifts for nonprofits of all types. Identifying and cultivating planned giving prospects efficiently can ensure future income for nonprofits of all sizes.

If you’re new to planned giving or want to learn more about how planned giving can boost your fundraising then contact DonorSearch for a free demo today.

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Planned Giving: Identifying Prospects