What Donors Actually Did—And How They Did It

Much of what we know about charitable planning comes from living people. They tell us in surveys that they’ve included a bequest in their will, or established some type of life income gift. But we also know that some people simply won't disclose about their giving, and, for some others, social desirability bias leads some to exaggerate their philanthropy. After our survey subjects have died, it’s difficult to compare their reports with actual behavior, especially for estates that fall below the estate tax threshold. There are various formulas for estimating the number of Americans who make charitable bequests, but the truth is, we don’t know exactly how many do.

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It seems we're getting closer. For more than 20 years, the University of Michigan’s Health and Retirement Study (HRS) has been tracking a variety of information on more than 30,000 adults aged 50 and above. Among other things, the study reports whether or not participants have a signed and witnessed will (or funded trust) and whether or not there is a charitable component to the will or trust, which allows the tracking of national trends on who has these documents and how this has changed over time. At the 2013 National Conference on Philanthropic Planning, Russell James (Texas Tech University) and Jackie Franey (BNY Mellon Wealth Management) dig into this data to see if more than 10,000 HRS respondents who died during the survey period actually followed through with charitable gifts they said they’d made. 

“We’ve all talked about testamentary provisions, and tried to figure out how many of our donors have charitable plans,” Jackie says, “but this is a statistically-valid tracking of what people said they would do and what they actually did—and how they did it.”  In addition to the HRS data, Jackie and Russell will also analyze more than 1,000 charitable trusts managed by BNY Mellon Wealth Management, to learn about the donors and their strategies for directing assets to charity.

It’s tantalizing to consider what all of this data will reveal about planned gift donors as a national group. How might it apply to one planner’s work? In some cases, the national HRS data confirms what planners observe in their own experience. For example, charitable provisions actually are most likely to be added or dropped when a donor’s family structure changes (e.g., through marriage, widowhood, or the birth of a grandchild), or as time or events increase a donors’ sense of her own mortality. “Plans are largely stagnant across time,” Russell says, “but then are highly likely to change dramatically during a punctuating event, the strongest of which is actually approaching the date of death.”

He also notes that in many donors’ plans, a will is only a "backup" document.  It doesn't control assets with transfer-on-death (TOD) designations or most jointly held assets and accounts.  “Over the last few decades, TOD designations have expanded dramatically and can now transfer the entire estate including, in some states, real estate. ..We are seeing a lot of charitable plans that are part of a signed and executed will where the will exists after death, but is never probated.” In connection with this, Russell says that the relative strength of a living trust in actually generating a post-mortem charitable transfer was “dramatic.”  The HRS findings show a gradual decrease in the usage of wills and increased usage of living trusts.

  

What donors actually did, and how they did it, informs what charities expect to receive, and when to expect it.  What trends have you observed in your planned gift donors and their methods of giving? What information would you like to get from the HRS data? Jackie and Russell will consider your comments as they prepare their presentation to the National Conference on Philanthropic Planning.  

Trending Forward: Emerging Demographics Driving Planned Giving
Thursday, October 17
8:30-9:30 a.m.

Find out more about Jackie Franey and Russell James and download the mobile app.

More resources from Jackie Franey and Russell James

Charitable Bequest Decision-Making: Practical Lessons from Research Findings (Russell James, slides) 

Charitable Bequest Demographics (Russell James, slides)

Miningfor Gold: Sifting the Database to Strike it Rich (Jackie Franey; Anita Lawson, 2008 National Conference on Planned Giving) 

Bleak the New Black? Motivating Donors in the New Normal (Jackie Franey and Sally Rubin, 2012 National Conference on Philanthropic Planning)

About Barbara Yeager

Barbara Yeager is the director of operations for PPP. She has worked for the organization since 1991. Her responsibilities include managing research projects for the national organization and for councils, managing education and networking programs for the National Conference on Philanthropic Planning, the Council Conversations series, and the Leadership Institute. She moderates groups in the PPP e-community and works with writers to develop original content for publication by PPP. Barbara has a master’s degree in library and information science and worked as a public librarian and as a technical writer and systems analyst before joining the PPP staff. In her community, she is a Girl Scout leader, a community gardener and volunteers as a costumer for community theater groups. 

Why We Must Educate About The Charitable Tax Deduction

With articles like the ones recently posted in The New York Times, we have to be ever more diligent to make sure the role nonprofits serve in our society does not get whittled down to misinformed sound bites that characterize the sector as somehow not deserving of support or at the very least, not deserving of the charitable tax deduction. 

Discussion and debate about the value and impact of the charitable tax deduction is welcomed and should be debated. Too often however, the argument does not move out of tax policy, which only factors where the money will move within the tax structure. What is missing is how contributed money is spent and the impact those contributions make. Not only on the individual recipients, but the economic activity that is generated in communities as well. As the debate continues, we need to make sure our legislators are educated about all aspects of charitable contributions and how the nonprofit sector has a role in doing best what government and business does not. For all our discussions about the charitable tax deduction and whether it stays in the tax code, is altered or removed entirely, the one aspect we all know is that the needs will not be affected. See what PPP is doing in our summer advocacy campaign and access resources that you can use with your local legislators to ensure the charitable deduction is fairly represented in this current climate of tax reform debate.

About Michael Kenyon

Michael Kenyon is president and CEO of the Partnership for Philanthropic Planning. For the past 11 years, Kenyon has served as executive director of the Percussive Arts Society. While at PAS, he led the organization through a relocation and development of Rhythm! Discovery Center, a new museum and educational facility that USA Today recently named one of the top places in the United States for hands-on music making. He has worked with St. Martin’s Hospitality Center for the homeless, Celebrate Youth, which was recognized by the Kellogg Foundation as an exemplary program in the development of young adults and as executive director of the New Mexico Jazz Workshop.

Kenyon holds a Master of Music in Performance Pedagogy from Arizona State University and began his professional life as a musician before transitioning into nonprofit administration. He has taught percussion at Arizona State University and as a percussionist and jazz drummer, has extensive professional performance experience including the, The Glenn Miller Orchestra, New Mexico Symphony Orchestra, Broadway Touring Shows and jazz artists that include Harry “Sweets” Edison, Paquito D’Rivera, and Rosemary Clooney. 

Shake Up at the Epicenter of Philanthropy

“Silicon Valley has become the epicenter of philanthropy in the U.S., if not the world. Along the span of entrepreneurs’ lives, my guess is we’ll look back at this period and see a lot of them did a lot of philanthropy over a long period of time.” Bradford K. Smith, President, The Foundation Center (quoted in the New York Times)

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Where there’s an epicenter, there’s bound to be a shake-up. Your ideal planned gift prospect may be older, with a carefully tended fortune to bestow and a phalanx of conservative advisors cautioning her against frittering away her assets. Perhaps you’ve become adept at the patient art of assuring her that she can afford a modest bequest. Will your mojo still work when you find yourself at the table with a 20-something software designer who wants to change the world right now and who has never in her life heard (or at least, never heeded) the word “no?”

Wendy Chou (Silicon Valley Community Foundation) and Phil Golden (Stanford University) will bring their experience with the famed tech entrepreneurs of Silicon Valley to the National Conference on Philanthropic Planning in October. It’s possible that you’ll never meet someone like Wendy's donor, who made a gift of virtual currency . But those creative—and possibly crazy—donors do have the reputation of being on the cutting edge. “It’s cool to ask yourself, ‘is there a way to make this work?’” Wendy says.

What if…

• The currency is intellectual property, or some other funky asset that offers no clear matrix of risk and reward?
• The donor must be convinced that his gift will have impact—and insists on seeing that impact in person?
• The advisors are creative, not obstructive, and they actually encourage—even demand—innovative approaches to charitable giving?
• The stewardship, and opportunities for cultivating future gifts, will span many decades?

Benefit corporations, mission investing, venture philanthropy, adaptive strategy—it’s not “planned giving” in a traditional sense, but philanthropists have many new options for directing their assets. And many of those options are being tested in Silicon Valley. Have you had an opportunity to think outside the box with donors who are too young or too impatient for the traditional planned gift strategies?  

    

Case Studies of Interesting Gifts in Silicon Valley
Wednesday, October 16
3:30-5:00 p.m.

Find out more about Wendy Chou and Phil Golden and download the mobile app.

About Barbara Yeager

Barbara Yeager is the director of operations for PPP. She has worked for the organization since 1991. Her responsibilities include managing research projects for the national organization and for councils, managing education and networking programs for the National Conference on Philanthropic Planning, the Council Conversations series, and the Leadership Institute. She moderates groups in the PPP e-community and works with writers to develop original content for publication by PPP. Barbara has a master’s degree in library and information science and worked as a public librarian and as a technical writer and systems analyst before joining the PPP staff. In her community, she is a Girl Scout leader, a community gardener and volunteers as a costumer for community theater groups. 

Weathering the Storm through Philanthropic Climate Change

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Many of us in the fundraising profession have crossed paths with some colorful characters who have lived interesting lives and had interesting careers. One of my donors came from very modest circumstances but made a fortune when he invented, patented and manufactured a system that allowed clothing manufacturers to ship clothes on hangers. In the past clothes came to the stores folded and store employees had to put each piece on hangers. It saved retailers a bundle and made him rich. 

Another donor I worked with appeared to be someone of very limited resources at first glance. He certainly was rough around the edges!  It turns out his widow was one of the certified Howard Hughes heirs. The donor made a significant gift in his wife’s memory.

It WAS a little-known fact that in addition to my consulting work with nonprofit organizations around the country, I have helped operate a Community Supported Agriculture (CSA) farm in southwestern Ohio. Like the little-known activities of the donors mentioned above (with the possible exception of a famous family member), my avocation has a lot to teach my vocation. Can we thrive when conditions are less than ideal? Did our planning yield enough to meet the needs of our supporters? Can we get the right mix of volunteers and professional workers to deliver on our promises? Should we try something new, or stick with what’s worked in the past? 

While the CSA team is asking those questions at the beginning of a growing season, my nonprofit clients are asking the same things about their mission-driven work. And PPP is asking them too. The philanthropic climate is changing in response to economic and political and social trends. In fact, it’s always changing. Our job is to look as far forward as possible, and to help our members weather the storms. PPP’s volunteer leaders and staff take that responsibility seriously, and I look forward to my work with and for you this year as chair of the PPP Board. Please use every channel you have, including responses to this blog, listserv and forum posts, survey responses and phone or e-mail contacts, to let us know what you need in order to thrive.       

About Jeff Lydenberg

In addition to serving as the 2013 President for the Partnership for Philanthropic Planning, Jeff Lydenberg is a vice president of consulting at PG Calc, a planned giving services firm headquartered in Cambridge, MA, with offices in Seattle and Cincinnati. Jeff joined PG Calc in 1999. Throughout his career at the firm, he has participated in client support, product development and product training for the company’s software products, Planned Giving Manager and GiftWrap. 

Jeff previously served as assistant director of planned giving at The Cleveland Clinic Foundation and in a similar capacity at the Cleveland Foundation. Prior to that, he practiced law with the Cleveland-based law firm of Thompson, Hine, and Flory. Jeff has a BA in American studies from Kent State University and a JD from Case Western Reserve University School of Law.