Friday, August 30, 2013

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.

Image courtesty of Ambro /
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 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. 

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