Opportunity:

The United States is presently in the midst of the largest wealth transfer in history. Recently, researchers at Boston College conservatively estimated that $41 trillion will transfer through settled estates during the 55-year period from 1998 to 2052. Charities that are proactive and invest in a planned giving program will benefit from this phenomenon, and the financial rewards are dramatic. If administered properly, a coordinated planned giving effort will endow or expand the charity’s mission in a relatively short period.

Need:

When committed supporters of any charity are guided through the estate planning process from a stewardship perspective, giving comes naturally. Donors merely extend the same stewardship principles to their estate that they exercise during lifetime. PhilanthroCorp’s historical averages illustrate this well. Moreover, a comparison of PhilanthroCorp’s results versus national averages cited in the Boston College study illustrates the importance of a coordinated planned giving effort.

 Problem:

No matter how well a planned giving program is implemented, the program will involve an investment of today’s dollars for future benefits. By targeting planned giving towards older, committed supporters with long giving histories, the payback period of the investment can be shortened and ultimate returns enhanced. However, all planned giving efforts will involve a cash drain during the initial investment period until the desired payback period begins.

Most charities either cannot afford such initial investments in planned giving, or existing leadership lacks the long-term perspective to make current expenditures to secure benefits that may not occur during their tenure. As a result, planned giving is neglected and fundraising is focused on individuals’ liquid assets, which constitute a small portion of their net worth. Consequently, the opportunity to capitalize on the wealth transfer and permanently endow or dramatically expand the charity’s work is often forfeited.

Results:

The financial rewards associated with investing in planned giving are extremely impressive. State University of New York studies indicate that it costs only 8 to 10 cents to secure one dollar of planned gift through a typical planned giving program. PhilanthroCorp’s outsourced planned giving model reduces this to a cost of merely 2.4 cents (average PhilanthroCorp results since inception in 1997).

Simply stated, investments in a well-defined planned giving program will produce benefits at a staggering rate. Historically, every dollar invested in PhilanthroCorp’s services produced $40 of planned gifts (current value). In other words, a million dollars strategically placed in our planned giving services, would be expected to multiply to $40 million in deferred bequests. This $40 million is valued as the current value of the deferred gift; future values at maturity would, of course, be much more. These historical results have improved significantly in recent years. In fact, average results during the last two years have approached 60 to 1.

Solution:

To empower charities to capitalize on the opportunity presented by the current wealth transfer, we propose that grants or designated gifts be sought to underwrite planned giving services. These grants can be expected to be multiplied greatly (over 40 times if PhilanthroCorp is employed) and endow or expand the future work of the ministry. In doing so, the impact of each such grant will be leveraged significantly.

Even if such grants are not a possibility at present, if a small amount of a charity’s budget can be allocated for planned giving each year, enormous benefits can be obtained. Statistics show that if a planned giving program is targeted toward committed, mature supporters (average age 65) that the program will on average cash flow positively within 10 years. Thus, by allocating small budget amounts each year toward targeted planned giving (perhaps the equivalent of the cost of an administrative assistant) and targeting your approach, this investment can be multiplied dramatically (over 40 times) and the time period until planned giving becomes self-sufficient can be very short.