November 2004
Why Do U.S. Donors Leave Bequests?(Part 2) by Adrian Sargeant and Elaine Jay
Go with the flow by Deborah Block and Paul Karps
What's up online by Dan Weeks
A Special Report
Research
This Special Report, of which the article below is Part 2, is the result of research conducted nation-wide in the United States by one of the world's leading charity researchers, Adrian Sargeant.
As Sargeant wrote in our September issue, "Despite the significance of bequest income for the sector, we presently understand very little about why individuals might choose to leave bequests, how they select the organizations they wish to support, and what triggers their decisions to include charity beneficiaries in their wills.
"Nonprofits remain unsure whether bequest marketing activities actually trigger pledges — and, of these, how many individuals actually make changes to their wills. Charities also remain unclear on the best form of approach, whether to segment their donorfiles in some way, and which marketing channels to use."
To underwrite the research that led to this paper, my firm, Mal Warwick & Associates Inc., joined the Association of Fundraising Professionals (AFP) as a sponsor.
—M.W.
Why Do U.S. Donors Leave Bequests? (Part 2) (click here for Part 1)
By Adrian Sargeant and Elaine Jay
NEITHER SUPPORTERS nor pledgers felt there were any significant barriers to making wills — not surprising, given the numbers in both groups that have already done so. Pledgers are significantly less likely to feel there are any barriers.
Respondents were next asked to indicate the greatest barriers they perceived to naming a charity in their estate plans. Again, we employed a five-point scale to measure from 1 = no barrier to 5 = major barrier. The results are reported in Table 8.
Table 8: Barriers to Naming a Nonprofit as a Beneficiary
Barriers Supporter Pledger
Not having enough money to make it worthwhile offering such a gift 3.05 2.68**
The level of family need 3.67 3.20**
Being unable to choose between all the organizations I support 2.62 2.50
Not wanting to commit now, given that my interests might change over time 3.20 2.53**
Not wanting to commit now, in case the work of the organization changes 2.94 2.54**
* = Significant at the 0.01 level of significance
The level of family need appears to be the greatest potential barrier to offering a gift to a nonprofit. Pledgers are significantly less likely to perceive a lack of funds, the level of family need, or the likelihood that priorities might change over time as barriers, which again makes sense given they've already made the decision to leave gifts in their wills to nonprofits.
Supporter data
To address the objective of determining supporter perceptions of communications designed to solicit a legacy, the questionnaires sent to the supporters of the nonprofits in our study were mailed to arrive within a month of the organizations' soliciting legacy gifts from their supporters. The questionnaire could then ask a series of questions of respondents in respect to how they felt about this mailing, whether they intended to respond, and so on.
Fifty-one and one-half percent of supporters could recall receiving the nonprofit mailing, but only 2.2% intended to respond. This percentage is not at all unusual given the singular nature of a legacy solicitation.
Respondents who could remember the communication were asked to indicate how they perceived the mailing. Once again, we used a series of five-point scales, with 1 = strongly disagree and 5 = strongly agree. The results of this analysis are reported in Table 9. A mean score of four indicates agreement with the statements listed.
Table 9: Perception of Legacy Communication
Statement Mean % who agreed
The mailing was informative 3.83 66.0
The mailing was clear 3.87 66.7
The mailing was interesting 3.50 45.9
The mailing was appropriate 3.75 61.1
* = Significant at the 0.01 level of significance
Seventeen percent of respondents who could recall the mailing indicated they had been prompted to consider leaving a legacy, although (as previously indicated) only a small percentage has actually taken action to date or indicated their intention to do so.
Respondents who were prompted to consider leaving a legacy by the mailing they had received were asked to indicate what had appealed to them about offering a legacy gift. The detail of this analysis is reported in Table 10.
Table 10: What Appealed About Leaving a Legacy Gift
Statement Mean Score
My family is already adequately provided for 3.06
I perceive that the needs of X are more pressing than those of my family 2.41
I feel it is important to find a way to support both my family and charity 3.89
It is important to me that the work X does continues on after my passing 2.38
I wish my name to continue to be associated with X even after my passing 1.79
I have no family to provide for 2.98
There are tax advantages for me in offering a legacy to X 2.99
I want to avoid/reduce the payment of Estate Tax 2.67
I would want to be remembered for having supported X 2.70
I want to influence how I will be remembered 2.35
In Table 11, we've displayed a mean score for each respondent on each of these dimensions to indicate how strong each motive was. (Supporters were asked to indicate what appealed to them about the potential to leave legacy gifts, and pledgers were asked what had appealed to them.)
Table 11: Legacy-Specific Motives
Motive Supporter Mean Pledger Mean
Lack of Family Need 2.37 3.13**
Need To Live On 2.80 3.00*
Tax 2.88 2.37**
* = Significant at the 0.05 level of significance
**= Significant at the 0.01 level of significance
Pledgers were significantly more likely to cite a lack of family need and the wish to "live on" as motives for leaving a legacy gift and less likely to see tax as an important factor in making this sort of gift.
The overwhelming majority of recipients didn't alter their views of the nonprofits they supported as a consequence of receiving legacy solicitations, with nearly 10% indicating they were more likely to support the organization in the future. The legacy communication had a negative impact on only 0.4% of the sample.
Pledger data
Eighty-eight and 6/10ths percent of the pledgers responding to the survey indicated to us as third-party researchers that it was their intention to support the organization that had supplied their data to us with a legacy gift.
The detail of the legacy-specific motives for such gifts is depicted in Table 12. Here, as previously, we used a five-point scale from 1 = strongly disagree to 5 = strongly agree.
Table 12: Pledger Legacy-Specific Motives
Statement Mean Score
My family is already adequately provided for 3.84
I perceive that the needs of X are more pressing than those of my family 3.25
I feel it is important to find a way to support both my family and charity 4.36
It is important to me that the work X does continues on after my passing 2.59
I wish my name to continue to be associated with X even after my passing 2.49
I have no family to provide for 2.72
There are tax advantages for me in offering a legacy to X 2.61
I want to avoid/reduce the payment of Estate Tax 2.67
I would want to be remembered for having supported X 1.79
I want to influence how I will be remembered 2.33
Pledgers were also asked what had prompted them to consider leaving legacy gifts. The detail of this analysis is reported in Table 13.
Table 13: What Prompted the Legacy Pledge
Prompt %
A communication from a nonprofit 26.0
Advice or recommendation from a lawyer 6.1
Advice or recommendation from a financial advisor 7.2
I have been aided by the nonprofit 26.2
Advice or recommendation from a friend 3.7
Advice or recommendation from a relative 3.3
Trust
Finally, we explored the extent to which the nonprofits in the study were trusted by both groups of respondents. As Table 14 shows, a very high degree of trust is engendered. Once again, we employed a five-point measurement scale.
Table 14: Trust
Trust Statement Supporter Pledger
To always act in the best interest of the cause 4.30 4.53**
To conduct their operations ethically 4.38 4.52**
To use donated funds appropriately 4.32 4.49**
Not to exploit their donors 4.30 4.47**
To use fundraising techniques that are appropriate and sensitive 4.27 4.49**
**= Significant at the 0.01 level of significance
In every case pledgers are significantly more likely to express high levels of trust in the organizations they support.
Conclusions
(1) A variety of motives drive legacy giving. Individuals who perceive their families are already adequately provided for appear, unsurprisingly, to be good prospects for gifts of this nature. The pledgers surveyed in this study felt it was important to find ways to support both their families and their charitable interests. Although supporters speculated that tax could be a factor in their decisions to offer legacies, pledgers who had actually made this decision were significantly less likely to cite it as a factor. This suggests that while estate planning issues can be the basis for opening a dialogue with a donor, the decision of whether or not to proceed with a gift will ultimately be a function of other, perhaps more personal, issues.
(2) The most common prompts for an individual to consider offering a legacy gift were a communication from a nonprofit or having been helped by a nonprofit. Recommendation from personal or business contacts was less significant. Many nonprofits shy away from approaching the mass of their fundraising database, concentrating their resources on only the very wealthy. Others shy away from approaching service users, volunteers, or other categories of stakeholders. Our results suggest that all those touched in some way by the work of a nonprofit may in fact be good prospects for legacy donations.
(3) Targeting potential legacy pledgers and distinguishing them from the balance of the fundraising database will be problematic. Legacy pledgers are significantly less likely to have children and are marginally older than the balance of the supporter base. They're also more likely to be female. None of the differences we identified, however, would be an appropriate basis for a priori segmentation since, for example, many men also offer legacies and few nonprofits hold data on the number of children or grandchildren an individual donor might have. Segmentation on the basis of age is similarly problematic and may in any case be undesirable, since the majority of individuals we surveyed have already made out their wills. It may be more fruitful to:
a) approach individuals in middle age who are making wills for the first time — or new wills; or
b) approach all older individuals on the database to consider making modifications to their existing wills to include a nonprofit.
In either case, our results suggest the optimal strategy will be to ask every category of supporter on a regular but infrequent basis.
(4) Significant attitudinal differences emerged between pledgers and supporters. Pledgers seem more concerned with performance, professionalism, responsiveness, and communication. They're thus likely to be more demanding of the organizations they support than other supporters and to respond well to a high degree of donor care. In seeking to steward this group, it is thus advisable to take particular care to communicate the ways in which past donations have been used and the real impact on the cause that those gifts helped to achieve.
(5) Contrary to speculation in the popular fundraising press that the solicitation of legacy gifts might be viewed as offensive, we find the converse is true. Donors believe that such approaches are entirely legitimate, and only 0.4% of respondents indicated their future giving would be impacted negatively as a consequence of such a solicitation.
(6) Both categories of respondent identified mailed solicitations, advertisements in the organization's own literature, and presentations to groups of supporters as the most appropriate routes to use for legacy solicitation. Promotion via third parties, such as financial and legal advisors, was seen to be less appropriate, with the telephone viewed as highly inappropriate. It is, perhaps, unsurprising that donors with a track record of giving in response to direct marketing appeals would favor these communication channels for the solicitation of legacies. However, it does reinforce the view that:
a) such media can be used appropriately to solicit legacies; and
b) there's a significant untapped potential here, since few nonprofits in the U.S. presently solicit legacy gifts from the mass of their fundraising/supporter database. Although the average size of the bequests ultimately received will be much lower than those traditionally solicited by the planned giving department, the sheer number of such contributions could constitute an extremely valuable revenue stream.
(7) However, these communications preferences are almost certainly a function of the age of the respondents. Both the pledgers and supporters in the study are in their mid-to-late 60s and are therefore more likely to respond to the traditional, non-intrusive communications used by charities. As subsequent generations move towards retirement, the content and style of legacy communications may have to be reviewed and the use of new electronic media developed.
(8) The supporters who recalled receiving a mailing were generally positive about the communication, and they did not alter their view of the nonprofit as a consequence. A small proportion (2.2%) were also planning to respond.
(9) Only 67% of supporters said they would notify a nonprofit if they decided to make a bequest to it, and a significant proportion of both groups are not motivated by benefits or recognition for their giving. Where recognition is seen as appropriate, very simple vehicles, such as a straightforward letter or receipt, were seen as the preferred options. The relatively low percentage of donors who would notify the nonprofit of their intentions complicates efforts to project revenue from legacy fundraising. Not only will it frequently take many years of investment before the promised legacies begin to accrue, but fundraisers will receive 33% more legacies than they were expecting and thus will be in a position to take the credit for. Our results suggest that legacy metrics should take account of this issue in assessing the relative effectiveness of particular campaigns.
(10) A number of direct marketing agencies have speculated that as many as 80% of legacy pledgers may be untruthful and may not actually be planning to support the nonprofit in this way. Writing as third-party researchers, we can find no evidence this is the case. It appears as though over 90% of pledgers who indicate they have made a change to their wills have actually done so. "Lying pledgers" do exist, but in fairly small numbers. The majority of pledgers will deliver bequest gifts to their chosen charities.
Adrian Sargeant is Professor of Nonprofit Marketing, Bristol Business School, University of the West of England, and Adjunct Professor of Philanthropy, Center on Philanthropy, Indiana University. He may be reached at adrian.sargeant1@btinternet.com. Part 1 of this Special Report appeared in our October issue.
Go with the flow
By Deborah Block and Paul Karps
IN OUR BOOK, every direct mail fundraising letter should have a logic to its structure. For regardless of how many words actually get read, you have to at least pretend the recipient pores over your copy as carefully as you craft it.
At the very least, you're giving her an easy way to skim from point to point through your meticulous prose.
So while appeals may differ in length, message, tone, etc., here's a rough schematic of how we organize the flow of a typical letter:
The lead
To grab the reader's attention, we try to keep the first paragraph to 1-2 lines — especially in acquisition. With three the preferred maximum.
But generally, the lead consists of more than just that first paragraph. A few more paragraphs are usually needed to flush out your opening salvo.
What's at stake
In issue-oriented letters, we'll then introduce the problem at hand, whether the number of acres destroyed by developers or the growing number of homeless in the community. This flows into a broad description of what your organization is going to do about this problem. (For ongoing supporters, thank-yous are liberally mixed in.) If we're touting a cultural attraction, we may give an overview of the museum or an exciting upcoming exhibition, with the punchline being that membership is the best way to take advantage of all this.
The Ask
Once the recipient understands the issue/offer, we'll move on to the purpose of the appeal — to ask her to send a gift. Our first Ask will always appear on page one.
Fill them in
From there, we'll provide more detail about the issue/offer. For instance, we might describe the group's projects to save a threatened landscape or care for the homeless. An acquisition would also include background on the nonprofit's history. In a cultural mailing, we'll high-light key tangible benefits and then go into greater depth about upcoming exhibitions.
Bring it back
After this information-heavy section, we'll bring the letter back to the donor/ prospect with a segue like, "As you can tell, we're doing so much. . ." or "As you can tell, there's so much to experience when you become a member." Often, we'll indent or underline that copy as a visible transition.
We'll then remind the reader how important her support is to the organization's mission. Something along the lines of: "But to move forward, we must count on caring people like you." In a cultural mailing, we'll give a more detailed list of tangible benefits.
From there, it's a logical progression into a final-page Ask.
Time to conclude
We'll try to wrap up with an emotional pull. We may reiterate the threat while telling the recipient the lasting difference her gift will make. On the cultural side, we'll throw in the intangible benefits of membership. And we invariably end on an inspiring high note to help the reader realize how good she'll feel when she takes action. We'll also harken back to the theme presented in the letter's lead.
Finally, in the requisite P.S., we'll review a tangible benefit or deadline or perhaps offer a new statistic — and, of course, ask again for a gift.
Managing Editor Deborah Block and Paul Karps are partners in BK Kreative, 1010 Varsity Court, Mountain View CA 94040, phone (650) 962-9562, fax (650) 962-1499, e-mail bkkreative@aol.com.
What's up online
By Dan Weeks
Ellen (as in "Degeneres," to those out of touch with pop culture) has designated America's Second Harvest as her November Charity of Choice, and she's holding a "Thanks-for-giving" Food Drive to raise money to help end hunger in America.
America’s Second Harvest is the nation’s largest domestic hunger-relief organization. Through their national network of more than 200 regional food banks and food-rescue programs, they're able to distribute 1.9 billion pounds of donated food and grocery products annually.
One of the things I like about their Web site — www.secondharvest.org — is that you find multiple links to their membership and donation page. So many groups seem satisfied with one link, but here you find it under the obvious "Donate Now" as well as under "stop the waste" underneath a constantly updated "Food Wasted Counter," and elsewhere too.
Does your nonprofit offer holiday cards? If not, they probably should. They're a great way for organizations to spread the word and raise money while giving donors an opportunity to send greetings while telling everyone about what's important to them. Second Harvest offers four varieties of holiday cards, offered right at the top of their Web site. .
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