Gaining Donors’ Trusts

Charities step up their efforts to attract sizable planned gifts

In the late 1980’s and early 1990’s, the University of Missouri at Columbia’s alumni magazine

regularly featured advertisements showing an elderly couple who had made a planned gift.

The ad was nothing fancy, just a snapshot of the smiling donors and the reason they chose to set up a charitable remainder trust.

Long after the ads stopped appearing, Michael Kateman, a university fund raiser, was sitting in his office when a man walked in and pulled from his wallet a well-creased copy of the ad, pointed to it, and said, “I want to do this.” The six-figure gift that resulted “paid for any effort we put in advertising for many, many years,” says Mr. Kateman.

The university’s experience was hardly unusual. Promoting planned gifts often takes a long time to show results — but is usually worth the investment.

Many charities in recent years have come to realize the importance of seeking planned gifts — bequests, annuities, trusts, and other donations that produce a sizable tax break for a donor, and often regular payments besides. Because such gifts are usually made with appreciated assets such as stocks or real estate, they often end up being much larger than annual gifts, which are usually made with cash.

Competition Intensifies

But as planned-giving solicitations proliferate, the growing challenge for charities is to persuade donors to make such sizable donations to their institutions.

Direct mail, in-house newsletters, seminars, informational videos, advertisements in national publications, radio ads, telemarketing, and World Wide Web promotions rank among the most popular tactics that charities are using to get the attention of donors. The trick lies in discovering which strategy works best to attract different types of donors.

To better figure out how to increase its returns, the Nature Conservancy, in Arlington, Va., hired a marketing director for planned gifts three years ago.

“The planned-giving program has always been successful,” says Lynette Brooks, director of legacy programs. “Since we added that position, the growth has taken off even more.”

Last year’s marketing efforts yielded 3,700 inquiries about planned gifts. The conservancy also received about $50-million in cash from bequests and about $30-million from planned gifts that generate income for a donor. (Typically, through such gifts, the donor makes a contribution to a charity, which invests the money to provide the donor with a regular payment; eventually, after the donor dies, any money left over goes to the charity.)

While many of the inquiries about planned gifts are responses to catchy ads that run six times a year in the conservancy’s magazine (for instance, “Caught Up in a Web of Taxes?” reads the caption above a photo of a spider), the organization is now experimenting with direct-mail appeals.

The charity recently sent 10,000 letters about bequests to typical estate donors: long-term members who support several of the conservancy’s programs. Just over 2 percent responded to the mailing by asking for more information.

This fall the charity plans to repeat the bequest mailing, this time to a group of 30,000 members, and in the spring it will do another mailing aimed at donors who might be interested in planned gifts that provide an income stream.

While the Nature Conservancy only markets to its 1.1 million members, other national organizations, like the Salvation Army and the Arthritis Foundation, reach for a broader audience. Those groups place occasional advertisements in publications such as The Wall Street Journal and Modern Maturity.

“A national publication is the easiest and most economical way to generate responses,” says Lindsay Lapole, who oversees planned giving for the Salvation Army’s southern territory — 15 states and the District of Columbia.

National advertisements, however, are not necessarily as effective an option as they once were.

In 1996, the first year the Arthritis Foundation advertised in Modern Maturity, it received over 9,000 responses; the following year the ad, which now included a postcard readers could mail in for more information, generated about 22,500 inquiries. The charity, which is based in Atlanta, estimates that more than $7.1-million in gifts flowed from the annual ads, which ran until 1999. They cost the charity $78,000 to $103,000 apiece. After 1997, however, the number of leads declined each time the ad ran, partly due to increased competition from other groups running similar notices.

To deal with that change, the Arthritis Foundation dropped the national ads this year and instead put its resources into producing its National Estate Planning Week, held in May.

Forty local chapters sponsored events that week. Donors and professional advisers were invited to a series of open forums, discussions, and question-and-answer sessions. Each program began with a speech on progress in arthritis research — the kind of information that led many people to want to attend.

Although such events can be costly, the organization plans to repeat them next year, and is now looking for a national sponsor to offset expenses. The charity can’t afford to slack off on getting the word out about planned gifts: In the past two years bequests have accounted for at least a quarter of its income.

National Estate Planning Week’s emphasis on seminars for donors and their advisers draws a mixed reaction among fund raisers.

Some fund raisers say donors are overloaded with requests to attend seminars that teach them the basics of planned-giving arrangements, while others say no approach is as effective in giving people a good understanding of their options.

Edward Thompson, a planned-giving consultant in Brentwood, Tenn., has found an alternative that deals with both concerns. He attends seminars frequently himself, and then sends donors postcards about his travels, often with a note that says he’s learned something new about planned giving and would like to share it with them when he returns.

“People love to be remembered,” says Mr. Thompson, who found that out when one donor responded to the card with an eight-figure gift.

Seminars for Advisers

In many cases, fund raisers say, seminars are better aimed at advisers than at donors, since such professionals are usually in the best position to explain tax or financial advantages to their clients.

Many charities are increasingly offering seminars and other activities to such advisers, so that when their clients decide to focus on estate planning, advisers will be familiar with a charity’s planned-giving program.

Before the United Way of Allegheny County, in Pittsburgh, even hired a full-time planned-giving officer, it solicited a group of 24 professional advisers — lawyers, accountants, stockbrokers, real-estate agents, and financial planners — to become involved with the organization.

United Way invites them (and their clients, if they wish to bring them) to four meetings a year at which the organization discusses new developments in the planned-giving field and also updates them about United Way’s latest efforts to serve Pittsburgh-area residents. Those advisers are also eventually asked to consider making gifts themselves — and two advisers have indicated that they have included the charity in their wills.

The Community Foundation for Greater New Haven, in Connecticut, also has received a gift from an adviser. A financial consultant who had helped clients set up about $4-million in planned gifts at the foundation said he realized he wanted to do the same thing. He has designated the foundation as beneficiary of a $300,000 planned gift.

“If everyone who was interested in planned giving would market to professional advisers, I think that there would be a whole lot more planned gifts out there,” says Nancy Kyger, the fund’s director of development and communications. “It’s a tremendous marketing tool and makes a great story.”

Online Calculations

However, some savvy donors wish to investigate for themselves how a planned gift would work, so instead of calling up an adviser or asking a charity for a personal illustration they are turning to the Internet.

A handful of charities have started to include a calculator on the planned-giving section of their Web sites, so donors can figure out how much different types of gifts would save in taxes, or how much income various arrangements might generate annually.

“The whole intention behind this is to make information available to people via the Internet which in the past had been the privy of accountants and lawyers,” says Steven Kavanaugh, director of gift planning at Haverford College, in Pennsylvania, which hired the planned-giving software company PGCalc to set up its calculator. Since the software went online in February, the college has recorded about 500 users.

While no gifts may result directly from people who use the calculator, it does give donors one more reason to visit the Web site and think about the college, says Mr. Kavanaugh. However, the promotion has a possible downside: It could minimize contact between a donor and a charity. And a donor could learn about planned giving from one charity’s Web site but decide to give to another.

Teas and Testimonials

One way to avoid that problem is to make sure donors receive multiple messages about planned giving from a charity, both online and offline, says Devon Brown, assistant director of planned giving at the University of California at Los Angeles.

U.C.L.A. sends out repeated solicitations, and as soon as donors commit — no matter how much they pledge — they are acknowledged with membership in the First Century Society. Members of the group, who are invited to an annual tea on campus, currently number about 700.

The university hopes that showing early appreciation of a gift that might not land in the institution’s coffers for many years, even decades, will help encourage planned gifts. It also distributes brochures that include articles about individual First Century members.

That type of “testimonial” ad seems to appeal to donors more than any other approach. But not all donors have time to read the articles. That’s one reason some organizations are turning to telemarketing, a strategy that may seem unworkable because people rarely tell perfect strangers their estate plans.

Two years ago Greenpeace hired Gift Planning Direct, a Los Angeles company that uses a nine-month approach combining phone and mail, to get in touch with 5,000 donors who had given less than $1,000 to the organization.

Callers were trained to discuss planned gifts and chat with donors as long as they wished. The program helped the charity discover about 110 people who had included Greenpeace in their wills without the charity’s knowing it, and 180 people who said they would consider putting the group in their estate plans. The telemarketers also persuaded 30 other people to make planned gifts.

Telemarketing tends to work best with older donors, who might have more time to talk and who often have estate planning on their minds.

But some charities are looking for other approaches that will bring in a very different group of donors: young adults.

“We need to market not quite so exclusively to the older population,” says Mr. Lapole of the Salvation Army. He notes that educating younger people about planned giving serves a twofold purpose: It introduces them to the concept early and also helps those who are assisting parents with estate planning.

“I’m seeing more and more interest from younger people,” says Cindy Sterling, director of gift planning at Vassar College, in Poughkeepsie, N.Y. “Investing and financial planning have become much more popular in recent years. Many of these people have more money than they ever thought they would have at this age and they are intrigued.”

Since many young fortunes are made in stocks these days, setting up a planned gift, such as one that offers an income stream, can help diversify a younger person’s investment portfolio as well as offer tax breaks.

But non-profit groups that encourage those types of planned gifts may not see benefits for decades, making some wonder if marketing to younger donors makes sense.

“We continue to see the prime market as 50 or 60 and above,” says Marc Carmichael, president of R&R Newkirk, a Willow Springs, Ill., consulting company that helps charities solicit planned gifts. “That’s where you spend your first dollar in marketing.”

While those marketing dollars can help get donors in the door, Mr. Carmichael and others say they don’t work without a lot of effort from fund raisers.

“The big thing is personal contact,” says Mr. Kateman of the University of Missouri at Columbia. “Marketing generates leads but closing the gift happens with contact.”