Recent research sheds light on bequest giving (USA)

By Paula Wasley

While most types of contributions slow in tough economic times, giving through charitable bequests usually grows during a recession, fund-raising experts say.

Three new studies seek to help nonprofit groups do a better job of soliciting such gifts by offering insights into which donors are most likely to remember charities in their wills, and why.

In a study that tracked 20,000 Americans over the age of 50 from 1995 to 2006, Russell N. James III, an assistant professor at the University of Georgia, found that among people who donate $500 a year or more to charity, fewer than 9.5 percent had a charitable estate plan. "For those who think the generational transfer will automatically flood their organizations with resources, it's time to think again," said Mr. James. "Without putting in the hard work of generating these planned gifts, 90 percent of donor mortality will simply result in lost current giving." Mr. James's study found that people who didn't have children or grandchildren were the most likely to make charitable bequests. Among the donors in the study who had completed a will, only 9.8 percent of those with grandchildren chose to make a charitable bequest, while 50 percent of the ones without offspring included a provision for charity in their wills. Family Status While fund raisers have long known that family status plays an important role in estate planning, said Mr. James, the study found that it was far more important to know whether a person was a parent or grandparent than how well educated they were, how wealthy they were, or whether they volunteered at a charity. The influence of children on charitable estate planning is so great, said Mr. James, that in comparing two individuals of similar demographic and financial profiles, an individual with grandchildren who has a history of volunteering and making substantial gifts to charity is much less likely to give than another older person who doesn't volunteer or give to charity but has no children. "In fact, even if A had more income, or education, or assets, he is still less likely to leave a charitable estate gift than B," added Mr. James. He found that among the 1,306 people in the study who dropped a charitable bequest from their wills during the nine-year survey, the number-one reason was that they had become grandparents. People who were in declining health and those who stopped making gifts during their lifetime also were less likely to make a bequest. Conversely, for the 1,477 people in the study who added charitable provisions to their will, the decision came after they started to make gifts to charity, their health improved, or their wealth increased. The bottom line, said Mr. James, is that non profit groups need to be more aggressive in soliciting bequests from donors who are childless. "Don't recruit estate givers just by age and giving level. Identify any donor without children. It's such a huge factor that you need to be having a conversation with those individuals," he said. Motivations for Giving Fund raisers may also want to be mindful of the language they use when asking donors to make a bequest, suggests a new study by Adrian Sargeant, professor of fund raising at the School of Public and Environmental Affairs at Indiana University. Mr. Sargeant used transcripts of conversations with eight groups to identify donors' motivations in making charitable gifts or bequests. Among the reasons cited by the groups were a desire for personal benefits or gain in prestige, the perceived efficiency or professionalism of an organization, or a wish to make a difference or leave a legacy. Considering donors' possible motivations can help fund raisers figure out how to appeal to people who might make a bequest, said Mr. Sargeant. For example, he said, many participants said that the quality of communications they receive from an organization influences their decision to give. To capture those donors, he said, nonprofit groups need to make a concerted effort to differentiate bequest donors from others by treating them with extra care and communicating with them frequently. Other organizations might want to structure bequest gifts so that donors would see the benefits of their bequest while they are alive - such as creating an endowed professorship named in honor of the person who has planned a bequest. That approach might appeal to donors who want the prestige that comes with providing a big gift. Crafting Appeals And because people think differently when making decisions about bequests than they do about short-term gifts, said Mr. Sargeant, fund raisers should use different language to make bequest appeals than they would for other types of gifts. While donors who give once a year tend to respond to appeals that use concrete results - such as the fact that a$20 gift will inoculate a child against disease - people who make bequests tend to think in more abstract terms. Donors are more likely to respond to bequest appeals that emphasize the quality of care, the relief of suffering, or dignity provided to clients, he said.

Similarly, he said, unlike people who give yearly, bequest donors are less interested in how an organization will fulfill its mission than in why the mission is important. Fund raisers, he suggested, should emphasize less how the donors' dollars will affect the organization and more how the organization will benefit society.

As charitable bequests are often provoked by major changes in life, such as ill health, the birth of a child, or a death in the family, said Mr. Sargeant, charities need to be making a "drip-feed ask" for bequests - steadily reminding and informing donors about bequest giving to increase the likelihood they will remember the organization when they make a will.

He also urged fund raisers to make bequest appeals to all donors. Fund raisers' tendency to concentrate their efforts on major donors gives others the impression that they don't have enough assets to make a difference. "We need to celebrate not only large bequests but smaller bequests from folks who have a passion for the organization," he said.

Analyzing Demographics

In a study to be published in May, Patrick M. Rooney, director of research at the Center of Philanthropy at Indiana University, analyzed data on 8,000 households taken from a series of state and regional surveys to determine how variables such as gender, age, location, marital status, and frequency of church attendance might affect a person's motivation and propensity to make a bequest.

His analysis showed that 56 percent of the participants had made a will and that 15 or 16 percent had named a charity in their will - a much higher proportion than the 4 to 5 percent of the population that the Internal Revenue Service says make bequests.

His study found little statistical difference overall between the number of men and women who had drawn up wills or made a charitable bequest, although there were some differences among particular types of demographic groups.

For example, the data showed that 27.7 percent of donors who lived in cities or suburbs and had never married said they had named a charity in their will, as compared with 19.1 percent of donors in rural regions who had always been single.

Among men who attended church services once a week, 28.9 percent said they had named a charity in their will, compared with only 17.1 percent of the women who attended services weekly.

The data also found some slight variations in what motivates different types of people to make gifts, which Mr. Rooney suggested may help fund raisers tailor their bequest appeals to those groups.

For example, he said, the data suggest that female donors are more likely to respond to appeals that focus on the impact a bequest can achieve or on the value of helping those with less, while both men and women under 40 might be more responsive to requests that emphasize basic needs.

Rewarding Results

However, among men 65 or older with a household income of \$100,000 or more, 54.5 percent said a major reason for giving was that charities provide better services than the government. When appealing to those donors, said Mr. Rooney, "fund raisers might want to emphasize their ability to work more efficiently than government agencies, or provide services that the government doesn't."