Sunday, March 28, 2010

Planned Giving

Many times nonprofits fall into basically two distinctive camps when it comes to talking about planned giving.

First you see small nonprofits with limited staff and budgets that are totally consumed with running their organization and raising the money. They simply don’t feel like they have the time to devote to something that on its face seems so nebulous.

The second type of nonprofit organization is one that is bigger possibly better funded but more than likely does not have one person who is just devoted to only fundraising but it is the job of several which obvious includes in large part the board of directors. Even in this organization planned giving and creating an endowment appears to be more of an after thought versus something that is in the forefront. Instead of thinking about funding that might strengthen the future of the nonprofit they focus solely on what they can see directly in front of them by way of their annual campaign.

If the organization is more motivated many times you see an effort on their part to offer seminars to “help the donor” with their estate planning. The assumption here is that the donor has no other help. While I’m sure this effort helps the proverbial little old lady in the shoe I can only give this organization a C+ for at least addressing the topic of “planned giving.” In my opinion this is not the best motivational tool to encourage someone to give. In fact, when I receive a note from a university or other agency inviting me to a seminar to hear someone I have no knowledge of or have never established a level of trust with, I get more than a little irritated.

I recently read that 70% to 90% of all planned gifts to charity are made with the charity having no knowledge until after the donor’s death. So much for thanking your donor, huh!

So how can this change and who is the best to guide you on his journey? First while I am sure there are a number of well qualified consultants I would like you to give each one a little test. Ask them if they themselves have made a planned gift! If so ask them to tell you about it and why they made it. If they tell you, no, then I’ll let you decide.

It is one thing to tell you what you should be doing and another to have actually done it. I am happy to report that long before I became a consultant for nonprofits I began my philanthropic career at an early age. Giving was both taught by example as well as in actions taken after making an effort to get involved and feeling a sense of responsibility to help others.

By the way as a consultant that does almost all pro-bono work I’m not trying to get more business. Trust me, I’m already busy!

Anyway, I currently have several planned gifts funded by insurance policies. While many organizations might shy away from this type of gift because the giver can always choose to stop paying the premium, I started at a young age so it was something I felt I could afford to do. I realized back then that long after I was gone it would have a lasting effect and impact on the lives of others.

I wish I could tell you that in my case the nonprofits involved did all the right things and were active in keeping me involved, but that would be lying. The fact of the matter is the planned gifts I made were self driven.

A few facts nonprofits need to understand. First less than half of all Americans have a will and the ones that do only 8-9% include a gift to charities. The good part about that percentage is that once a charity is included 97% of the time they will remain in the will.

So how does one go about actively finding that individual who might be willing to make that planned gift?

The answers, while quite simple, are ones that need to be thought about as you review your donor database. People who make a planned gift “care” about the organization as a whole. This level of caring is something that is not often studied or talked about but is something you as a nonprofit need to develop with each and every donor you meet.

You need to make sure that when someone gives to your organization you have some method of establishing that that gift has a greater sense of purpose.

We all at some point have written a check for a utility bill or phone bill. You know the feeling you get seeing the figure owed and thinking about what you paid last month, looking at your balance in your check book and writing the check. Even if you now are doing all these transactions online, unless it is automatic draft, you still have a certain thought process.

The worst thing that can occur to a nonprofit is when a donor makes a donation in the same rote, lifeless automated response. When this happens there is little joy in making a gift. Much like helium birthday balloons with a slow leak, eventually there is nothing happy about it at all.

Coupled with the sense of caring about your organization is another deep rooted emotional response a donor has is the need to do something special.

We all understand what it means to have someone go out of their way to do something nice for you. Not because they have to but because they want to. In this same spirit of openness the donor seeks to share a literal part of their self with the organization.

Sadly most organizations are so self absorbed that if someone truly does care to that level it is missed completely by the leadership. Even if the board or staff recognizes that this person is really special to the organization often times there is a lack of response as a way of just saying thanks for being there.

Many nonprofits, especially those that really don’t understand what giving is all about, incorrectly think that “rich people” want to give to a nonprofit because something is in it for them like a tax deduction. While no one likes to pay more taxes than they have to 65% of the time a gift to charity in a planned gift is NOT for estate tax reasons.

Lastly, I have said this many times and it is worth repeating.

People give to people first before they give to the organization.

So, get out of your comfy office and go visit your donors. Spend some time getting to know them! But let me warn you first, if your motivation is only because you’re thinking about a gift and not a friendship then realize that your will not be able to hide your insincerity, so don’t stay long.

If you have any questions feel free to send me an email or visit my website at:

Wanting To Be Heard!

No matter which side of the health care debate you fall it was obvious that people in both camps were feeling desperate to have their voice heard.

The generation of today is drawn to technology like a mosquito is to a bug zapper! Be it Twitter, Facebook, or YouTube your proud teen is happy to develop carpal tunnel syndrome by achieving new heights in daily texting a minimum of twenty minutes per day. People are buzzing like bees with no unified direction or focus in this grand “social networking” experiment that is tantamount to nothing more than glorified self absorption.

This fevered pitch cannot be maintained forever yet it is not surprising that this frustration is easily carried over to how many nonprofits feel trying to rise above everyday life’s noise to reach their respective donor.

It is hard to get a donor’s attention especially if they are worried about being able to keep their job in this economic slow down or because they are constantly answering their BlackBerry.

Regardless, while nonprofits bemoan this fact it is also quite ironic that nonprofits themselves often times forget that part of their responsibility to the donor is to also listen!

When was the last time you let your donor speak?

I’m not talking about asking them to fill out a survey or questionnaire to see if they think it is a good time for you to raise money for your upcoming capital campaign. What I am talking about is really focusing “one on one” to try to discern how the donor feels about your organization and what you are doing.

We all need to be reminded at times that we are given two ears and only one mouth for a reason!

So, as frustrated as you might feel, realize in this age of technology with all the applications and madness allowing the individual to say whatever they want. More than just a few of your donors might seem a little frustrated because they feel like for whatever reason real or imagined their voice is not being heard or enough attention has not been given to them.

Only you can change the outcome of this scenario. The question remains, will you act on what you have heard or just ignore it like the rest?

Saturday, March 27, 2010

Bill’s Dilemma

Bill Johnson was 63 and felt like the best years were behind him. Susan had been his wife and soul mate of forty-six years and had recently passed away suddenly from cancer. He never expected or planned that he would be the one alone. But now he was and having to deal with it the best way he could.

He could not believe how huge, empty and cold their house felt especially since the couple had been constant companions and never had children.

He began to wonder out loud to himself what in the world would happen now and what should happen to all his possessions once he was gone.

Over the years both Susan and Bill had been generous to several charities. Both Susan and Bill’s parents had died years ago, and Bill only had one younger bother named Roger, and Susan was an only child. Bill had never been close to his brother and only visited once a year usually around Christmas or Thanksgiving.

Bill did not consider himself a wealthy man but he had inherited some property from his family that turned out to be quite valuable especially after Wal-Mart wanted it for a new store.

Both Susan and Bill had worked over forty years before retiring. Susan had worked for the phone company and Bill had worked in sales all his life. His first sales job was with a life insurance company and later he worked for a hardware store before finally settling in to working for a family owned plumbing supply company for fifteen years. He worked the counter and was one of the best and most liked salesman. All the building contractors hated to see him retire because they knew the younger kid that took his place would not be detailed oriented or really go out of his way to help them like Bill did.

Bill and Susan grew up in families that constantly struggled to make ends meat and their upbringing caused them to both want to live modest lifestyles. No fancy cars or clothes and the most extravagant thing Bill ever purchased as a toy for himself was a few extra chisels, files and gouges for his wood whittling hobby.

Their retirement money was invested in conservative investments which were mostly tax free bonds and some blue chip stocks. The money from the sale of the property had been put in CDs. At Susan’s death Bill had totally forgotten about a whole life insurance policy Susan had taken out years ago at the phone company for $250,000.

Susan had always been the bookkeeper in the family and had everything organized in little piles in her office. It took Bill two weeks before he stepped in her office to begin to sort things out. After a few days looking at the check book and adding all the investment figures up he was shocked to see how their nest egg had grown to a nice little sum of over $1.5 million dollars which did not include their house which was paid for or their two older cars.

Bill’s younger brother Roger and his wife Jill had one son named Tom who was 22. Roger and Jill’s lifestyle was completely opposite of Bill and Susan. They had a big house, big new leased cars and even a big John Deer lawn mower! Roger and Jill wanted it all and wanted it all now. While both had good paying jobs, Bill realized they were living way beyond their means and knew they must be drowning in debt.

Like Bill, Roger also had inherited some land from their parents as well but quickly sold it right after he got it so he could buy more toys. While Bill and Roger love each other like bothers do they never understood how both could have grown up in the same house but be so totally different.

Bill knew from past experience that Roger’s way of living was all about making the payment and never about owning anything outright. It didn’t matter what it cost it only mattered if he could get it with no money down and how small the payment might be. In his mind being debt free was just a dream like winning the lottery.

Ten years before their parents died the boys had been given a check for $10,000 with an understanding that the money was to be used to help pay off bills. Roger paid off one credit card and Bill used the money to help pay off the little bit they owed on their home. A year later, Roger had run his credit card bill back up to $10,000 and Bill’s home was paid for.

Bill knew that what ever money he decided to give to his brother he would probably blow through it within a year or so and he wasn’t sure that was the right thing to do.

Roger likewise never understood why Bill never seems to enjoy life and have some fun. He saw his older brother work all the time and never spend much money on anything but that stupid hobby of his. He hated thinking about his childhood and having to wear his older brother’s used clothes and how everything he seemed to get growing up was used.

Roger and Jill felt they were happy but always were juggling the bills to make it work. Living on the edge of their financial ability was all they knew as normal and they were not interested in changing how they lived.

If you were the judging type you might draw your own conclusions as to what was “right” or “wrong” in the lives both bothers live. Regardless it all comes down to personal decisions and choices and living with those actions.

The path and decision you make truly is like a pebble thrown in a pool of water. The ripples, while small, have the ability to effect things that are far reaching beyond your immediate field of view.

Finally, I am reminded of a phrase I was told many years ago: You can only spend it once!

A dollar one spends on one’s self is lost and cannot be spent helping another.

Friday, March 26, 2010

Are you planting seeds or weeds?

As the weather turns warmer you can’t help but think about getting outside and enjoying the sunshine. So far 2010 has been a difficult year and the skies have seemed awful cloudy for most nonprofits.

No matter how the pundits might try to spin it people are more than just a little concerned about their job and the economy. Hearing about unemployment figures on a weekly basis as well as hearing that one out of four people are behind on their mortgage does not make anyone feel warm and fuzzy. Regardless, you have to be rooted in reality and not stick your head in the sand. On the contrary you have to have a plan!

Nonprofits for whatever reason seem to be more confused than ever, which is not good.

In order to survive you have to keep moving forward and remain focused on your mission. It is true you might have to scale back the services you offer or even lay off staff but you must maintain your forward momentum at all costs.

Now would be a good time to do a full review of what I call your “funding pie” to look at the percentages you are getting from each of your funding sources.

Take a moment and record your actual numbers looking in each category:

Program Fees

Board Member Donations

Staff Member Donations

Volunteer Donations

Individual Donations

Local Corporate Donations

Corporate Foundations

Local Family Foundations

Community Foundations i.e. Donor Advised Funds

Local Government Funding

State Funding

Federal Funding

**Nonprofit Endowment Account

**I would also be remiss if I did not mention that all nonprofits should strive to set up their own endowment fund. In my opinion the easiest way to accomplish this is by setting up a fund with your local community foundation. Also I realize that on every board there will be naysayers who will want to argue that you need every penny you have now and you can’t afford to put money aside to start an endowment. My response to that is the organization’s life depends on a long term vision not short term goals.

The following is a true story that might give you a moment to pause and motivate you and your board to set up that endowment account now.

I was on the board of a local nonprofit organization that received a call from a CPA in late December of one year. The CPA had a client that wanted to donate one million dollars to a nonprofit for tax reasons but it had to be done within a few days. There was also a stipulation that the nonprofit had to already have in place an endowment to receive the donation and that the endowment’s guiding document had to state that the principal monies were invested and only a percentage of the money earned were spent.

Unfortunately the nonprofit did not have an endowment in place at that time and lost out on what would have been a huge transformative gift for the organization!

If after you filled out the list you found that you are not receiving monies from one or more categories and need help in figuring out how you can accomplish this, check out my website for ideas: and also feel free to send me an email if you have questions.