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Planned Giving Is Having a Moment During the Pandemic

Posted: 9/29/2020

Click here to read on Chronicle of Philanthropy

by Eden Stiffman

The Patient Access Network Foundation, or PAN Foundation, works to help underinsured Medicare patients with serious illnesses get the medication they need through grants and advocacy to lower out-of-pocket costs.

In the past, most of the group's donations came from corporations, but the staff started to build an individual giving program a few years ago. In October, fundraisers sharing information about planned giving with their donors.

Before the pandemic, donors had committed about $100,000 in planned gifts to the organization, but over the past several months, interest in legacy giving has skyrocketed. Now about 50 donors have committed more than $750,000 in deferred gifts.

As gift commitments started to come in, fundraisers struggled with whether to press ahead with planned-giving email communications. They worried about offending people. But in the end, they decided the group's information about planned giving was an important resource for donors and the potential gifts were critical to advancing its mission. Staff worked hard to ensure that the tone of the messaging wasn't fatalistic or morbid. Still, they were candid with supporters about their wariness, even in communications that pointed to a free online estate-planning tool.

"We honestly reconsidered sending this email due to the international health crisis," one email reads.

"After discussion and research, we ultimately decided to share this resource with you because, no matter what lies ahead, we want to provide you with all the resources you need to secure the vision you have for your family's future."

Looking forward, CEO Dan Klein sees promise — and maybe just a little peril — in planned giving.
"We're excited about it and are trying to be very careful about how we do ask for support, especially during this period."

The PAN Foundation is not alone in seeing a surge in interest in planned giving in recent months. Between early March and mid-April the Southern Poverty Law Center received word of 50 new bequest commitments, significantly more than it normally sees in a six-week period. The gravity of the Covid-19 crisis has donors contemplating the role charity will play in their legacies. Experts say fundraisers are smart to approach the topic of planned giving sensitively but that it's a mistake to ignore it during the pandemic.

"One of the sayings in planning giving is that it's often around a life event — a new mortgage, the birth of a grandchild, retirement — where people begin to have these reflection times," says Patrick Schmitt, co-CEO of FreeWill, a company that provides free online estate-planning tools. "What we're really seeing now is that the entire country is going through a life event simultaneously."

People who created or updated wills on the company's site in March committed nearly $100 million in new planned gifts. The last week of that month, FreeWill saw a 600 percent increase in bequest commitments compared with the same period in 2019. April numbers were up about 150 percent from last year. And May numbers were up 40 percent over 2019, when there was another surge in commitments following an AARP article about the platform.

The coronavirus crisis is happening against the backdrop of a massive demographic and economic shift.

In the next 20 years, wealthy baby boomers in the United States will pass trillions of dollars to the next generation. Projections vary widely, with some experts estimating a transfer of wealth of $9 trillion by 2027, while others put the figure closer to $68 trillion over the next 25 years.

Meaningful Conversations

A huge number of bequests are being allocated right now, presenting what experts see as potentially a once in several generations opportunity when it comes to planned giving. Schmitt says it isn't necessarily that these people are sick, but the coronavirus is pushing them to start making decisions about what will happen to their estates when they're gone.

Planned-giving fundraisers are used to having meaningful conversations with donors about their lives and legacies, says Crystal Thompkins, national director of gift planning services at BNY Mellon Wealth Management. Thompkins manages a team of planned-giving experts who work with individual donors as well as nonprofit institutions in the administration of their planned-giving programs.

In recent months, her nonprofit clients have spent a lot of time checking in on donors to make sure that they and their loved ones are safe and healthy. "It's not necessarily that unusual for a planned giving officer to be talking to a donor about what's going on in their daily lives," Thompkins says. "This is just making it more meaningful, not so much in service of a gift but really just trying to continue to build on that personal connection in this time of real crisis for so many people."

Her nonprofit clients, most of which are colleges and universities, say not only do donors want to speak to them but the conversations organically lead to talk about how donors can support the organizations.

Many of these conversations started long before the pandemic hit. But now, donors are putting their commitments in writing.

Some types of planned giving may be especially appealing to donors in uncertain economic times, Thompkins says.

Charitable remainder trusts and gift annuities, for example, which provide donors with a steady stream of income during their lives, offer an element of security and stability. "It's not just check-writing philanthropy in the sense that you write the check and the money's gone," she said. "You get a benefit that you don't necessarily get from, say, an annual fund."

Of the charitable-gift annuities and charitable -trust gifts that her nonprofits clients have received since January, 75 percent came in March and April. Year over year, her clients have seen a slight decline in the number of gifts received in 2020, but the average gift size is up 10 percent overo the first four months of 2019.

Bequests may also be appealing because donors who include a charity in their will hold onto those assets and can change their plans, if necessary. Posting bequest language on an organization's website — and making it easy to find — is a simple way to encourage more gifts, says Marilyn Kochan, a gift-planning officer at the Washington National Cathedral in D.C..

In the short term, charities may see the value of donor estates diminish. Stock-market declines and a possible recession that could erode real-estate values mean that charities should expect a decline in revenue from legacy gifts that charities receive from the estates of donors who have recently died, planned-giving scholar Russell James and fundraising consultant Michael Rosen wrote in a recently published white paper.

'A Sense of Autonomy'

The white paper offers insight into the psychology behind the uptick in interest in planned giving.

"Drafting a will or purchasing a life insurance policy is a way for someone to feel a sense of autonomy or control over the current situation," the authors wrote. "A major reason we now see a spike in interest in wills and life insurance is that it gives people an enhanced sense of well-being."

They say that now is both the best of times and the worst of times to be talking about legacy giving.

While some donors may be keen on getting their affairs in order, "talking about legacy planning can be offensive like never before," the authors wrote.

Back in March, for example, the University of Mississippi was criticized when it went ahead and sent a previously scheduled planned-giving email to donors that suggested they revisit their wills during moments of life change. The school apologized for the message, which some recipients perceived as insensitive.

Gary Pforzheimer, president of PG Calc, a planned-giving services company, recently shared advice on talking about planned giving during the crisis.

"Your communications should acknowledge the existence of the pandemic, economic disruption, and a looming recession. If you ignore what is on everyone's minds, donors will think you are out of touch with reality," he says.

At the same time, marketing messaging shouldn't focus on when these gifts come to fruition — which in most cases is at the donor's death, says Thompkins, with BNY Mellon.

"Historically, planned-giving marketing has revolved around donors' stories and really hitting home not about the impact for the individual donor, but the impact for that organization."

Time to Think

Since the coronavirus crisis began, Joe Baldasare, chief development officer at the Dayton Foundation, has been making calls and sending emails to the CPAs, financial advisers, and estate-planning lawyers who are among the community foundation's top referral sources of donors.

Baldasare got responses from about two thirds of the 50 people he contacted. About a third of them responded positively, saying, "So glad you contacted me. I've been working on this estate now. They are ready to do something," Baldasare says.

"I am doing more planned giving right now than I've done in the 19 years I've been at the Dayton Foundation," he says.

From March through May, 11 donors made new planned-gift commitments. That's more than a third of the 30 commitments made during the group's fiscal year, which ends in June.

"There is this fear, maybe subconsciously, or in some people's cases very consciously, of their own mortality," Baldasare says.

Many people also have more time to think. "They are spending more time with their significant other, and they're talking about the what ifs. They're talking about what their legacy is going to be. They're talking about things that they would traditionally put off until a later date," he says. "Well, that later date is here now."

As Schmitt says, "There's only so many times you can repaint a room." People are starting to run out of upkeep chores, and this is one of them.

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