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Capitalizing on the Bequest Boom

Several studies in the not-for-profit sector have shown that bequests constitute the largest proportion of all planned gifts. Further, bequest marketing produces some of the highest ROI of any fundraising channel: the average bequest in North America is about $35,000, or seven times larger than the average major gift.

This has been confirmed by well-known donor communications expert Tom Ahern (who spoke at Global Philanthropic’s Extraordinary Donor Journey 2017), and UK fundraising expert Stephen Pidgeon (who spoke at Global Philanthropic’s Extraordinary Donor Journey 2018). It appears, however, that many non-profit organizations do not put in enough effort into marketing bequests.

A Bloomerang survey[1] of 367 non-profit organizations in North America about their bequest marketing activity, developed by Steven Shattuck, Tom Ahern and Russell James, determined there is an opportunity for greater success.  Russell James commented:

Among organizations receiving any gifts from wills or estates, on average organizations receive an almost 50% greater share of gift income from such gifts than the share of total fundraising they devote to such fundraising. In other words, such organizations devote 4.56% of their fundraising budgets to estate gifts, but receive 6.74% of their total gift income from estate gifts. Compared to other fundraising, fundraising devoted to estate gifts may generate a substantially larger income.”

With baby boomers moving into retirement, there is a massive wealth transfer underway. Not-for-profit organizations need to devote enough resources to capitalize on the emerging bequest boom.  Consider the following data from a wealth transfer study[2]:

  1. $15.4 trillion will be transferred globally by 2030 by individuals with a net worth of $5 million or more. This sum is equivalent to the entire Chinese economy or 17 times the market capitalization of Amazon.
  2. North America will be home to over half of the wealth transferred globally. $8.8 trillion will be passed on in this region, largely due to the scale of wealth in the US. In Europe, a slightly older wealthy population than the global average will pass on $3.2 trillion by 2030, just over one fifth of all wealth transfers. Asia will account for 12% of wealth passed on by 2030, a total of $1.9 trillion. This reflects a substantially younger wealthy population compared to other regions.
  3. The generation inheriting this wealth differs from their elders in outlook. This inheriting generation is comprised of generation X and some millennials. This group is global, highly digital and often seeks to find meaning in the way it uses its wealth. Wealth preservation continues to be important, but these individuals are noticeably concerned about the impact of their wealth on the world, society and the environment, with an increasing interest in impact and responsible investment.
  4. Family wealth transfer will have long-term impact on organizations across industries. From the financial, legal and advisory professions to the luxury and not-for-profit sectors, providers should seek to implement an active, systematic and long-term approach to wealth transfer. This includes talking to clients early about this issue and taking measures to understand, connect and engage with the next generation.

Despite these trends and high ROI, the Bloomerang survey also noted:

  • 44% of non-profits do not focus fundraising and donor relations on wills and other estate gifts;
  • 71% do not generate marketing material devoted to bequest giving;
  • 67% do not have a legacy society, a membership-based stewardship program for legacy donors;
  • 82% do not send a letter annually to donors, asking them to consider putting a gift in their will.

Most charities remain focused on bringing immediate cash in the door, eclipsing the long-term need to build the organization’s future. There is a false assumption that planned giving appeals to annual and major gift donors reduces their current giving. This could not be further from the truth.

According to numerous studies, annual donors are typically the most loyal to an organization. Donors who have given regularly for five years or longer are likely to leave a bequest at least 100 times that of their average annual gifts.  

The sustainability of non-profit organizations can be advanced by capitalizing on the opportunities presenting themselves through the wealth transfer already underway. The time to act is now!

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[1] Bloomerang, The State of Nonprofit Bequest Marketing 2018, https://bloomerang.co/blog/infographic-the-state-of-nonprofit-bequest-marketing-2018/

[2] Wealth-X – A Generational Shift: Family Wealth Transfer Report 2019 New York 142 W. 36th Street, New York, NY 10018