Most organizations, large or small, public or private, local or national, arrive at the intersection where major gifts and planned gifts cross, come into question, or even merge.
Which road should they take?
- Should the major gift officer learn planned giving?
- Should the planned giving officer become a major gift officer?
- What business model will work best?
- How can we make major and planned gifts work together in a frictionless environment?
When you look left you see the need for cash or liquid major gifts. When you look right you see the need for bequests for the future. But sometimes you forget to look straight ahead and move into what I call–and have called–for over a decade “Asset-based philanthropy”.
What is Asset-Based Philanthropy?
Organizations define the term “major gift” by an arbitrary dollar amount, set for their own convenience. Planned gifts are defined by a gift vehicle. But neither is correct from a donor’s point of view.
In fact, from the donor’s perspective, both of those constructs are irrelevant. From the donor’s point of view, the asset they give philanthropically, whether cash or real estate or stock, is the important factor.
Why would they give this asset and what does it accomplish?
Without understanding why they give, and what they will give, the two functions of the development office cannot be blended successfully.
Come from a Donor Perspective
When an organization creates a major gift level, such as $5,000 or $50,000, or any other dollar amount, it has failed to realize what a major gift is to the donor. If the donor has $100,000 of net worth, a $5,000 major gift level may be hard to reach and he or she can only do it once or a few times. It is therefore a “non-recurring gift.”
However, for the donor with a net worth of $5,000,000, a $5,000 gift is not such a singular major gift. That donor could afford to give (maybe not be inclined to give) a $5,000 gift every year, which would make it a “recurring gift” which has another name—annual gift.
Thus, this definition of major gift is an artificial construct for the convenience of the donee organization.
When the same organization sets up a planned giving program, it is assumed the gifts produced are in the form of a gift structure, such as a charitable remainder trust or a gift annuity. Maybe even a life estate-remainder gift or a bargain sale is the strategy. A bequest is merely a promise of an intended future gift, not really a gift at all. But the strategy or gift vehicle is not the gift. The gift will be the asset given.
For just a moment, let’s drive straight through the major gifts/planned gifts intersection to the real issue—what is the solution to cultivating gifts from wealth?
How to Cultivate Gifts from Wealth
All organizations, large or small, need substantial support in addition to yearly support. Whether an organization calls a program “major giving” or “planned giving”, it is simply saying it is seeking gifts of a substantial amount. So, let’s take a look at it from the donor’s perspective.
The wealth of donors is not their cash in a bank account, it is in their ownership of assets. As a donor’s net worth increases, the share of that wealth held in cash decreases.
The answer to creating a frictionless fundraising environment for both the donor and the donee is this: when you use terms like major gift or planned gift, it automatically sets up a divide, a chasm to cross for management and staff. Two programs, two sets of prospect leads, two budgets, two, two, two.
I agree it is two, but a completely different two—cash or assets. That’s all.
What’s Planned is Major; What’s Major is Planned
Note that all planned gifts, almost entirely of assets, are, in fact, major gifts. Note also that all major gifts, whether of cash or assets are in fact planned. So, why not change the paradigm and be true to the facts of the situation when trying to manage both major and planned gifts—whether it is the role of the major gift officer or the planned gifts officer, you are dealing with a donor’s assets.
You don’t have to “start a planned giving program” if you have a major gift program. You already have one. Planned giving is just a form of fundraising with assets.
Asset-based philanthropy, or ABP as my students call it, focuses on two elements:
- Understanding what assets a donor may own, and
- Understanding how those assets may be used in philanthropy.
How to Build the Intersection
If you happen to have one, you can leave the techno-nerd stuff to a dedicated planned giving officer. However, don’t despair if you’re a small or medium-sized organization struggling with the concern you ought to be doing planned giving, but don’t know where to start or who will have time to do it. You can partner with outside financial advisors to fulfill the technical role.
Your most important job is to learn these two elements of ‘what’ and ‘how’ so you can work with donors who have philanthropic intent, yet may not currently be considering their assets as a place from which their generous intent may be fulfilled. In fact, you can have a highly successful asset-based philanthropy program that is neither major giving nor planned giving. It is neither and it is both. That’s the intersection!
Put Substance over Form
For too many years nonprofits have focused on something not terribly important and have put form over substance. The industry and its professionals have focused on the form of gift—is it a major gift? Is it a planned gift? That’s a waste of precious time and effort.
Over the past ten years, I have witnessed a transformation in many organizations when the focus shifts away from major and planned gifts to asset-based philanthropy. It happens by embracing these two easy elements that meet the needs of both the donor and the done: (1) what a donor owns and (2) how it can be used to make a stellar gift.
Any major gift officer can do it and any planned gift officer can do it.
In fact, the planned giving officer, if you have one, becomes an effective major gift officer and the major gift officer loses the fear and concern of having to learn all those techno-nerd things they thought they had to know. The knowledge base of major and planned giving becomes fused and staff works together in a frictionless environment, one where the staff member is happier and management sees success in better managing staff resources.
Reap the Rewards
The biggest benefit of building a major/planned gifts intersection based on assets is the fund raising professional learns how to:
- Identify new prospect leads based on target market assets, and
- Suggest a strategy that works seamlessly for the prospect and the asset.
The fundraising professional need not be the one who leads the prospect through all the technical ins and outs; this can be referred to someone else. What’s critical is (1) being alert to the possibility of an asset-based gift, and (2) having some basic knowledge of opportunities that may be of benefit to the donor and the organization.
The approach to a prospect becomes easier and more comfortable for both the donor and the fundraising professional. As one major gift officer recently told me, she never would have taken on a gift of a farm, and another gift of mineral interests, had she not learned this easy method of asset-based philanthropy.
Guest author Lynda Sands, JD, MBA, has advised nonprofits, families and businesses in philanthropic planning for 42 years and has trained tens of thousands of fundraisers and financial advisors. She has written over 200 articles and 6 books, founded the subscription newsletter Charitable Gift Planning News, and created Docs in a Box software for charitable document drafting. I have known Lynda from the first year I began in fundraising, when I hired her to help set up both my first major and planned gifts programs. She is among the smartest, most knowledgeable planned giving attorneys out there. But she’s more than that. Never content to be just a practitioner, she has taught for years. If you’re looking for practical, no-nonsense, incredibly thorough help in bringing in larger gifts, today and tomorrow, take a look at her upcoming virtual Plain English Planned Giving course – suitable for students at all levels. The name of the course says it all! Registration ends September 14, and you’ll get 38.75 CFRE credits.