A Case for Gift Planning Early in Donors’ Cycle of Generosity By Wm. David Smith, CAP® CEO & Founder, Heaton Smith Group
H
ealthcare fundraising professionals frequently asked themselves: How can we secure more blended gifts to advance our mission? This question is especially relevant since planned giving in the healthcare subsector is less mature than in higher education. The need for current gifts to healthcare institutions clouds the vision for and execution of an effective planned giving program since deferred gifts may not be realized for eight to ten years hence.
The planned giving landscape has changed significantly since 1969. The fundraising vernacular to describe these programs has evolved from deferred giving, to planned giving, and now the commonly preferred term is gift planning. This change is much more than mere semantics but reflects the growth and sophistication of when and how more mature fundraising programs engage in gift planning discussions with prospects.
As trailing and leading baby boomers reach their late fifties and mid-seventies, respectively, a golden opportunity exists for gift planning.1 The baby boomer generation’s total wealth exceeds $64 trillion.2 Since 40% of boomers are retired,3 the inter-generational transfer of their wealth is currently underway.4 While donors in their fifties and sixties typically have needs and goals that differ from older donors, gift planning offers solutions for all.
Influences in the evolution of gift planning
An evolution in gift planning Bequests in a will or trust were front and center of all planned giving programs for decades and continue to be a priority. However, the Tax Reform Act of 1969 ushered in new definitions, requirements, and tax benefits for what are known as “split interest” gifts. These new gifts included charitable remainder trusts, charitable lead trusts, pooled income funds, and remainder interests in personal residences and farms.5
Three important factors influenced this evolution in the gift planning space: (1) the significant increase in wealth in the US over the past two decades, (2) an increased recognition that gift planning vehicles can address donors’ needs caused by greater wealth, and (3) donors’ desire to make a significant impact on organizations most important to them during life rather than only at death. Let’s consider these three factors in more detail. Increase in wealth. According to the Federal Reserve, the average US household net worth in 2019 was $746,821.05 compared to $189,367.92 in 1989.6 For the top one, five, and ten percent households, net worth increases were equal to or more significant than the general population, as noted in Tables 1-3.
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