The Lutheran Community Foundation

A recent study suggests when it comes to bequests, many nonprofits and planned giving advisors have been missing the boat.  In spring of 2008, The Stelter Company and research firm Selzer & Company, Inc. conducted a national survey to discover who names charities in their wills, when and why, with some surprising results.

The industry's tendency to focus development efforts on older donors fails to recognize the change in how Americans think about their estates.  This new study reveals that two out of three U.S. residents aged 40 and over (64%) already have wills.  And, the majority of those people who do have wills reported completing them prior to age 50.  Therefore, decisions about including charitable plans in their estate are clearly happening with people much younger than the age group commonly targeted for these types of gifts.

Furthermore, the study documented that:

• Seven percent of Americans currently have made a bequest to charity in their wills.

• Five percent of Americans have a will and say they will definitely or probably make a bequest to charity.
• Five percent of Americans don't have a will but say they will definitely or probably make a bequest to charity when they have this document in place.

The findings indicate that advisors should be reaching out to potential donors when they are in their 40s - at least 10 to 15 years earlier than the timing now widely accepted as ideal. The study identifies two lucrative prospect groups: five percent with wills in place and five percent without - both with plans to make a future bequest to charity. What is exciting is how the second group (those without a will) differs substantially from the first. These are the so-called Secret Givers - secret because they have not previously been on anyone's radar screen.

Who are the "Secret Givers"?

Secret Givers are disproportionately younger (65 percent are age 40 to 54, compared to 37 percent of the population overall); with less education (45 percent have no more than a high school education, compared to 35 percent of the population); single (26 percent compared to 11 percent overall); and have children under age 18 (29 percent, compared to 19 percent overall).  There are also viable prospects within lower income groups. 

The best news? Once a nonprofit is in a will, it's there to stay.  The potential downside for working with younger donors is the fear they will change their mind; however, the data suggests that risk is negligible.  Less than 1% of all those with wills have ever removed a nonprofit.

Most who don't have wills plan to create one in the next five years. 

Asked about the timeframe for making a will, one in three who don't currently have a will indicated they plan to make one in the next couple years; another 30% say they intend to make a will within the next five years.  Of the Secret Givers group, 74% say they plan to create one in the next five years. This is a key finding, indicating a great pool of prospects for estate and charitable planning.

These prospects simply need some education on the options for bequest giving.  A focus group conducted in 2007 indicated many with wills had not considered giving a percentage of their estate to charity.  They are stopped from making a gift because they haven't figured out for themselves how to do so in a way that provides for their family first - a clear case for the need for professional advisors.

The Foundation can help you with sample language, fund options and other considerations, including ideas for how to bring up the topic of charitable giving with clients. 

Click here for the complete "Discovering the Secret Giver" report from Stelter.com