Answers to Your Prospects' Questions: Gift Basics

If you want to start a passionate debate among gift planners, you are asking the right question! There are generally two schools of thought on this issue. The first group believes that the purpose of legacy societies is to thank donors, period.  Because most donors of legacy gifts will have passed on before the gift matures, the legacy society allows the charity to provide the donors with thanks and appreciation during their lifetimes, before it is “too late”. Because legacy gifts will not mature until the future, it is really impossible to quantify the value of the gift, since we do not know how long the donor will actually live. Further, since many of these gifts are for a percentage of a residuary estate or the remainder in a qualified retirement account, the amount will vary depending upon a host of factors outside of the donor’s and the charity’s control. Ultimately, this group believes that it is less important to quantify the gift amount (which is uncertain and can change anyway), and more important to simply steward the donors. They do not require a minimum gift amount to enter their societies, but frequently ask the donors to provide a rough estimate and the designation of the gift, so the charity can be sure to use the gift in the way the donor intends. This group is among the majority today. There is a small but vocal group which believes just the opposite. They argue that a donor is much more likely to keep you in the estate plan if they are a member of a legacy society with a minimum gift amount which they have promised. It also ensures that the charity is not spending more on stewardship than it will ultimately get from the estate gift. Finally, a minimum amount allows the charity the quantify the value of its gift planning program and set up a gift planning pipeline of future expectancies.

I am personally in the first camp and strongly recommend that charities do not put a minimum gift amount on legacy society membership. Anything that creates a barrier to stewardship makes it less likely that the charity will ultimately get the gift. For example, there is one charity that I have actually elected not to include in my estate plans because my planned estate gift for them might not meet their minimum requirement for legacy society membership. I don’t know for sure, since the gift was to be a percentage of a pool of funds I am leaving to a group of charities. The net result, they are not getting an estate gift because they made me feel like the estate gift I was planning was not “good enough” for them. It has made it so that they are stewarding the relationship, and over time it becomes less and less likely that I will include them in my plans, even as the total pool of funds for charity in my estate plan increases in value. There is no reason for a charity to take this risk.

Thank your legacy donors with a quality stewardship society, regardless of amount, and the rest will take care of itself. The average charitable bequest nationally is $50,000, which will more than enough to cover the cost of stewardship. One institution I work with has an average bequest of $260,000, and no legacy society minimum gift amount. Legacy societies are not about quantifying the exact amount of expectancies or setting up a pipeline. This can be done in a less formal way without creating barriers to entry to the society. The legacy society is to there to thank your donors. If you keep this in mind, and treat your donors with the care and respect they deserve, you won’t be disappointed with the legacy gifts that mature.