What’s My Planned Giving ROI?

What's My Planned Giving ROI?

Nonprofit leadership often ask us “what will our ROI be if we invest in planned giving marketing?”

In medical advertising you often hear “your results may vary.”  Planned giving is that way too. Your ROI depends on:

  1. Timing
  2. How often you market it
  3. When you market it
  4. How cleverly you market it
  5. Difference in constituency (type)
  6. Difference in constituency (financial)
  7. Loyalty
  8. The weather

A corollary to the above question would be, “Which phone system will ring more? Verizon or AT&T?” Obviously, it depends on how much marketing you do.

For as long as I can remember, planned giving programs have been underfunded for one simple reason:

No one knows how to calculate planned giving ROI, and many confuse ROI with COI — a small known phenomenon that kills development shops.

Savvy fundraisers realize there’s a mountain of potential there, but leadership won’t invest because there was no way to give them quantifiable numbers.

Until now.

As The Better Fundraising Co. reports, there’s an actual formula to calculate your planned giving income potential. It comes from Moceanic.Com, and it looks like this:

A x B x C = V

A = The number of your donors who have given 2 or more gifts, and at least one of those gifts was made in the last 18 months.

B = Your successful pledge rate. This is the big variable, the number you can change by what you do or not do. It most likely is somewhere between 0.01% and 5%.

C = Your average bequest. For US charities, it’s around $35,000. If you don’t know your average, this is a good number to use.

When you multiply those three numbers, the answer equals the value of future bequests to your organization — V.

It’s genius, and it adds up. We know that the best planned giving prospects are those who have given consistently to your organization over a long period of time. In fact, that’s often where we recommend you focus your marketing efforts.

It’s also a brilliant way to show your organization’s leaders the COI.

What’s COI?

COI = the Cost of Inaction.

It’s the amount you stand to lose by not implementing, at the very least, a basic planned giving program. It’s the cost of doing absolutely nothing — no marketing, no planned giving handouts, no website … nothing. It can also measure the cost of focusing on the wrong things.

For instance: How much will it cost you in lost short- and long-term gifts if you are fixated on studying legal complexities — like CRUTs and CRATs — you believe you need to learn before initiating a break-through marketing program?

If you are more focused on gaining a deep understanding of estate planning laws than on actual donor stewardship, your planned giving program becomes paralyzed, because you’re not actually taking steps to build the relationships necessary to sustain successful solicitation strategies and campaigns.

The Importance of Planned Giving

A planned giving program is a reliable, cost-effective source of funding. Nonprofits that have solid planned giving programs are more resilient, and better able to weather financial storms. Instead of breathlessly racing from annual fundraiser to annual fundraiser just to keep the lights on, a planned giving program allows a nonprofit to build its endowment and plan for the future.

A planned giving program is also a signal to donors that your organization is serious about its mission, and in it for the long haul.

If you don’t act today, what does it cost your nonprofit? How many game-changing gifts are you missing out on? And how much longer are you going to wait? How much longer can you afford to put off taking steps that will actually make a difference to your organization (and even your career)?

And remember, planned giving is more than just money. It’s about building trust. Reputation. It’s about creating the image you want to portray to the public that you are serious about the future of your organization. Everyone savvy is doing it.

The next time you’re meeting with the boss to discuss funding your planned giving program, run the numbers. Show them your planned giving ROI …. and the COI.

Category: Sustainability

All of our blogs, products and services are proudly conceived, created, reviewed, and disseminated by real humans — not A.I. (artificial “intelligence.”)

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