What's new in planned giving motivations and demographics research

Professor Russell James III, J.D., Ph.D., CFP Texas Tech University What's new in planned giving motivations and demographics research New Results from the Lab and the Latest Demographics in Planned Giving

Latest results on the words and phrases that trigger positive responses in planned giving Latest national numbers on who plans and when they change plans

Depressing News Part I: The use of wills and trusts by older adults is falling a lot

U.S. 55+ population with a will or trust 61% 59% 57% 55% 53% 51% 49%

11.5% 11.0% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% Charitable beneficiary among those aged 55+ with a will or trust

13% Charitable beneficiary among those with a will or trust by age 12% 11% 10% 55-64 65-74 75+ 9% 8% 7% 1993 1995/6 1998 2000 2002 2004 2006 2008 2010 2012 2014(p)

10% U.S. 55+ with a charitable beneficiary 8% 6% 4% 2% 0%

65% 60% 55% 50% 45% 40% 35% 30% 25% Age 55+ use of will alone by age 1995/6 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016(p) 55-64 65-74 75+

Age 55+ use of funded trust by age 20% 15% 10% 5% 55-64 65-74 75+ 0%

Depressing News Part II: People change their revocable charitable plans before death a lot

70% 60% 50% 40% 30% 20% 10% 0% 10-Year Retention of Charitable Estate Component 1993/4 to 1995/6 to 2004 2006 1998 to 2008 2000 to 2010 2002 to 2012 2004 to 2014 70+ 50-69

Most realized charitable plans (in red) added within 5 years of death Estates $ Gifted 15% 20% 43% 39% 38% 22% 10% 13%

Actually approaching death (i.e., last survey prior to death) is the #1 most significant predictor for ADDING a charitable component and the #2 most significant predictor for DROPPING a charitable component

Plans destabilize as death nears Post-mortem for largest estates Old data We can see this only in a LIFETIME survey not in a ONE TIME survey

Practice suggestions What now?

Many charities go silent at the most important point of decision Lifetime Giving and Volunteering by Actual Estate Donors 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% Giving ($500+) Volunteering

Count it and forget it doesn t work!

Why traditional counting doesn t work Planned giving fundraising measures the BEGINNING step of a process to generate money Traditional fundraising measures the ENDING step of a process to generate money

Approaches to advance counting Reward continuity 1. Updating present value with revocation adjustments 2. Don t (Instead, count fundraiser behavior only)

Adjusting for risk of revocation The value of an irrevocable gift is an upper bound for the value of a revocable gift, converging as death approaches Discounting for risk of revocation by choosing a higher interest rate generates features similar to directly estimating the annual risk of revocation and remaining life expectancy

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 Share of Face Value 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Remainder @ 2% Present Value of Future Gift Remainder @ 2% w/99% annual retention Remainder @ 2% w/97% annual retention Remainder @ 2% w/95% annual retention Remainder @ 8% Donor Age

Updating present value with revocation adjustments Simply use a higher interest rate with standard IRS remainder interest table Credit the change in value for each reconfirmation at constant rate Ex: Value of $100,000 estate gift using 8% discount rate at age 60=$25,308, 67=$34,749, 73=$44,494, 79=$55,071, 85=$65,412 Each reconfirmation $10,000 credit

Updating present value with revocation adjustments Defensible value Standard IRS tables Incentivizes working with correct age, interest, and capacity Prevents count it and forget it Back office only (not for donor communication) Pick the interest rate that matches the behavior you want to generate

Latest results on words and phrases in planned giving

What is the best front door phrase to make people want to read more PG info?

What is the best front door phrase to get people to read about planned giving information? They have to be interested in finding out more They have to expect to see planned giving information (i.e., not bait and switch )

What is the best front door phrase to get people to read about planned giving information? They have to be interested in finding out more Suppose you are viewing the website of a charity representing a cause that is important in your life. In addition to a Donate Now button, the following buttons appear on the website. Please rate your level of interest in clicking on the button to read the corresponding information.

I am definitely interested Gift planning Planned giving Survey #1: 2,550 respondents Giving now & later Other ways to give Other ways to give smarter Other ways to give cheaper, easier, and smarter

I am definitely interested 3% 4% 7% 16% 20% 23% Gift planning Planned giving Survey #1: 2,550 respondents Giving now & later Other ways to give Other ways to give smarter Other ways to give cheaper, easier, and smarter

Is there a better way to phrase, Other ways to give cheaper, easier, and smarter? Survey #2 (2,750 respondents)

I am definitely interested Other gifts More ways to give Give other ways Survey #2: 2,750 respondents How to give cheaper, easier, and smarter Other ways to give cheaper, easier and smarter

I am definitely interested 8% 14% 15% 21% 22% Other gifts More ways to give Give other ways Survey #2: 2,750 respondents How to give cheaper, easier, and smarter Other ways to give cheaper, easier and smarter

What is the best front door phrase to get people to read about planned giving information? Which of the following types of information would you expect when clicking on the button labeled " " They have to expect to see planned giving information (i.e., not bait and switch )

12 types of planned giving information 1. make a gift of stocks 2. make a gift of bonds 3. make a gift of real estate 4. make a gift in your will 5. make a gift in your living trust Which of the following types of information would you expect when clicking on the button labeled "? How to 6. make a gift by naming a charity as death beneficiary of your life insurance policy 7. make a gift by naming a charity as death beneficiary of your IRA or retirement account 8. make a gift by naming a charity as death beneficiary of your bank account 9. make a gift and, in return, receive lifetime income from the charity 10.avoid capital gains taxes by making charitable gifts 11.avoid estate taxes by making charitable gifts 12.avoid income taxes by making charitable gifts

Overall average for all 12 types of planned giving information I definitely expected this Gift planning Planned giving Giving now & later Other ways to give Other ways to give smarter Other ways to give cheaper, easier, and smarter

Overall average for all 12 types of planned giving information I definitely expected this 20% 12% 7% 15% 19% 12% Gift planning Planned giving Giving now & later Other ways to give Other ways to give smarter Other ways to give cheaper, easier, and smarter

Combined Results I am definitely interested 3% 4% 7% 16% 20% 23% Gift planning Planned giving Giving now & later Other ways to give Other ways to give smarter Other ways to give cheaper, easier, and smarter 12 types of PG info average I definitely expected this 20% 12% 7% 15% 19% 12%

How do you say CGA so that people will want to know more?

Suppose you are viewing the website of a charity representing a cause that is important in your life. In addition to a Donate Now button, the following buttons appear on the website. Please rate your level of interest in clicking on the button to read the corresponding information. (1) I am definitely NOT interested (2) I don t think I would be interested (3) I don t know if I would be interested (4) I might be interested (5) I am definitely interested

I am definitely interested Survey #1: 2,550 respondents assigned to 5 different surveys Charitable gift annuities Life income gifts Get a tax deduction and make a gift that pays you income for life Gifts that pay you income for life Gifts that pay you income

I am definitely interested 5% 9% 26% 28% 29% Survey #1: 2,550 respondents assigned to 5 different surveys Charitable gift annuities Life income gifts Get a tax deduction and make a gift that pays you income for life Gifts that pay you income for life Gifts that pay you income

Does this differ for people of different ages, or for people who make substantial donations to charity?

Group Differences All 5% 9% 26% 55+ 4% 11% 22% Donor $1k+ 5% 10% 26% I am definitely interested Charitable gift annuities Life income gifts Get a tax deduction and make a gift that pays you income for life 28% 25% 27% Gifts that pay you income for life 29% 23% 26% Gifts that pay you income

Is there a better variation of Gifts that pay you income? Survey #2 (2,750 respondents)

I am definitely interested Survey #1: 2,750 respondents assigned to 5 different surveys Gifts that pay you income Gifts that pay you guaranteed income Gifts that pay you Gifts that pay you income and avoid taxes Gifts that pay

I am definitely interested 30% 30% 29% 26% 24% Survey #1: 2,750 respondents assigned to 5 different surveys Gifts that pay you income Gifts that pay you guaranteed income Gifts that pay you Gifts that pay you income and avoid taxes Gifts that pay

What does it mean? When you click on the phrase, what do you think you are going to see?

Which of the following types of information would you expect when clicking on the button labeled " [CGA Term] " How to make a gift and, in return, receive lifetime income from the charity (1) I definitely did NOT expect this (2) I didn't really expect this (3) I don't know if I expected this or not (4) I guess I expected this (5) I definitely expected this

How to make a gift and, in return, receive lifetime income from the charity I definitely expected this Which of the following types of information would you expect when clicking on the button labeled " " Charitable gift annuities Life income gifts Gifts that pay you income Get a tax deduction and make a gift that pays you income for life Gifts that pay you income for life

How to make a gift and, in return, receive lifetime income from the charity I definitely expected this 15% Which of the following types of information would you expect when clicking on the button labeled " " Charitable gift annuities 24% 30% 31% 34% Life income gifts Gifts that pay you income Get a tax deduction and make a gift that pays you income for life Gifts that pay you income for life

Combined Results I am definitely interested Charitable gift annuities Life income gifts Get a tax deduction and make a gift that pays you income for life Gifts that pay you income for life Gifts that pay you income How to make a gift and, in return, receive lifetime income from the charity I definitely expected this

Combined Results I am definitely interested 5% 9% 26% 28% 30% Charitable gift annuities Life income gifts Get a tax deduction and make a gift that pays you income for life Gifts that pay you income for life Gifts that pay you income How to make a gift and, in return, receive lifetime income from the charity I definitely expected this 15% 24% 31% 34% 30%

Previous finding (2014 survey) Interested Now 50% 23% 2014 Survey, 1,418 Respondents, Group F/G Receive a tax deduction and make a gift that pays you income for life Receive a tax deduction and make a gift that pays you income for life called a Charitable Gift Annuity Will Never Be Interested 8% 19%

How should you say that you want to share information about making a gift in a will?

I might be/ am definitely interested Gifts in wills Gifts in a will Tax tips for gifts in a will How to make gifts in a will Gifts in your will Will planning Bequest gifts

I might be/ am definitely interested 26% 26% 27% 27% 28% 28% 18% Gifts in wills Gifts in a will Tax tips for gifts in a will How to make gifts in a will Gifts in your will Will planning Bequest gifts

Previous finding (2014 survey) Interested Now 23% 12% 2014 Survey, 1,246 Respondents, Groups D/E Make a gift to charity in my will Make a bequest gift to charity Will Never Be Interested 12% 14%

Don t use Bequest Interested Now 12% 2014 Survey, 1,203 Respondents, Groups D/C Make a gift by naming a charity as a transfer-ondeath beneficiary on a bank account or retirement account. Will Never Be Interested 26% 9% Make a bequest gift by naming a charity as a beneficiary on a bank account or retirement account. 31%

What about broader estate planning terms?

I might be/ am definitely interested Will planning Legacy planning Legacy giving Planning with trusts & estates Estate planning Estate giving

I might be/ am definitely interested 28% 18% 18% 17% 16% 14% Will planning Legacy planning Legacy giving Planning with trusts & estates Estate planning Estate giving

Instead of a broad estate planning term, what about a long list of several terms?

I might be/ am definitely interested Gifts in wills Gifts in wills, trusts, or retirement accounts Gifts in wills, trusts, retirement accounts, or life insurance Gifts in wills & trusts

I might be/ am definitely interested 26% 25% 24% 23% Gifts in wills Gifts in wills, trusts, or retirement accounts Gifts in wills, trusts, retirement accounts, or life insurance Gifts in wills & trusts

Do people expect to see a broad range of estate planning information? 1. How to make a gift in your will 2. How to make a gift in your living trust 3. How to make a gift by naming a charity as death beneficiary of your life insurance policy 4. How to make a gift by naming a charity as death beneficiary of your IRA or retirement account 5. How to make a gift by naming a charity as death beneficiary of your bank account

Gifts in wills 82% 49% 51% 48% 52% Estate Planning 64% 53% 48% 46% 46% Gifts in wills, trusts, retirement accounts or life insurance 80% 76% 63% 59% 50% I definitely/ guess I expected this 1. Make a gift in your will 2. Make a gift in your living trust 3. Make a gift by naming a charity as death beneficiary of your life insurance policy 4. Make a gift by naming a charity as death beneficiary of your IRA or retirement account 5. Make a gift by naming a charity as death beneficiary of your bank account

26% 16% 24% Gifts in wills 82% 49% 51% 48% 52% Estate Planning 64% 53% 48% 46% 46% Gifts in wills, trusts, retirement accounts or life insurance 80% 76% 63% 59% 50% I might be/am definitely interested 1. Make a gift in your will 2. Make a gift in your living trust 3. Make a gift by naming a charity as death beneficiary of your life insurance policy 4. Make a gift by naming a charity as death beneficiary of your IRA or retirement account 5. Make a gift by naming a charity as death beneficiary of your bank account

Testing Charitable Gift Annuity Ad Messages

Please rate your interest in pursuing the above described charitable giving arrangement What you would do or what another donor has done? Interested Now Definitely/somewhat/slightly All: 55+: All: 55+:

Text only or text and donor picture? Please rate your interest in pursuing the above described charitable giving arrangement: % Interested now (definitely/somewhat /slightly) All: _ 55+: _ All: _ 55+: _

What s the problem with the donor picture? Is it just this photo? This donor age? Is it photos in general or what?

Interested now (definitely/somewhat /slightly) 55+ _ 35-54 _ U-35 _

Interested now (definitely/somewhat /slightly) 55+ 24.4% 35-54 38.4% U-35 44.5% 22.0% 47.4% 32.6% 41.1% 30.6% 30.2%

How do these compare with text only or a non-donor photo?

Interested now (definitely/somewhat /slightly) 55+ 35-54 U-35 All 1 st 44.4% 3 rd 40.1% 3 rd 34.7% 1 st 40.1% 3 rd 28.3% 2 nd 44.6% 2 nd 36.4% 2 nd 36.5% Young Middle Older 24.4% 22.0% 41.1% 38.4% 47.4% 30.6% 44.5% 32.6% 30.2% 35.8% 34.0% 34.0%

Age matched donor pictures are OK Otherwise, use text only or a different picture

Avoid death reminders Previous findings People are less interested in make a gift to charity in my last will & testament that will take effect at my death than when the final phrase is removed. Stories of living bequest donors are more influential than otherwise identical stories of deceased bequest donors New finding Replacing if the annuity holder lives up to different ages with depending on the age when the annuity holder dies and each year you live with until you die reduces those interested in purchasing an annuity from 36% to 26%. Solving the annuity puzzle: The role of mortality salience in retirement savings decumulation decisions, Journal of Consumer Psychology, 2016 (forthcoming), L. C. Salisbury & G. Y. Nenkov