Which do you like first, the good news or the bad news?
But before you answer, what if I told you that the good news is also the bad news? How you or your clients handle this good, bad news or this bad, good news will affect the sustainability of your nonprofit agency.
Baby Boomer wealth transfer forms the glass half-empty or half-full scenario for sustainability. Even accounting for inflation, stock market volatility, political turmoil, and post-pandemic “revenge” spending, the largest transfer of wealth in American history is taking place daily. Reporting in Forbes magazine and the Wall Street Journal estimates the value of this historic wealth transfer between $30-68 trillion—that’s “trillion” with a “t.”
That transfer has a solid potential to inject trillions (with a “t”) into the nonprofit sector through wills, bequests, stock transfers, and other giving instruments. Sounds great, right? But not including essential preparations for planned giving could turn a generous gift into an accounting and programming nightmare for a nonprofit.
Whether you’re a grant writer, fundraiser, development director, or consultant who works with them, you can play an essential role in helping prepare a nonprofit to accept unexpected, larger donations and build sustainability for the communities served. Cherian Koshy, an expert in sustainability for nonprofits, details the best practices and potential pitfalls of the great wealth transfer in the latest episode of the Fundraising HayDay podcast: Strategic Grants & Fundraising for the Win: Play the Long Game (podbean.com). Here are three essential practices you can bring to the table for this significant trend.
- Planned giving program: The term “planned giving” means the opposite when you’re the recipient since the donor’s death determines when the giving takes place, and there’s no way to plan for that, of course. (Wouldn’t it make a horrifyingly fascinating mystery series if someone did?) People who include nonprofits in their planned giving are not required to notify the agencies but often do when asked. Including planned giving messages in newsletters and other donor communications can spur deeper conversations with individuals who may give through family foundations or donor-advised funds. Extensive research on trends in philanthropic giving indicates that people who commit a part of their estate to a nonprofit tend to increase their annual giving, too—a critical finding for boards and executive directors who may think that even mentioning planned giving means that annual giving amounts would decrease.
- Gift Policies and Procedures: Nonprofits with a solid track record of grant awards typically have detailed grant management procedures already in place. But what about stock transfers, donations of valuable art, or even deeds to houses or tracts of land? Bequests can take many different forms. Think through what your agency can and cannot accept, who makes those decisions, and how gifts are processed.
- Spending Policies: Robust and regularly reviewed spending policies can protect your organization in the happy event that an unexpected large donation comes your way. From accounting procedures to levels of approval to a cohesive strategic plan, grant pros and fundraisers can help a nonprofit plan wisely and well. If you are not yet in a leadership role, offer to review current documentation and identify gaps. Detail-loving grant professionals shine at this painstaking but crucial need for sustainability.
For more information about wealth transfer and how it affects sustainability, I again refer you to the entertaining and informative interview with Cherian Koshy on the Fundraising HayDay podcast: Strategic Grants & Fundraising for the Win: Play the Long Game (podbean.com). Here’s a link to the Wall Street Journal article to learn more about wealth transfer trends. https://www.wsj.com/articles/older-americans-35-trillion-wealth-giving-away-heirs-philanthropy-11625234216 Finally, courtesy of Cherian, here’s a link to Texas Tech Professor Dr. Russel James’s PowerPoint on planned giving and annual giving. https://www.slideshare.net/generosity/planned-giving-myths
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