Measuring Planned Giving Progress

Larry Kerstein - Wed, 7/10/2019 - 15:56

Metrics that reflect planned gift activity have evolved over time in response to leadership’s need to see evidence of a return on their planned giving investment. Traditional measurement of planed giving activity has been dollar-oriented – how much was raised in life-income gifts, how much in realized bequest income? However, measuring planned gift activity solely in dollars is imprecise, unpredictable, and reflects short-term thinking.

The Long-Term Nature of Planned Giving

Planned giving by its nature is a long-term endeavor, whose success is most predictably the result of a long-term strategy. Life income and estate gifts are life-long propositions, a characteristic that is attractive to planned giving donors. The flexibility and revocability of the charitable bequest make this type of gift popular with donors. As for life-income gifts, a life-long income stream, whether fixed, or for the more adventurous, variable, gives these gifts their appeal.

For the charity, however, this flexibility and variability complicates things. A charitable gift annuity offers a fixed payment stream, however, the return on investment for gift assets can vary over the life of the gift. The ACGA targets a residuum of 50% in establishing gift annuity rates. Nonetheless, the residua from any annuity is driven by investment returns of the annuity reserve pool and the mortality of annuitants. The distribution from a realized bequest can vary depending upon the terms of the will, outcome of probate, state of financial markets, fees, taxes, and more. Most bequests expectancies are unknown to the charity until realized. Even donors with known bequest intentions are hesitant or unwilling to offer the anticipated size of their estate gift. Charitable bequests are frequently expressed as a percentage of the donor’s estate after paying fees, debts, taxes, and bequests of specific amounts. Donor estimates of the size of an anticipated bequest are frequently wildly inaccurate. To the extent that there is data on historical average and median gift amounts, those figures can be used in projecting the value of the estimated planned gift pipeline. These projections can be unreliable because of the factors mentioned above.

Focusing on Activity

For all of these reasons, planned giving metrics have largely shifted from dollars to activity, on the assumption that the right kind of activity will translate into dollars over the long term. Results vary, but after a sustained, concentrated investment in planned giving activity, it can take as long as five years to see material increases in known expectancies, life income gifts and even longer before seeing increases in realized estate gifts. As such, program evaluation should reflect progress, i.e. activity, within the context of this timing. The primary metrics for assessing planned giving efforts should be focused on three critical areas:

  1. discover (marketing)
  2. development of planned giving prospects (fundraising)
  3. cultivation of known planned giving donors (stewardship)

The more common metrics used to measure activity focus on “significant moves” with top prospects. Significant moves are characterized by relationship building with donors.

  • How many significant moves has the gift officer made with top prospects?
  • How many visits has the gift officer made?
  • How many substantive phone calls have been made with prospects?
  • How many proposals have been delivered?
  • What other steps has the gift officer taken to move the prospect closer to making a planned gift commitment?

Within the context of our three areas of focus, here are the most common ways to measure a planned giving program’s success:

Marketing Activity Fundraising Activity Stewardship Activity
  • Number of targeted direct mailings
  • Leads or activity from website
  • Referrals from professional advisors
  • Number of new prospects
  • Number of proposals sent
  • Number of known bequest intentions
  • Number of communications and/or events that feature planned giving information
  • Number of new donor stories
  • Number of planned giving visits by gift officers
  • Number of unique planned giving visits by gift officers
  • Number of substantive phone calls to prospects
  • Number of blended gifts (outright and deferred combination)
  • Number of development communications that feature a planned giving message
  • Number of referrals from senior leadership and other gift officers
  • Annual visits, phone calls, and letters to donors
  • Birthday cards/calls to donors
  • Number of stewardship (non-solicitation) communications
  • Number of events held
  • Realized bequests processed

Activities and statistics that capture the positive impact of your legacy society are also important to quantify, as these numbers reflect on efforts to meet the long-term relationship criteria:

  • Number of new members each year (you should not report the gross number of members from year to year as some will pass away during the year, leading to underreporting of new gift intentions).
  • Average size of annual-type gifts from donors before and after they joined the Legacy Society.
  • Current gifts that result from the legacy society stewardship efforts.
  • Repeat planned gifts from society members, particularly gift annuities.
  • Increases in the dollar amount of planned gift by members.
  • Average size of realized bequests from legacy society members versus those received from unknown bequest donors.

Industry Comparisons

Finally, comparing your organization’s results against an “industry baseline” could be an effective way of gauging planned giving progress. Some time ago, Katherine Swank of Blackbaud published a white paper in which she offered the opinion that the best metric for how a legacy program is doing is a comparison to industry growth as a whole. Comparing your program to an annual industry aggregate provides a benchmark against which to evaluate the progress of you planned giving program. The report states that planned gifts to charitable organizations have grown on average 4.5% to 5% every year. If your program is growing at that rate, you can have some confidence that progress is being made.

Printer Friendly, PDF & Email