Bequest, In Memoriam and Tribute Giving

 

In this chapter we explored the topic of bequest/legacy giving. We outlined the potential size of the bequest market and discussed recent trends. We also introduced some of the latest research profiling potential bequest prospects and discussed how to plan a campaign. We concluded by examining in memoriam and tribute fund giving.

 

Bequest Giving

Data on bequest giving in the United States is routinely gathered by the Giving USA study. Trends in this category of giving can thus be easily tracked.

The team at the Center on Wealth and Philanthropy at Boston College developed detailed estimates for the value of estate transfers taking place for the 55 year period from 1998 – 2052. They are of interest to fundraisers as they provide at least a sense of the future for bequest giving in the United States.

 

Profiling Bequest Donors

Over the years several academic studies have attempted to profile bequest givers.Elderly man holding walking stick

Joulfaian (2005), for example, in an analysis of estate tax returns tells us that the propensity to give a charitable bequest increases with wealth and the age of the decedent. The fraction of estates reporting charitable bequests rises with age and peaks at 29.7 percent for decedents age 85 and over. Similarly, the fraction of wealth bequeathed to charity peaks at 17.8 percent for the oldest group. In 2003 donors left an average of 29 percent of their wealth to an average of 3.5 different organizations.  The average number of recipient charities rises with the propensity to give, but interestingly some 40% of donors only support one organization.

The largest beneficiaries of these bequests are the philanthropies (usually private foundations), educational institutions, followed by religious institutions. Combined, these three categories account for 70 percent of all charitable bequests reported on federal estate tax returns. The majority of donors, some 55 percent, give to religious institutions. But these account for less than nine percent of total charitable bequests.

While data on actual bequest givers is sparse there have been numerous surveys of donor intentions allowing us to paint a picture of a typical bequest ‘pledger’ or  someone who has pledged to include a bequest in their estate. The Partnership for Philanthropic Planning, for example, published detailed information on this topic in 2001.

There is also data available from the Center on Philanthropy on this topic – although we urge caution when interpreting their finding that women and men are equally as likely to include a nonprofit in their will. This may be so, but it does not mean that men and women are equally likely to leave a bequest. Women tend to live longer than men and so in many cases will be the individual responsible for actually taking decisions about how family assets will be disposed of.

We particularly like the work of economist Russell James III who recently completed a study entitled ‘Causes and Correlates of Charitable Giving in Estate Planning’. It reviews five waves (1996-2006) of the University of Michigan Health and Retirement Survey, involving more than 100,000 people.  The study presents the first comprehensive longitudinal analysis of charitable bequest behavior among older adults.  The research uncovers the factors associated with individuals adding or removing a charitable bequest to their estate plans. For a copy of the research findings – click here.

There was also a study conducted a few years ago at the Center on Philanthropy in collaboration with Campbell and Company.

 

Motives for Bequest Giving

Chapters 4 and 5 have already examined the topic of donor motivation in some depth. Many of the motives described there for annual giving are of equal relevance in the domain of bequests. Many donors give, for example, because they want to pay back the nonprofit for service they have received, because they want to make a difference, or because they feel it is their duty to support the organization in this way. Other legacy specific motives include:

Need To Live On

McGranahan (2000) found that testators who gave more to individuals outside their immediate families were more likely to give charitable bequests. This suggests that people making charitable bequests may be significantly more concerned to influence how they will be remembered. This was confirmed by Sargeant et al (2006) who identified that some bequest donors are motivated by the need to ‘live-on’ through the work of the charity. This suggests that nonprofits should identify ways in which they can provide a lasting ‘legacy’ for those donors and particularly higher value donors, that desire it. Fundraisers need to clarify the exact nature of this need and the forms of recognition that would be deemed most appropriate to meet it. For some this may be as simple as a mention in book of remembrance, while for others a more public expression of gratitude may be desired.

Lack of Family Need

The lack of family need is the most commonly cited reason by pledgers for offering a charitable bequest. When the needs of close relatives, relatives and friends have been taken care of, a charity may be entered as a beneficiary in a will. While intuitive, this is also a little sad. It is difficult to believe that the majority of beneficiaries of a will would ‘regret’ the donation of a few thousand or even a few hundred dollars, to a lifetime passion of the decedent. A will is the last opportunity each of us will have to express who we are. In the view of these authors there is therefore a clear role to play for bodies such as Leave A Legacy to challenge the assumption that a nonprofit should always be the last consideration in a will.

Spite

There can be little doubt that a small but significant number of bequests are also motivated by spite. Wills have a fine tradition in this regard. Historically some have conditioned bequests on the cutting of hair, beards and moustaches. Other wills have dictated lifestyle choices for the would-be beneficiaries, such as choice of residence, school, occupation, hobby, attire and even spouses. The poet Heinrich Heine, for example, left all of his fortune to his wife, but only on condition that she remarry. He conditioned his bequest in that fashion, so he said, in order that ‘then there will be at least one man to regret my death,’ Menchin (1963, p79). Whether the condition was complied with and if not, whether the money went to charity, is not recorded! However a number of charities undoubtedly benefit from bequests because the individual has fallen out with their immediate family and as a consequence desires that they should not benefit from their estate. For some spite can be a powerful motive but probably not one for the fundraising profession to advocate.

In our recommended reading section we list many articles that have explored the motives of bequest givers.

 

Soliciting Bequests

Nonprofits can solicit a variety of different forms of bequest.

A specific bequest where individuals can include an outright gift in their will. This might be a specific asset such as securities, real estate or tangible personal property.

A pecuniary bequest. This takes the form of a fixed sum of money. It is worth noting that pecuniary legacies tend to decrease in value over time due to rises in inflation and should be reviewed in order to maintain their original intended value. For example, a bequest of $1,000 written into a will in 1980 would now be worth less than $380.

A residuary bequest.  In this case the nonprofit receives all or a percentage of the remainder of the estate after all other provisions of the will have been fulfilled and all estate-related expenses paid.

A contingent bequest. Donors can also name the nonprofit to receive a bequest but only in the event of the death of other named beneficiaries. In this way, donors can guarantee that their loved ones are cared for first  and that their charitable wishes are honored if there are sufficient assets to do so.

From a nonprofits perspective a residuary bequest is likely to be of substantially greater value than a specific or pecuniary bequest. In the UK, for example, where the value of all bequests are recorded the value of a typical residuary gift is $77K, while the average value of a pecuniary gift is currently closer to $4.2K. A huge difference.

To solicit bequests organizations should:

  • Ensure that Board members, fundraisers and volunteers lead by example and sign up to supporting their nonprofit in this way.
  • Integrate bequest solicitation messages with the organization’s newsletter or annual communications.
  • Consider an occasional ‘solus’ solicitation.
  • Develop information provision online.
  • Consider the development of a bequest society.

Crawford and Hartwick (2004) argue that bequest societies provide four clear benefits:

  • They provide a forum for the charity to express appreciation to it’s   members
  • They serve as an incentive for non-members to make similar plans
  • Since most estate plans can be changed at any time before the donor dies, a planned giving society can provide a regular reminder to donors of the importance of their future gifts
  • They can bring members closer to the charity and may provide the opportunity to ask for current gifts

We were unable to find many worthwhile web resources that detail how best to solicit legacy/bequest income, but we can recommend the Institute of Fundraising’s Code of Conduct for Legacy Fundraising. Readers outside of the UK should obviously ignore references to the law, but the balance of the advice offered is still of relevance. Like of all the Institute’s Codes, it is packed full of very practical advice and guidance.

 

Public Initiatives

Fundraisers should also be aware of the public campaigns to support legacy giving being conducted in their country. Where appropriate, they may even wish to consider participating themselves.

In the U.S. LEAVE A LEGACY is a public awareness campaign designed to inspire individuals to make a charitable bequest. Campaign resources and an invitation can be found on the organization’s website.

The U.K. equivalent of this campaign is Remember A Charity. This campaign is funded by a wide range of UK charities and is designed to raise an awareness of the legacy as a further way in which individuals might support causes and organizations that they care about.

In the U.K. there is also Will Aid – which is a campaign involving nine of the UK’s leading charities (ActionAid, British Red Cross, Christian Aid, Help the Aged, NSPCC, Save the Children UK, Sight Savers International, SCIAF and Trocaire.)The objective of the campaign is simple but compelling: to encourage people to make a Will with a solicitor and at the same time raise vital funds for the Will Aid charities

Under the scheme, solicitors (lawyers) will draw up a basic Will free of charge. In return for this service, the solicitors hope the Will Aid client will donate to the Will Aid charities the fee they would normally charge. The suggested donation level is £75 for a single Will, £110 for mirror Wills and £40 for a codicil. If there is additional work involved, for example estate planning, solicitors may charge their normal fee for the work.

 

Memorial and Tribute Fundraising

People have long been motivated to give in memory or tribute following someone’s death yet this type of fundraising remains under-developed in most of today’s non-profits. The urge to mark the passing of a life is a part of the natural grieving process and yet memorial fundraising remains one of the most underdeveloped areas of charity fundraising. This valuable fundraising tool is often mistakenly seen as being too intrusive – yet it can both deliver significant income and offer a valuable focus for grieving donors.

Memorial Giving

memory in a photoMemorial gifts can be sent to the nonprofit direct from the donor, or they can be given as a consequence of a collection by the next of kin (or a close friend/relative), or from a collection undertaken on behalf of the family by the funeral home. These days such collections can also be handled online with individuals logging in to the selected organization to make their gift.

With memorial giving it is important to remember that these individuals are not necessarily supporting the cause, they are giving as an expression of personal grief, as a mechanism for coping, or simply because the family asks. It is therefore inappropriate to treat these individuals as regular donors. Memorial giving is not about the charity, but about the donor and their memories. Understanding this is key.

As consequence many organizations now develop specific memorial programs. Gifts, particularly online, can be routinely offered in memory of a friend or a loved one. Organizations such as the Red Cross, allow the donor to have the family notified of their gift and for a personalized message to be attached. This is an incredibly powerful form of giving and the nonprofits that provide this service add genuine value for certain categories of donor by so doing. Opportunities can also be created for secondary and subsequent gifts, respecting the genuinely distinctive nature of this form of giving.

Below we offer links to a selection of organizations that are soliciting memorial giving

 

Tribute Funds

Tribute Funds offer the bereaved the opportunity to create a lasting memorial that they can manage at their own level. These funds are particularly effective where a life has been cut short. Modern Tribute Funds managed online offer the fund-holders a range of options of engagement, from posting memories and pictures to effective support in fundraising on behalf of their chosen charity through sponsored events, special occasions etc. The opportunity to see the fruits of their fundraising efforts embedded in the lasting memory they have created for the person who has died is very motivating and can help with the grieving process.

A few examples are posted below


 

File Downloads


 

Recommended Reading

Books

Articles

  • Astrachan, J.M. (1979) ‘Why People Don’t Make Wills,’ Trusts and Estates, 118, 48-50.
  • Auten, G. and Joulfaian, D. (1996) ‘Charitable Contributions and Intergenerational Transfers,’ Journal of Public Economics, 59, 55-68.
  • Barthold, T. and Plotnick, R. (1984) ‘Estate Taxation and other Determinants of Charitable Bequests.’ National Tax Journal, 37(2), 225-237
  • Bernheim, D.B., Schleifer, A. and Summers, L. (1985) ‘The Strategic Bequest Motive,’ Journal of Political Economy, 93, 1045-1076.
  • Boskin M.J. (1976) ‘Estate Taxation and Charitable Bequests,’ Journal of Public Economics, 5, 27-56.
  • Bryant C.D. and Snizek W.E. (1975) ‘The Last Will and Testament: A Neglected Document in Sociological Research,’ Sociology and Social Research, 59, 219-231.
  • Butler, R.N. (1963) ‘The Life Review: An Interpretation of Reminiscence in the Aged.’ Psychiatry, 26, 65-70.
  • Chuma, H. (1995) ‘Intended Bequest Motives, Savings and Life Insurance Demand,’ In T. Tachibanaki and D. Wise (Eds), Saving and Bequests (pp15-38), Ann Arbor, The University of Michigan Press.
  • Cicirelli V.G. (1998) ‘Views of Elderly People Concerning End of Life Decisions,’ The Journal of Applied Gerontology, 17(2), 186-203.
  • Crawford, R. S. and Hartwick, F. (2001) ‘Creating and Maintaining A Planned Giving Society,’ Journal of Gift Planning, 5(4), 19-52.
  • DameGreene, S. (2003) ‘How to Develop a Successful Bequest Program: A Simple, Easy-to-Follow Plan for Starting, Increasing and Collecting Bequests At Your Nonprofit,’ The Journal of Gift Planning, 7(2), 17-52.
  • Davis, M.T. (1990) Psychological Aspects of Will Making and Estate Planning, Unpublished Doctoral Dissertation, University of Kentucky, Lexington.
  • Davies, J.B. (1981) ‘Uncertain Lifetime, Consumption and Dissaving in Retirement,’ Journal of Political Economy, 89(3), 561-577.
  • Feldstein, M. (1976) ‘Charitable Bequests, Estate Taxation and Intergenerational Wealth Transfers,’ Public and Urban Economics, Grieson R (Ed) Lexington Books, Lexington, MA.
  • Fink, G. and Redaelli, S. (2005) Understanding Bequest Motives – An Empirical Analysis of Intergenerational Transfers, Working Paper No 42/2005, De Nederlandsche Bank NV, The Netherlands.
  • Gentry, J., Baker, S.M. and Kraft, F. (1995) ‘The Role of Possessions in Creating, Maintaining and Preserving One’s Identity: Variations Over The Life Course,’ in Advances in Consumer Research, 22, Association for Consumer Research, 413-418.
  • Hunter, E.G. and Rowles, G.D. (2005) ‘Leaving A Legacy: Toward A Typology,’ Journal of Aging Studies, 19, 327-247.
  • Kamptner, N.L. (1989) ‘Personal Possessions and Their Meaning in Old Age,’ in The Social Psychology of Aging: The Claremont Symposium on Applied Psychology, Spacapan S and Oskamp S (Eds), Newbury Park, CA, Sage.
  • Konkoly, T. H and Perloff, R. M. (1990) ‘Applying the Theory of Reasoned Action to Charitable Intent,’Psychological Reports, 67(1), 91-94.
  • Kopczuk, W. and Lupton, J.P. (2005) To Leave of Not To Leave: The Distribution of Bequest Motives, Working Paper, Dept of Economics, University of Columbia.
  • Mathur, A. (1996) ‘Older Adults’ Motivations for Gift Giving to Charitable Organizations: An Exchange Theory Perspective,’ Psychology and Marketing, 13(1), 107-123.
  • McGranahan, L.M. (2000) ‘Charity and the Bequest Motive: Evidence From Seventeenth-Century Wills,’ Journal of Political Economy, 108(6), 1270-1291.
  • McNees, S. (1973) ‘Deductability of Charitable Bequests,’ National Tax Journal, 26(1), 79-98.
  • NCPG (2001) Planned Giving in the United States, National Committee on Planned Giving, Indianapolis, Indiana.
  • Poterba, J. (2001) ‘Inter-Vivos Transfers and the Incentive Effects of Estate and Gift Taxes in the US,’ Journal of Public Economics, 79, 237-64.
  • Price, L.L., Arnould, E.J. and Curasi, C.F. (2000) ‘Older Consumers’ Disposition of Special Possessions,’ Journal of Consumer Research, 27 (Sept), 179-201.
  • Rowlingson, K. (2004) Attitudes To Inheritance: Focus Group Report, University of Bath, Bath
  • Schervish, P.G (2005) ‘Today’s Wealth Holder and Tomorrow’s Giving: The New Dynamics of Wealth and Philanthropy,’ The Journal of Gift Planning, 9(3), 15-37.
  • Schervish, P.G., O’Herlihy M.A. and Havens J.J. (2001) Agent Animated Wealth and Philanthropy: The Dynamics of Accumulation and Allocation Among High Tec Donors, Chesnut Hill MA: Center on Wealth and Philanthropy, Boston College.
  • Schervish, P G. and Havens, J.J. (2001) ‘The New Physics of Philanthropy: The Supply Side Vectors of Charitable Giving – Part 1: The Material Side of the Supply Side,’ The CASE International Journal of Educational Advancement, 2(2), 95-113.
  • Schervish, P.G. and Havens, J.J. (2002) ‘The New Physics of Philanthropy: The Supply Side Vectors of Charitable Giving – Part 2: The Spiritual Side of the Supply Side,’ The CASE International Journal of Educational Advancement, 2(3), 221-241.
  • Schervish, P.G. and Havens J.J. (2003) ‘Gifts and Bequests: Family or Philanthropic Organizations?’ In A.H. Munnell and A. Sunden (Eds.) Death and Dollars: The Role of Gifts and Bequests in America. (pp130-158). Washington DC, Brookings Institution Press.
  • Sussman, M., Cates, J. and Smith, D. (1970) The Family and Inheritance, New York, Russell Sage.
  • Whitman, R. and Borden, W.A.(1980) ‘But How Will They Feel About The Will?’ Trusts and Estates, 119(4), 63-64.
  • Willhelm, M.O. (1996) ‘Bequest Behavior and the Effect of Heirs Earnings: Testing the Altruistic Model of Bequests,’ American Economic Review, 86, 874-892.

Test your knowledge with our Quiz: Bequests / Legacies

Stewardship at its best engages donors with the impact and outcomes of their investments of time, wisdom, expertise, connections, and money.

Karen Osborne