Dublin Legacy Presentation

Effective promotion of legacy giving:

A presentation of new research findings and theory

Russell James III, J.D., Ph.D.Associate ProfessorDirector of Graduate Studies in Charitable PlanningTexas Tech [email protected]

Presentation at Legacy Promotion Ireland, Dublin, Ireland, 26 July, 2010

Previous studies

One time survey• Non-response bias if the whole survey

was about charitable giving

After death distributions• Only for taxable estates• Rare single county probate studies

Current study

LongitudinalSame people asked every two years

DistributionsAfter death nearest relatives are asked about final distributions

New Questions

ChangesNot just who has charitable plans but

when do they add and drop them

Intentions v. Outcomes

Did during life plans result in after death distributions

Details

• Nationally representative of over 50 population since 1998.

• Over 20,000 people per survey.• In person interviews, some

follow up by phone.

• Started in 1992• Questions within

larger Health & Retirement Study

• Respondents paid

What share of people over 50 in the U.S. have “made provisions for any charities in [their] will or trust?”

U.S. Over 50 Population

Charitable Plans; 5.7%

No Charitable Plans; 94.3%

* Weighted nationally representative 2006 sample

U.S. Over 50 Population

* Weighted nationally representative 2006 sample

Charitable Plans; 5.7%

Plans Without Charity; 38.2%No Planning Doc-

uments; 56.1%

What share of over-50 charitable donors giving over $500 per year indicate that they

have a charitable estate plan?

* Donors giving $500+ per year, weighted nationally representative 2006 sample

Over-50 Donors with Charitable Plans; 9.4%

Over-50 Donors With No Charitable Plans;

90.6%

Can that be right?

• Maybe a lot of donors will eventually get around to making a charitable plan?

Will donors ever get around to making a charitable plan?

88%-90% of donors ($500+/year) over age

50 will die with no charitable estate plan.

Projecting based on age, gender and

mortality or tracking actual post-death

distributions

You mean 90% of our donors will die without

leaving a gift?

You mean we could generate 9 times more estate gifts from

our current donors?

Among donors ($500+) over 50 with an estate plan, what is the single most significant factor associated with having a charitable estate plan?

Age? Education? Wealth? Income?

Among Donors ($500+) with an Estate Plan

Family Status

% indicating a charitable estate

planNo Offspring 50.0%Children Only 17.1%Grandchildren 9.8%

Regression: Compare only otherwise identical people

Example: The effect of differences in education among those making the same income, with the same wealth, same family structure, etc.

Likelihood of having a charitable plan(comparing otherwise identical individuals)

•Graduate degree (v. high school) +4.2 % points•Gives $500+ per year to charity +3.1 % points•Volunteers regularly +2.0 % points•College degree (v. high school) +1.7 % points•Has been diagnosed with a stroke +1.7 % points•Is ten years older +1.2 % points•Has been diagnosed with cancer +0.8 % points•Is married (v. unmarried) +0.7 % points•Diagnosed with a heart condition +0.4 % points•Attends church 1+ times per month +0.2 % points•Has $1,000,000 more in assets +0.1 % points•Has $100,000 per year more income not significant•Is male (v. female) not significant•Has only children (v. no offspring) -2.8 % points•Has grandchildren (v. no offspring) -10.5 % points

Find your estate donor…

Amakes substantial

charitable gifts, volunteers regularly,

and has grandchildren

Bdoesn’t give to charity,

doesn’t volunteer, and has no children

From an Australian study by Christopher Baker including 1729 wills:

“Australian will-makers without surviving children are ten times more likely to make a charitable gift from their estate”

How did giving during life compare with post death transfers?

$ $$$

Estate giving and annual giving for 6,342 deceased panel members

OffspringLast Annual

Volunteer Hours

Average Annual Giving

Average Estate Giving

Estate Gift Multiple

No Children 32.6 (6.6) $3,576 $44,849 12.6Children Only 25.4 (7.1) $1,316 $6,147 4.7Grandchildren 23.2 (2.1) $1,497 $4,320 2.9Total 24.3 (1.8) $1,691 $8,582 5.1

When did people drop charitable plans?

Yes! Yes! No.

What happened

here?

Factors that triggered dropping the charitable plan1. Becoming a grandparent 0.7226*

(0.2997)

2. Becoming a parent 0.6111† (0.3200)

3. Stopping current charitable giving 0.1198* (0.0934)

4. A drop in self-rated health 0.0768† (0.0461)

Some factors that didn’t seem to matter: Change in income Change in assets Change in marital status

*Fixed effects analysis including 1,306 people who reported a charitable plan and later reported no charitable plan. Coefficients show relative magnitude of factors.

When did people add charitable plans?

Factors that triggered adding a new charitable plan• Starting to make charitable gifts .1531† (.0882)• An improvement in self-reported health .0927* (0.0446)• A $100k increase in assets .0061** (.0023)

One factor dramatically reduced the likelihood that a new charitable plan would be added:• The addition of the first grandchild -.4641† (.2732)

Do the estates of people who make charitable estate plans grow differently than the general population?

After making their plan, charitable estate donors grew their estates 50%-100% faster than did others with

same initial wealth

Demographics and future projections

The Fall and Rise in Live Births - US

1909 (Age

100)

1911 (Age

98)

1913 (Age

96)

1915 (Age

94)

1917 (Age

92)

1919 (Age

90)

1921 (Age

88)

1923 (Age

86)

1925 (Age

84)

1927 (Age

82)

1929 (Age

80)

1931 (Age

78)

1933 (Age

76)

1935 (Age

74)

1937 (Age

72)

1939 (Age

70)

1941 (Age

68)

1943 (Age

66)

1945 (Age

64)

1947 (Age

62)

1949 (Age

60)

1951 (Age

58)

1953 (Age

56)

1955 (Age

54)

1957 (Age

52)

1959 (Age

50)

1961 (Age

48)

1963 (Age

46)

1965 (Age

44)

1967 (Age

42)

1969 (Age

40)2,000

2,500

3,000

3,500

4,000

4,500

Live

Bir

ths

Age 50 to

54

Age 55 to

59

Age 60 to

64

Age 65 to

69

Age 70 to

74

Age 75 to

79

Age 80 to

84

Age 85 to

89

Age 90 to 94

Age 95 to

99

Age 100+

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Y2000Y2001Y2002Y2003Y2004Y2005Y2006Y2007

Pers

ons

Aliv

e in

Am

eric

a

Dramatic increases on the horizon

Temporary drop in key demographic population

The fall and rise in live births - UK

Age 50-54

Age 55-59

Age 60-64

Age 65-69

Age 70-74

Age 75-79

Age 80-84

Age 85-89

Age 90-94

Age 95-99

Age 100+

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Persons alive in the UK, 2008-2030

Ireland population pyramid, 2001• Without the large post-war baby boom, expect less

rapid growth in older ages• Growth will come primarily due to improved longevity

http://upload.wikimedia.org/wikipedia/en/a/ac/Pyramidireland.gif

Projecting future bequest giving

Frequency of future bequest gifts • Change in population• Change in tendency to make bequest gifts

Charitable Estate Planning among US Adults Aged 55-65

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

1996 1998 2000 2002 2004 2006

Increases in charitable planning are driven by increases in childlessness and education

VariableEstimate

(s.e.) p-valueEstimate

(s.e.) p-valueEstimate

(s.e.) p-valueYear 0.0138

(0.0032)<.0001 0.0033

(0.0034)0.3298 0.0015

(0.0036)0.664

Any children -0.6251 (0.0345)

<.0001 -0.6224 (0.0479)

<.0001

Years of Education

0.1412 (0.0048)

<.0001 ….full set of

….

control variables

Probit analysis of all respondents age 55-65 in 1996-2006 HRS. Outcome variable is the presence of charitable estate planning.

Time trend exists

Time trend disappears

when including childlessness

and education

Charitable estate planning among adults aged 55-65

0%

5%

10%

15%

20%

25%

30%

35%

40%

1996 1998 2000 2002 2004 2006

No Children - NoCollege Degree

No Children -College Degree

Children - NoCollege Degree

Children - CollegeDegree

Basic relationship

• This suggests that the overall trend of increased charitable estate planning may have been driven, in large part, by changes in childlessness and education.

• Such a relationship has important implications for predicting charitable estate planning levels in the future.

Upcoming cohorts and childlessness

• Childlessness among women who will be entering the 55-65 age group over the next decade will be substantially higher than those in the 55-65 age group during 2006 (the year of the latest HRS survey).

• Women in the 56-61 age group during 2006 reported a childlessness rate of 16.0% in 1990 when they were aged 40-44 (Dye, 2005). In comparison, women in the 40-44 age range in 2004 (i.e., those who will begin entering the 55-65 near retirement age group in 2015) reported a childlessness rate of 19.3% (Dye, 2005).

Similar trends in U.K.

Source: http://www.statistics.gov.uk/cci/nugget.asp?id=369

http://www.statistics.gov.uk/articles/population_trends/birthstats_pt94.pdf

Upcoming cohorts and education

• Similarly, a college education is much more common among the upcoming cohorts of individuals nearing retirement age than among the current 55-65 group (Stoops, 2004).

• In 1996, less than 27% of those in the 35-54 age group had at least a bachelor’s degree.

• By 2007, over 31% of those in the 35-54 age group had at least a bachelor’s degree (Current Population Survey, 2007).

• Thus, one can expect the upcoming cohorts of individuals nearing retirement to be more educated than individuals currently in the 55-65 age group.

Big take-aways

• Don’t just recruit estate givers by giving level, also know your donors without children

• After making their intention, charitable estate donors grew their estates 50%-100% faster than did others.

• Future demographics are generally positive based on population, childlessness, and education

New Ideas for legacy promotion from a theoretical framework

Applying “The Generosity Code”

Why theory instead of just a list of techniques?

• Limitations of “war stories” research– So called best practices may just be practices

• Theory based strategies are more flexible– New techniques can emerge as circumstances

change• Guides practice even where, as in bequest

giving, interim measurement is difficult.

What does a fundraiser do?

• Bring in money?• This description is “true”, but not very informative.

Applies to essentially all private sector jobs.• What does a Lawyer do? Makes money. What does

a grocer do? Makes money. What does an artist do? Makes money.

• You could bring money to your organization from government contracts, operation of a charitable business, or other means, but it wouldn’t be as a fundraiser.


A fundraiser …


A fundraiser …

Encourages Generosity

Encouraging generosity

• An issue of fundamental human significance• An independently valuable mission separate

from (although complementary to) your organization’s mission

Understanding generosity

Giving occurs when the “potential energy” of a gift’s potential value is unlocked by the “catalyst” of a request

Reciprocity(Response of Recipient

to Donor)

Interdependent Utility

(Recipient’s experience)

Self-Identity(Donor as giver)

Social Exchange (Response of Others to

Donor)

Cultural Norms (Response of Others to

Others)

Self-Efficacy(Donor as change

agent)

Potential Value of Gift

(Potential Energy)

Quality of Request

(Catalyst)

Gift(Energy

Released)

1. Definitiveness2. Observers

=x


to Donor)





Donor)


Others)


agent)

Interdependent Utility(Recipient’s experience)

• I am happy because you were benefitted

• Empathyi X Change in well-beingi

Act of Receiving

Act of Giving

Others’ Responses


to Donor)





Donor)


Others)


agent)

Act of Receiving

Act of Giving

Others’ Responses


• I am happy because I am generous, faithful, concerned, etc.

• Importance of value and felt adherence to it


to Donor)





Donor)


Others)


agent)

Act of Receiving

Act of Giving

Others’ Responses

Self-Efficacy(Donor as change agent)

• I am happy because I was the one who benefitted you

• My actions were the cause of the change that I selected


to Donor)





Donor)


Others)


agent)

Act of Receiving

Act of Giving

Others’ Responses

Reciprocity(Response of Recipient to Donor)

I receive benefits from the recipient or representative charity


to Donor)





Donor)


Others)


agent)

Act of Receiving

Act of Giving

Others’ Responses

Social Exchange(Response of Others to Donor)

I receive benefits from others because of my giving


to Donor)





Donor)


Others)


agent)

Act of Receiving

Act of Giving

Others’ Responses

Cultural Norms(Response of Others to Others)

I influence others in the way they behave towards others


to Donor)





Donor)


Others)


agent)

Act of Receiving

Act of Giving

Others’ Responses

Theoretical backgroundThese value channels exists for reasons rooted in social psychology (proximate causes) and natural selection (ultimate causes)


to Donor)





Donor)


Others)


agent)

Psychological benefits to donor

Material benefits to similar others

Material benefits to donor

Theoretical backgroundWe can rearrange by their value type including both material and psychological value sources

Understanding generosity

Giving occurs when the “potential energy” of a gift’s potential value is unlocked by the “catalyst” of a request


to Donor)





Donor)


Others)


agent)


(Potential Energy)

Quality of Request

(Catalyst)

Gift(Energy

Released)


=x

Definitiveness• How clearly is a decision required?

Observers• Who observes the decision?

Quality of request

Quality of a request: Definitiveness

Requires a definite

“no”

Indefinitely deferrableresponse

General support concept

General issue

awareness

Specific request

• Definitiveness: The degree to which a request demands a definitive “yes” or “no”

• The enemy isn’t “no”, it is “no response”

General requestNo request


Requires a definite

“no”



General issue

awareness

Specific requestGeneral requestNo request

“100,000 children have died in West Africa’s current food crisis.”


Requires a definite

“no”



General issue

awareness


“100,000 children have died in West Africa’s current food crisis. Please help one of the relief agencies if you can.”


Requires a definite

“no”



General issue

awareness


“Please give £50 to Oxfam to support relief efforts for children caught in West Africa’s current food crisis.”


Requires a definite

“no”



General issue

awareness


“We are sending an office gift to Oxfam on Friday. Put in whatever you like and I will stop by to pick up your envelope in

the morning.”

Quality of a request: Observers

1. Perceived likelihood of observance

2. Observer’s social significance and level of commitment to beneficiaries

Observation of a decision point adds a social cost to saying “no” and a social benefit to saying “yes” based upon:

Office beverages available with payment on an “honor” system.Picture above payment instructions rotated weekly.Payments were higher when picture of eyes was posted.

M. Bateson, D. Nettle & G. Roberts (2006). Cues of being watched enhance cooperation in a real-world setting. Biology Letters 2, 412–414.

A B

Two groups with two computer backgrounds. Each person receives $10. Computer question: Do you want to share any of it with another (anonymous) participant?

K. J. Haley (UCLA), D.M.T. Fessler (UCLA). 2005. Nobody’s watching? Subtle cues affect generosity in an anonymous economic game. Evolution and Human Behavior, 26, 245–256

Shar-ing55%

Not Sharing45%

Normal Screen

Sharing88%

Not Sharing12%

Eyes Screen

K. J. Haley (UCLA), D.M.T. Fessler (UCLA). 2005. Nobody’s watching? Subtle cues affect generosity in an anonymous economic game. Evolution and Human Behavior, 26, 245–256


to Donor)





Donor)


Others)


agent)

Potential Value of Gift(Potential Energy)

Quality of Request (Catalyst)

Gift (Energy Released)


=x

Applications to legacy giving

Unfortunate reality of legacy giving

“74% of the UK population support charities and when asked, 35% of people say they'd happily leave a gift in their will once family and friends had been provided for. The problem is only 7% actually do.”

From www.rememberacharity.org

* Donors giving $500+ per year, weighted nationally representative 2006 sample

Over-50 Donors with Charitable Plans; 9.4%

Over-50 Donors With No Charitable Plans;

90.6%


to Donor)





Donor)


Others)


agent)


=x

So, why is legacy giving so low?What is missing?


to Donor)





Donor)


Others)


agent)


=x

People may not consider charity during document creation (practice of advisors and mistiming of communications from charity).


to Donor)





Donor)


Others)


agent)


=x

Will drafting and legacy planning is easy to postpone (avoid facing mortality).


to Donor)





Donor)


Others)


agent)


=x

Will drafting is not public, and not an acceptable forum for peer observation.


to Donor)





Donor)


Others)


agent)


=x

Most legacy giving benefits can only be anticipated, not actually experienced.


to Donor)





Donor)


Others)


agent)


=x

Reciprocity or social exchange is limited. Prior to the gift, the intention is revocable.

After the gift, the donor is gone.


to Donor)





Donor)


Others)


agent)


=x

Charitable bequests may be viewed as competitive with transfers to offspring

What strategies within this framework might improve participation in charitable bequest making?


to Donor)





Donor)


Others)


agent)


=x

Spend more efforts with those donors who do not have offspring (and thus lower

competing interdependent utility).


to Donor)





Donor)


Others)


agent)


=x

Promote self-identify of the planned legacy donor as a current identity of social worth.

Identify an important value.

Associate current planned giving status with that value.

Create experienced gift value today, rather than only anticipated post-mortem value.

[Legacy club] members have a love for animals that lasts more than a lifetime.

Become a [legacy club] member today.


to Donor)





Donor)


Others)


agent)


=x

Death creates a natural self-efficacy void. Emphasize giving opportunities with

permanence.

Self-efficacy in legacy gifts

With death we “disappear”, a serious imposition on self-efficacy.

– The desire to overcome this is natural.– Humankind develops memorials emphasizing

permanence.


Legacy giving can also help fulfill the desire for permanence.

But may depend on how the charity will use the gift.

Logo from http://www.rememberacharity.org.uk


It is easier for the wealthy to imagine charitable gifts with permanent impact.

Buildings, large charitable foundations, parks, art

Consider developing permanent giving opportunities for mid-level donors.

• Named giving opportunities limited to legacy donors (so as not to pull from current giving)

• Permanent memorial trusts for legacy donors only• Scholarships, lectureships, sponsor a child, sponsor a

rescued pet, annual performances, etc.


to Donor)





Donor)


Others)


agent)


=x

Develop small permanent giving opportunities exclusively for legacy gifts.


to Donor)





Donor)


Others)


agent)


=x

Emphasize data on how quickly inheritances are spent by family members as compared to

longevity of a “permanent gift”


to Donor)





Donor)


Others)


agent)


=x

Legacy societies to publicly recognize planned donors and create functioning donor communities through social events.


to Donor)





Donor)


Others)


agent)


=x

Always reminding so that the option is “top of the mind” whenever planning happens to occur.


to Donor)





Donor)


Others)


agent)


=x

Creating planned giving campaign deadlines to interfere with ease of postponement.

A small organization’s two-year campaign to reach 100 planned legacies

http://www.fcs.uga.edu/alumni/legacies.html


to Donor)





Donor)


Others)


agent)


=x

Encourage will making in donor population.


to Donor)





Donor)


Others)


agent)


=x

Provide free planning services to donors with high potential.


to Donor)





Donor)


Others)


agent)


=x

Create immediate commitment pledge devices with follow up verification.


to Donor)





Donor)


Others)


agent)


=x

Targeting advisors to include charitable questions in their document creation process through information and recognition.

Why not recognize the intermediaries?

• Intermediaries, such as a will drafting lawyer, are essential to the process.

• Often the simple act of specifically asking about a gift to charity by an advisor is key.

• A “new” idea?

Magdalen HospitalList of Contributors, 1760From: Sarah Lloyd, ‘A Person Unknown’? Female supporters of English subscription charities during the long 18th century, Voluntary Action History Society Research Conference, Canterbury, UK, July 14-16, 2010

Recognizing intermediaries

• Friends of charity solicitors society• Sponsoring free CPD (continuing professional

development) charitable planning related education opportunities– Advertising those who have completed the CPD

program.• Publishing recognition of active solicitors authoring

charitable wills probated in most recent 6 months in particular county, town.– Shows frequency of professional activity.


to Donor)





Donor)


Others)


agent)


=x

Consider legacy arrangements that involve children in charitable decisions.

Public notice of founding

of the Bible

Society (1804)

and listing of donors

The Morning Post (London, England), Monday, March

19, 1804; pg. [1]; Issue 11061. 19th Century British

Library Newspapers: Part II.

Executors become voting

Governors for life


to Donor)





Donor)


Others)


agent)


=x

The framework doesn’t provide automatic answers, but may help generate ideas about value creation and realization in your context.


to Donor)





Donor)


Others)


agent)


(Potential Energy)

Quality of Request

(Catalyst)

Gift(Energy

Released)


=x

Thanks for listening

These slides (and others) are posted at

www.slideshare.net/Generosity

Business

Dublin Legacy Presentation