Want to do more for your favorite charity? Consider a planned giveaway
The coronavirus pandemic has led many Americans to reflect on their own mortality and plan for their future.
AP Photo / Bill Cramer – The Conversation
A sign of this trend: The number of people using will writing websites rose 200% in late March, when the vast majority of states ordered social distancing measures.
As a philanthropy specialist who raised funds for nonprofits, I see an opportunity even at this difficult time. Few Americans consider leaving money to charity when they say who should inherit their property after death.
At the same time, many non-profit organizations are facing dire situation due to the pandemic. The demand for their services is increasing while, in many cases, their incomes are plummeting. In the case of museums, symphonies and closed theaters, they also lack the money from ticket sales they need to survive.
Only 32% of Americans have a willpower, according to recent estimates, up from 42% a few years ago.
But the share of the population planning to leave money for charity is much lower – only about 5% of Americans. This is a tiny fraction of the people who support nonprofits in any given year. According to a recent Gallup poll, some 73% of Americans made a charitable donation to a religious institution or other charity last year.
The most common way to give what is technically called a “planned gift” is a bequest – a donation to a nonprofit organization listed in someone’s will. Although the intention is expressed during the person’s lifetime, charities receive the money or other assets after their death.
Even though the number of attendees is small, bequest donations have quadrupled to nearly billions per year over the past 40 years, according to the Giving USA annual report.
That’s almost 10% of all money that goes to charity each year. But I see a lot of room for growth.
Many ways to give
Sometimes these gifts are unexpected. But many donors prefer to personally inform the nonprofits they have selected.
It is difficult to get precise data on these gifts because the IRS only collects them from the estates of the wealthiest Americans.
There are other ways to leave money to charity after death, in addition to bequest clauses in wills. All or part of an Individual Retirement Account, or IRA, as well as 401 (k) and other employer-sponsored retirement plans can be left to charity. The same is true for many other types of assets, including life insurance policies, trusts, real estate, and tangible personal property like works of art.
A charitable opportunity
My research shows that writing a will, especially when it asks to bequeath money to a charity, reassures people. It’s a way for people to make sense of their lives.
“I was able to express my appreciation for the organization and my commitment to the cause beyond my time here,” said a donor I’ll call Diane during our interview about her motivations for making a planned gift.
In a national study of planned giving donors last year, my research team and I found that the average age for making a first will is 44, and more than half of donors surveyed for the study made their first planned gift at the same time. as their first wish.
For those who give gifts, this is not a difficult process. In total, 68% of the 862 donors we surveyed said making their planned giving was “very” or “somewhat easy”.
Not just for the 1%
Many people think that writing a will is only for the very wealthy, but the reality is that anyone with a family, a house, or a bank account should have one. You don’t have to be very rich to bequeath a legacy. Some middle-class donors include charitable donations in their wills that exceed $ 0,000.
For many donors, planned giving allows them to give more after death than their finances would allow in their lifetime.
From my team’s research, we know that donors who make planned giving are often long-time supporters, have worked or volunteered for the organization they support and believe in its mission. And because nearly 92% of those surveyed have consulted a lawyer when drafting their wills, it’s important that lawyers and financial planners at least address the topic.
For nonprofit organizations, estate donations often come from people with a long history with the organization. On average, the donors we surveyed supported the organization that would receive their largest planned donation in 20 years.
The coronavirus pandemic and the resulting financial crisis means that many people will have a harder time than usual giving to charity. I believe that when someone is drafting or revising their will, it is important that they discuss how to support the causes that are important to them after their death with their lawyers and loved ones.
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This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Elizabeth J. Dale, Seattle University.
Elizabeth J. Dale has received funding from the Giving USA Foundation for her research on planned giving as well as the Bill & Melinda Gates Foundation through Indiana University and the Ford Foundation for further research on philanthropy. The opinions expressed in this essay are strictly my own and do not reflect the political positions of Seattle University or the Giving USA Foundation.