Where do Non Profits get most of their Planned Giving Money?

From a talk by Susan DameGreene, President of BIPSTER

Did you know that:

  • Over three fourths of wealth in the US is in the hands of people over age 55
  • A fourth of the population hold two thirds of the wealth in the US

The Federal Reserve has some even more surprising statistics about the distribution of wealth:

  • One third of the wealth in the US is in the hands of 1% of the population
  • The next third is in the hands of 9% of the population
  • The rest of us are in the 90% remaining and the average estate is roughly $140,000.

In 1985, two Cornell University professors did an intergenerational transfer of wealth study that turned up eight to ten trillion dollars. That’s $8,000,000,000,000 to 10,000,000,000 in bequests that would come to nonprofits.

As one generation grows old and dies, they leave their wealth to the next generation. This is not that notable, since it doesn’t happen all at one time and it doesn’t come in equal shares. Generations take an entire generation to die. The generation represented by the Cornell study will die between 1987 and 2044.

Almost one third of these transfers have already taken place — between 1998 and 2004 (right now). They are testamentary transfers, so possibly as much as one half of these transfers are already written into wills. Note that the numbers of bequests increases dramatically. The size of the bequests stays relatively the same.
So, you can see that Bequest Solicitation is a numbers game. There are literally millions of potential donors we can tap. I think we need to concentrate on asking for bequests from large numbers of donors, not just going after the huge ones that can be most difficult. That way, the odds are in our favor.

We have heard a lot over the years about the $8-10 trillion transfer. A recent study by Boston College cites much higher statistics on the wealth transfer. The amount that will transfer is $41 trillion to $136 trillion over the next forty years.

Unfortunately for me, and many of my colleagues, this study includes the baby boomers, of which I am a reluctant member. You know you are getting old when bequest solicitations start coming addressed to you instead of from you.

Did you know that, according to this new Boston College study, $6 – 25 trillion of this might come into nonprofits as BEQUESTS?

That amounts to about $500 billion a year for the next 30-40 years! Which represents a 300-fold increase in bequests.

The numbers of bequests are still quite high and the size of each bequest is still relatively stable as with the Cornell Study.

How many of you know Everett Dirkson, the former senator who is best remembered for his famous line “A billion here, a billion there and pretty soon, you’re talking real money!”

Earlier in my career, I used to work in Washington DC for the American National Red Cross and I saw the Washington Monument every morning on my way to work. How much is a trillion? To put it in perspective, we have to start with a million dollars. Well, a stack of $1000 bills six inches high is a million dollars. A stack of $1000 bills the size of the Washington Monument, or about 500 feet tall, is a billion dollars. A billion is a thousand million, so 1000 stacks of $1000 bills 6 inches high is a billion.

Got that? Now a trillion is one thousand billion: yes, 1000 stacks of $1000 bills 500 feet high or about the height of the Washington Monument. Yes, we are now talking real money coming to us from realized bequests. Have I got your attention?

In fact, we largely depend on bequests – 60 – 80% of all Planned Gifts come in as bequests, with the average bequest nationwide about $70,000. Bob Sharpe says that about 70% of all Planned Giving Gifts come in as bequests so basically I agree with him. Who better to agree with in this field?