A Tipping Point for Legacy Giving

As we look ahead to 2024, charities need to seriously reassess their investment priorities.

One area that has remained largely untapped is planned and legacy gifts. I’ve been fortunate to collaborate with colleagues in the UK. Charities there regularly receive a third or more of their annual revenue from legacy gifts, a figure that far outstrips the US, where an organization generating 10% from such gifts would be considered successful. This discrepancy highlights an enormous opportunity for growth for US organizations if only they choose to seize it.

Despite the significant potential of legacy gifts, the percentage of marketing and staffing budgets that organizations allocate to this area is paltry compared to the budget allocated to acquisition, annual giving, and other fundraising areas. And in an area of fundraising where consistency year over year matters more than almost any other factor, it’s the first budget line cut when fundraising is down and expenses are on the chopping block.

Even within planned giving departments, there is often a puzzling lack of urgency in advocating for more resources. Perhaps they are so used to doing more with less, or believing that “planned giving on shoestring budget” is possible that they’ve lost track of what could be possible – and what they are leaving on the table.

 This is a glaring oversight, especially given that legacy gifts represent one of the few growth opportunities in fundraising at this time.

Our research shows that 40% of US charity supporters over age 50 are willing to consider a legacy gift – yet only about 8% have finalized their plan. And the competition is fierce – donors support a median of 7 charities now; are considering a median of 4 charities for a legacy gift; and include a median of……ONE.

It's worth noting that when an organization sees robust and growing legacy revenue, it is directly correlated with the organization's consistent investment over the past 5-10 years or more.

Legacy giving has been a longstanding tradition in philanthropy. Records of the earliest charitable bequests date back a millennia or more. As Bob Sharpe once wrote: “Planned gifts are as demonstrably as old as Western civilization” and “An article published in The New York Times in the late 1930s declared that the colleges and universities that raised more money during the Depression than in earlier years did so because of the ‘dramatic increase’ in bequest income during the 1930s while outright gift sources declined.”

We’re also facing new headwinds in our industry: as the philanthropic landscape shifts due to the rise of donor-advised funds, understanding and investing in the changing environment for legacy giving becomes even more crucial.

In 2024, non-profit organizations must take a proactive role in planning for these changes. They should prioritize investment in planned and legacy gifts by allocating a larger share of their marketing and staffing budgets to this area and by committing to a baseline level of investment year over year.

It goes without saying that robust legacy revenue is fundamental to diversifying an organization's funding sources, reducing reliance on traditional fundraising methods, and making their revenue streams more resilient.

The time to act is now - 2024 could be the year that legacy giving moves from the periphery to the heart of your fundraising strategy.

Let me know how I can help!