Opportunity cost: “The cost of an alternative that must be forgone to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.”
For the purposes of this white paper, the alternative action is doing nothing! Most charities simply do nothing when it comes to planned giving. On average, Americans have approximately 9 percent of their net worth in cash and 91 percent in assets. Yet, nonprofits continue to rely on direct mail, fundraisers, and golf tournaments to meet their budgets; and make no attempt to help their donors learn how to gift assets. Several years ago we worked with the leaders at a major church who knew they needed to be doing planned giving. We met with the senior pastor, the board of directors, and a subcommittee of the board. Then, several months later, we met again as a new board rotated on and the old board rotated off. This process continued for over 24 months.
Finally, they signed an agreement and we launched into planning with this church. The church business administrator later told me that during the time when they were trying to make a decision, three long-time members of the church passed away. The business administrator wondered aloud, “How much money did we lose by not having planned giving in place? None of the three included the church in their will or estate plan, even though these folks had been givers and members for more than four decades.”
Including the local church in their will is a natural step for givers, including these long-time members. By doing so, they would be continuing the convictions by which they lived for decades in their estate plan. If they had simply included the church as a 10-percent beneficiary of their estate, or as the successor beneficiary of their IRA, significant taxes could have been avoided, and the church could have received a significant gift that reflected the importance of the church’s ministry to them and the recognition that God is the source of all resources.
Another pastor in the Midwest once told us, “I feel like I have done a pretty good job of meeting with people when they’re sick, in doing hospital visits, and in comforting families during times of terminal Illness. But in 30 years of ministry I have never had one family remember the church in their will or estate plan.” This is a common experience, and most of the time it’s not because families have chosen to leave the church out of their estate plans. More often than not, it’s simply because no one asked and, therefore, the donors never thought about it.
Both of these are simple illustrations of the cost of doing nothing when it comes to planned giving. If you don’t have a disciplined, systematic communication, and follow-up strategy related to gifts of assets, then you’re experiencing massive opportunity cost. Unfortunately, this is a little like having termites in your basement. They may be there for months—or even years—without you knowing it, but all the while they’re eating away at your floor joists and wall studs. In a similar way, by not doing planned giving, you’re eroding the future financial stability of your organization in ways that you may not feel today but will feel in the future. Resources necessary to expand ministry and grow kingdom impact will be lost simply from neglect.
Perhaps you feel that folks today have all this figured out. Surely everyone has considered saving taxes through charitable planning. Surely the business owners in your church have already considered their options when it comes to various charitable planning techniques. If this is what you think, in most cases, you’re wrong. And unfortunately, people’s financial and legal advisers rarely bring planned giving to their attention. We heard this from a nationally known charitable planning attorney who is interested in creating gifts to ministry. However, in his own words, it’s simply not in his firm’s system to proactively ask a donor about charitable giving.
Today, this all adds up to a perfect storm. Most donors are passionate about reducing their tax liability whenever possible. If given a choice, the vast majority of your donors would rather reduce or eliminate unnecessary taxes and redeploy those dollars to impact the mission of your organization. They simply don’t know how or have never been asked in a simple, straightforward way. This is the opportunity that costs your ministry if you don’t pursue it. What would happen if just 1 percent of your donors included your organization in their estate plan each year?
What if the average gift was just $50,000? (By the way, this is well below the national average.) Do the math and you’ll be astounded at the cost of doing nothing. Bottom line: In today’s environment, the desires of donors and the needs of the kingdom and of your organization are in perfect alignment. The problem is a communication vacuum. You must find ways to engage your donors in a conversation about charitable planning. The cost of doing nothing is increasing every day you delay.
Greg Ring is co-founder of Fulcrum Philanthropy Systems. For the past 33 years, he has been a recognized expert and thought leader in the planned giving arena. The firms launched by Greg have served more than 200 ministries and nonprofits, developing and executing more than $3 billion in documented planned gifts. Fulcrum builds on this rich history by engaging technology so that both the local church and mega nonprofits can participate in “the greatest transfer of wealth in history.” Greg is married with three daughters and four grandchildren, and lives in Colorado Springs. To learn more about planned giving, you can reach Greg at gring@FulcrumPS.com.