Lifetime Loyalty and Lasting LegaciesPresented by Lawrence C. Henze, J.D. & Katherine Swank, J.D.

Presentation SpeakerLawrence C. Henze, J.D.• Principal Consultant, Target Analytics• Founder, Blackbaud Analytics, Core

Data• Co-founder, Econometrics• 33+ years in nonprofit market as

fundraiser and consultant• Author, To Screen or Not to Screen

https://www.blackbaud.com/files/resources/downloads/WhitePaper_ToScreenOrNotToScreen.pdf

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Presentation SpeakerKatherine Swank, J.D.• Senior Fundraising Consultant, Target

Analytics• Past president, Colorado Planned

Giving Roundtable• Member, State Bar of Arizona• Affiliate faculty, Regis University’s

Masters in Global Nonprofit Leadership program

• Blogger @ npENGAGE• 25+ years in nonprofit market as

fundraiser and management

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Our Agenda

The Importance of Planned Gifts

Loyalty & Prospect Identification

Effective Use of Data

Getting Started

Q&A

The Importance of Planned Gifts in the Development Office

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Making the CaseWhat is Planned Giving?A giving process that honors the donor’s desire to do something special and

to give back• Emotional, moving, not technical

A giving process that correlates with donor and prospect loyalty

A giving process that reflects the donor’s financial behavior

Why is it important?Donor cultivation is similar to major gift cycle Research cycle is similar as wellYour organization may have more ultimate dollar potential

in planned giving than in major giving

Three Most Popular Planned Gifts• Charitable Bequests (Bequests)

• 90 to 95 of every 100 Planned Gifts will be Bequests

• Including Beneficiary Designation Form Gifts (BDFG)

• Life Insurance, Retirement Funds, Bank and Savings Accounts, Mutual Funds

• Charitable Gift Annuities (CGA)• Another 3 to 5 of the remaining will be CGAs

• Charitable Remainder Trusts (CRT)• 1 or 2 in every 100 planned gifts will be a CRT

Type of Planned Gift Average Gift Amount

Bequest $35,000 - $70,000

Charitable Gift Annuity $60,000

Charitable Remainder Trust $250,000

Role of Prospect Research

Why use research to identify planned gift prospects?

• Research leads the effort ….• Identify the organization’s pool of

qualified prospects• Categorize the prospects by gift type• Prioritize prospects capable of making

the largest gifts• Segment top prospects who should be

approached on a personal level

Primer on Planned GiftsBEQUEST

• Provision in a will or trust to pass money to a charitable organization upon one’s death • Wills are often the first estate planning tool

• Two primary age groups: Late 40s to late 50s; Mid 60s to late 70s

CHARITABLE GIFT ANNUITY• A contract between 1-2 donors and your organization. In exchange for making a gift,

you promise to pay the donor(s) a fixed amount regularly for life• Primary age group is mid 70s and older

CHARITABLE REMAINDER TRUST

• The trust that pays a specified annual amount to one or more people for a fixed number of years, or for the life of the individual(s) who benefit from the trust’s distributions; at the end of the term, the remaining trust property is distributed to your organization and any other specified charities

• Primary age group is mid 50s through early 70s

Loyalty & Prospect Identification

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Primary Attributes of Planned Gift Prospects

360 Donor View

•Giving history is trending positively/consistently•Volunteerism

•Generational correlations to planned giving

•Conservative use of credit•Preservation of assets

•Political contributions•Giving to other nonprofits

Loyalty to You

FiscallyConservative

Age/Cohort

Engagement with Others

Traditional focus is on consecutive years of giving or membership

• Loyalty may be shown through giving/membership that happens less frequently, but more often than not (for example 3 of 5 or 6 of 10 years)

Loyalty may also be known as affinity or engagement and demonstrated through other activities

Different Types of Loyalty

• Loyalty best described as a step in the engagement process

An expanded concept of loyalty may open doors to increased engagement by constituents

Nonprofits feel the compelling force of tradition every day

Looking outside tradition will allow you to identify the truly meaningful relationships that define loyalty and engagement

Use data to determine trends

• Metrics

• Analytics

Fit “best practices” to match what the analytics and metrics reveal for your organization

• Data driven success

Expanded View of Loyalty

Higher Education, K-12

Care (patient)

Cause

Arts & Cultural

Public Broadcasting (Radio and TV)

Faith-Based

Family & Human Services

Environmental

Loyalty by Nonprofit ‘Type’

Volunteer/DocentMemberTicket purchaserSubscriber# of VisitsOutreach to organization

• Donor or prospect initiated contacts • Positive or negative

Loyalty by Nonprofit ‘Type’ Arts and Cultural Example Faith-based Example

May vary significantly by the beliefs and traditions Volunteer

TeacherDelivery of meals

Regular attendanceOutreach (mission growth)Interesting outcome: engagement within the Jewish community drives giving to Jewish and non-Jewish organizations

Trajectory and BequestsThree donors (giving behavior for ages 50-70)

Donor 1• Consistent giving of $25 annually (bequest)

Donor 2• Consistent giving of $100 annually declining to $10

annually at age 65 (annuity)

Donor 3• Frequent but not consistent giving of amounts

$1,000+ escalating over time (CRT)

Grouping individuals of similar characteristics into respective categories

Way of taking a lot of data and grouping people into subsets in a meaningful way

Mosaic, Prizm, PersonicX, Niches are all pre-made cluster data overlays you can purchase

Cluster Analysis

Mosaic Clusters• http://www.experian.com/marketing-services/consumer-segmentation.html

Example:

Cluster Analysis

Autumn Years Established, ethnically-diverse and mature couples living gratified lifestyles in older homes

Aging in Place Middle-class seniors living solid, suburban lifestylesRural Escape Older, middle-class couples and singles living comfortable

lives in rural townsSettled and

SensibleOlder, middle-class and empty-nesting couples and singles in city neighborhoods

Clusters and Bequest Intentions• Segment by known bequest

intentions• For example, 76% of bequest

donors are described by 7 of the 26 clusters

• 29% of the non-bequest donors were also described by the same 7 clusters

• Concentrate on these prospects who are included in 1 of the 7 clusters for bequest cultivation and solicitation

APPLICATIONS OF CLUSTER DATA

Niche E8%

Niche I9%

Niche M14%

Niche N12%

Niche S8%

Niche Y9%

Niche X16%

All Other 'Mosaics'24%

% of Bequest Donors in XYZ Organization’s Database

Inferring Potential Loyalty from Philanthropic BehaviorAn individual’s history of past giving and overall philanthropic experience are key indicators for future philanthropic behavior and engagement.

NOZA - With more than 90 million records it provides the most comprehensive and up-to-date source of charitable giving data available anywhere.

Database Cooperative - A file of 80 million US households with over $2 billion in donations provided by over 900 of the largest non-profits in the US

Donor Loyalty

Donor/Prospect ActivityGiving to Other Organizations

Database CooperativeConstituent Analysis

Effective Use of Data

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Health Giving

Political Contributions

Credit Balances

Household Size

Credit History

Mosaics

Giving History

Planned Giver Profile

Donor Profile

Unknown < than $500,000 $500,000-

$999,999 $1,000,000-$2,000,000 $2,000,000-

$3,000,000 $3,000,000-$5,000,000 $5,000,000+

0%5%

10%15%20%25%30%

9% 8% 12%

27%23%

11%10%

% of CRT Donors

Real Estate Values and CRT Giving

• Wealth and asset data, such as real estate, can be used to better understand specific groups of donors

Data Mining for Planned Gifts

BEQUEST PROFILE

Recent and frequent donors with few people living in the home

Are either retirees, living quiet, comfortable lives, to very prosperous powerful middle-aged and older executives who enjoy more affluent lifestyles with prestigious careers and educations

Purchase a large amount of consumer products via postal mail and catalogs and give to religious organizations

RESEARCH POINTS

Look for loyalty in giving, membership or affiliation, volunteerismAge 40+, absence of children at homeHousehold Income at $70,000+Corporate titles or business ownershipEvidence of gifts to other organizations, especially religion

Data Mining for Planned Gifts

ANNUITANT PROFILE

Recent donors with few people living in the home, which they own outright or have no mortgage

Are retirees, living comfortable lives or are prosperous executives with prestigious careers and educations

Interested in business and finance, make political gifts and contribute to humanitarian organizations

RESEARCH POINTS

Look for consistent giving that may have waned recentlyAge 70+ with household close to pre-retirement levelsRetired status and possibly single, divorced or widowedEvidence of political gifts and giving to other organizations, especially

human services

CRT PROFILE

Committed donors to your organization, approaching or just passed retirement age and living alone or with one other person

May have been employed in science-related professions or business owners

Conservative financial habits with low or no mortgages; involved in the community through political giving

RESEARCH POINTS

Look for loyalty in giving, not necessarily high amountsAge 50+ with household incomes at $100,000+Corporate titles or business ownership, possibly in technology or

teaching in higher educationPolitically active donors

Data Mining for Planned Gifts

Getting Started

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Effective Donor Relationship Cycle

What’s happening now? Are you…

• Identifying planned gift prospects?

• Assigning planned gift prospects?

Are you moving donors seamlessly through the relationship management cycle?

• Avoiding “dormant” donors and prospects?

• Using Annual Fund to continually generate planned gift prospects and retain these prospects as active donors?

Gift DonorsPlanned

Gift Prospects

Annual Donors

Determine personal capacity of your development team’s planned gift prospect pool

Review your time allocation for other responsibilities to create more pro-active research time

The following slide shows maximum gift potential to your organization based on prospect portfolio size and national averages

Your chance to shine by uncovering a large amount of high-gift potential donors

Putting It All Together

Pro-active Research PlanWork with your Planned Gift team to create a multi-year research and solicitation plan

5-Year Research – Outreach – Solicitation Plan

# Prospect

s

Prospect-to- Gift

Conversion Rate

Average Planned Gift

Future Revenue Potential

Board Members 25 50% $50,000 $625,000

Past Board 100 30% $25,000 $750,000

Professional Staff 10 50% $20,000 $100,000

Long-term Employees 10 25% $10,000 $25,000

$10,000+ Single Gift 50 30% $50,000 $750,000

Stocks/Mutual Fund Donors 25 30% $50,000 $375,000

25 Gifts or more 500 20% $10,000 $1,000,000

10-Yr Donors 300 20% $10,000 $600,000

Other Top Prospects 750 <1% $10,000 $75,000

ProspectClassification

Summary and Q & A

Lawrence Henze, J.D., Principal ConsultantTarget Analytics, a division of Blackbaud, Inc. Based in Walnut Creek, CABlackbaud cell: 843-991-9921 Lawrence.Henze@blackbaud.com

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Katherine Swank, J.D., Senior ConsultantTarget Analytics, a division of Blackbaud, Inc. Based in Denver, COBlackbaud cell: 843-670-7278 Katherine.Swank@blackbaud.com

White Papers: http://www.blackbaud.com/company/resources/whitepapers/whitepapers.aspx

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