Charitable giving increases with a donor’s financial confidence and stability. Right? While this commonly held notion seems intuitive, it isn’t always the case.
In the last few years, many Americans have experienced financial uncertainty. A global pandemic, a tumultuous political climate, and a fluctuating economy have often made finances tricky—which in turn created challenges for planned giving professionals.
Luckily, you can show charitably minded individuals how they can make a big philanthropic impact without affecting their current cash flow. With thoughtful, targeted messaging across all forms of donor outreach, you can acknowledge concerns, offer easy solutions, and encourage action.
Understand the problem: Three reasons for gift resistance
The first step in presenting and facilitating effective gifts is to understand the challenges many donors are facing. Americans, in general, are holding their wallets a bit closer right now—but why?
1. Dwindling savings. Americans’ top priorities right now are to reduce spending and increase savings—even when that means delaying life goals. According to a USA Today/Harris Poll survey, 71% of Americans built up excess savings during the pandemic, but 60% of those individuals have depleted most or all of that money. Many people are now devoting a portion of their finances to increasing or rebuilding their savings.
2. The “silver tsunami.” Americans are reaching retirement age in record-breaking numbers. In 2024, over 4 million people will turn 65 at an average rate of over 11,000 per day, and this pace is expected to continue until 2027. These new retirees must make the transition from paychecks to Social Security checks—a shift that may leave some questioning how charitable giving will factor into their new financial reality.
3. Economic concerns. Among many looming unknowns, Americans have concerns about the economy. In fact, a Gallup poll found that 63% of respondents felt that the economy is getting worse. Donors are likely concerned about the rising price of goods and services, the unpredictability of the stock market, and the possibility of a recession.
Offer solutions: Three gifts designed to alleviate donor concerns
The second step, after acknowledging donor concerns, is to discuss planned gift options that offer a simple solution. After all, donors feeling cautious about their current cash flow can make significant and meaningful gifts that don’t impact their day-to-day finances. Educate donors on how the following planned gift options can fit well within their current plans.
1. Gifts in a will. Including a charitable bequest in a will is a powerful way to give without impacting current finances. Encourage donors to create a percentage gift instead of a dollar amount. Fixed gifts will not adjust to changes in an estate’s value or inflation and may result in a less substantial gift than the donor intended.
2. Beneficiary designations. Naming your organization as the beneficiary of a life insurance policy, IRA, or other retirement account is another attractive gift option that doesn’t affect current cash flow. Creating a charitable beneficiary designation on a tax-deferred retirement account also avoids potential double taxation of these assets (once in the estate and once as income to the heirs).
3. Grants from donor-advised funds (DAFs). DAF assets exceeded $228 billion in 2022. Many individuals who have donated to these funds have been waiting for inspiration to make charitable grants. Periods of economic uncertainty may be the perfect time for individuals to give from previously established donor-advised funds. Since the donor has already irrevocably earmarked those assets for charity, grants will not further impact their personal finances.
Encourage action: Three ways to help donors take the next step
It doesn’t have to be daunting to approach donors during times of uncertainty if you are mindful and strategic.
1. Continue to ask. Don’t assume your supporters can’t or won’t make gifts to further your mission. One of the biggest barriers to giving is simply that the donor wasn’t asked. Research shows loyal donors want to continue supporting your organization even in unpredictable times.
2. Connect and communicate. Donors want connections with your organization. Studies show donor engagement and retention go hand-in-hand. Communicate with donors about exactly how their gifts impact your organization and how valuable their support is to your mission.
3. Listen to concerns and present effective solutions. Take the time to understand a donor’s passions, motivations, and barriers to giving. Then shift the dialogue to finding the most strategic and sustainable ways to give that align with the donor’s needs and goals. Donors may be unaware of all the giving options available to them and how those alternatives could work best for them.
Don’t be fearful during uncertain times—be strategic. Understand your donors and offer gift options that bypass their concerns or otherwise effectively fit into their financial situation. Your efforts will have a lasting impact on furthering your organization’s mission and cultivating deep bonds with your contributors.
