Donors With Wills Are Declining

Helen E. Winberry was 95 when she died in 2011. Nobody at the Summit Volunteer First Aid Squad (SVFAS) personally knew Winberry but she left a “substantial monetary gift” to the squad in her will, according to SVFAS President John Christmann. The gift appeared “in a moment of great need” as the squad launched a $5-million capital campaign to replace its 50-year-old headquarters in Sum­mit, N.J.

It’s not every day that donations all but fall from the sky for charities. It does seem less likely in recent years that it will come via a will.

In a nationally-projectable sample of 1,000 adults conducted by Opinion Research Corporation (ORC) exclusively for The NonProfit Times, fewer people said they have a will or include a charity in their plans if they do have will than did four years ago. This year, 77 percent of people surveyed said they do not have a will or include a charity in one, compared with 71 percent in 2010 and 52 percent in 2007. Almost two out of three respondents this year (65 percent) reported not having a will while one in eight (12 percent) do but did not include a charity.

As might be expected, the older the respondent the more likely they are to say they have a will, a pattern that held true in each of the three surveys handled by ORC for The NonProfit Times in 2007, 2010 and last month. Nine of 10 respondents ages 18-34 this year said they did not have a will compared with less than 30 percent of those 65 and older. But even among those 65 and older, the percentage of respondents who said they don’t have a will or do not include a charity in their will has jumped over the years — from 54 percent in 2010 and 37 percent in 2007, to 61 percent in 2014.

Women were slightly more likely to have a will or include a charity. Two-thirds of men said they don’t have a will while another 12 percent said they did not include a charity in their plans. Meanwhile, 63 percent of females said they don’t have a will compared with 17 percent who did and included a charity, a little more than the 16 percent of men who did.

Among those with household income of $75,000 or less, at least two-thirds said they don’t have a will. Just about half of those earning between $50,000 and $75,000, or $100,000 or more, said they don’t have a will.

At least one in five people surveyed with household income of $75,000 or more said they have a will and include a charity. That figure dipped to 18 percent among those earning $50,000 to $75,000 and 14 percent among those earning $35,000 to $50,000 or less than $35,000.

The most likely to have a will and leave something to charity is a household with two people (20 percent). As the household gets larger (three people), that percentage declined to 12 percent, compared with 18 percent among one-person households.

If children are members of the household, it’s less likely that respondents said they have a will but it also depends on the age. In households with kids younger than 13, only 9 percent said they have a will and include a charity versus 16 percent among those with children older than 13. With no children in the household, that figure was 18 percent.

Three out of four people surveyed who had a high school education or less said they do not have a will, and only one out of eight said they do and include a charity in it. Still, more than half of college graduates said they don’t have a will, and only a quarter of college grads said they have a will and will leave something to charity.

Involvement with organizations, including volunteering, continued to be the primary reason cited why individuals leave something to charity. Overall, 12 percent said it was involvement compared with only 3 or 4 percent for other avenues, such as published materials from the charity, radio or television advertisements, financial or legal advisors, and visits from charity representatives.

A higher percentage of respondents cited involvement with the charity as the age cohort was older, spiking at 19 percent among those 65 and older and 16 percent among 45- to 54-year-olds. Household income and education also played a role to some degree, with a high of 18 percent among those earning $100,000 or more and 19 percent among college graduates.

Some of the survey’s findings confirm previous studies, said Barlow Mann, chief operating officer at fundraising firm The Sharpe Group in Memphis, Tenn. Those findings include: the majority adults don’t have wills; of those who do have wills, the likelihood of a charitable bequest increases with age, household income and educational level. The 17 to 21 percent level of those who said they have a will and include a charity is consistent with estate tax return data from the Internal Revenue Service (IRS). It appears there was a reduction in wills and estate planning generally in 2009-10, he said, as a result of the Great Recession and the temporary elimination of the estate tax.

The reduction of people with a will likely is a direct outcome of the recent recession, said Jay Steenhuysen, chairman of the board of Indianapolis, Ind.-based Partnership for Philanthropic Planning (PPP). “We talk to donors about charitable intent, and intent to create and include charities in their plan. What we’re hearing is, ‘My kids are my charity,’ ‘My kid’s back sleeping on my couch’,” he said.

People might be afraid that they don’t have enough assets to plan, that it’s not worth the time or energy. “That’s the wrong question,” said Steenhuysen, founder of Steenhuysen Associates and co-founder of Covenant Calls. “An estate plan is ultimately about your loved ones and the things you care about, not about the amounts. Most people think of it as a transfer of property, not a statement of values,” he said.

Steenhuysen suspects that people who might be back to the financial level they were at before the recession are much more conservative as a result of the downturn. It’s reflected in how much they might leave to their children versus how much to charity. Much like how people are sitting on cash versus investing in stocks, “there’s not that trust level,” he said. “Trusting that their children are going to be able to take care of themselves has become less of a certainty. Where that will show up is on the margin.”


The bequest donor

The gift to the first aid squad fit the mold of what a person with a will looks like at least for now. The donor is more likely to be female, Caucasian and older, in addition to having higher household income or net worth and higher level of education.

Stories about substantial gifts and bequests coming from people who were not donors aren’t completely out of left field. “From a psychological perspective, it does make sense because the estate planning process is one that takes place under these conditions that we’d call ‘high mortality salience’,” said Russell James III, director of graduate studies in charitable planning at Texas Tech University in Lubbock, Texas. He recently published American Charitable Bequest Demographics, 1992-2012, an extensive examination of charitable planning by those 55 and older over two decades.

“There are always these bequests that fall out of the sky, but marketing is really essential,” said Kristen Schultz Jaarda, executive vice president at Crescendo Interactive in Camarillo, Calif. Organizations need to have an integrated, multichannel approach — online, email, direct mail, social media — because they don’t know where their donors are looking.

In its planned gifts online marketing study last year, Crescendo noted significant growth in access to planned giving websites, with organizations now building mobile sites alongside traditional sites.

The best advice she has for fundraisers is to become a resource for donors. An organization is really being set up as a resource in the planning process if it can offer this type of assistance, Schultz Jaarda said. As such, organizations often become plan beneficiaries.

There’s a general attitude that an estate will be distributed by the family — outside of the will or the probate process — and that’s happening fairly consistently, said Lindsay Lapole, a retired planned giving director for The Salvation Army’s Southern Territory who still consults charities and chairs ACGT. “It’s not going to affect these numbers but I think as more and more people view this whole process, it’s just the attitude that, ‘I don’t need a will, my family will take care of it when I die.’ And, they will. Unless there’s real estate involved, or some particular asset that needs a title change, there’s no reason for that family to ever go to the courthouse.”

In his research, James sees more than just an anecdotal decrease in the use of will documents. People older than 50 are less likely to have a will document, and in most cases, when a person dies with a will, it controls no assets. “Most people don’t realize that, thinking a will controls everything you own. It only controls those assets solely titled in the name of the deceased with no beneficiaries or joint owners,” James said. An account with joint ownership would no longer be controlled by a will but by the other person. “A will is actually a backup document.”

More states also are allowing transfer on death designations of real estate and other assets. Previously, one could not transfer real estate, requiring a will for a house. That’s changing. States have started to allow that and as of last year, 24 states allowed for a transfer on death designation, with some 13 states considering legislation, he said. “That’s sort of the last piece. When that last piece goes, you can transfer essentially everything via a transfer on death designation. It doesn’t go to probate,” James said.

Minorities are far less likely to have a will or include a charity in their will. Survey results showed that almost seven out of 10 African-Americans in 2010 said they don’t have a will and the rate was even higher among Hispanics, 86 percent. Among Whites, barely half said they do not have a will.

Over the years, minorities, specifically African-Americans, have not had the same access to wealth as Caucasians, thus have less to give to charities after providing for their families, according to Nelson Bowman III, executive director of development at Prairie View A&M University, a Historically Black College north of Houston, Texas.

Education is a factor as many in the minority community are not aware of the various planned giving instruments available, Bowman said. As wealth increases for African-Americans, he noted, they become more seasoned with their philanthropy and their giving to a larger array of charities increases.

James suggests that minorities may be an opportunity for expansion of charitable planning, not because of a lack of charitable interest but a lack of charitable documents. He said that while minorities are less likely to have wills, among those who do have wills, they have about the same likelihood to have a charitable component. The reason for the lower percentage is mostly driven by a lower percentage of those who have documents.

“Nonprofits should have some kind of planned giving program — even if they only have a wills program — that they can very easily promote,” said Tim Seiler, director of The Fundraising School at the Indiana University Lilly Family School of Philanthropy in Indianapolis, Ind. “There’s not a lot of administrative management of a program like that; you just let donors know that it’s possible. We advocate this in all our courses,” he said.

“The earlier the conversation begins the better,” Seiler said. “Just have the information out there for people. It’s very easy to promote. You can do it in emails, direct mail, on your website, promote the notion of estate planning and consider us in your estate plan. Just getting that message out to people soon is better than waiting for some perceived magical age of 40, 50, or 60,” he said. “By then people probably are set in what they want to do or not do and probably are not going to change their thinking. Giving people the idea earlier is better.”

Prairie View A&M University launched a planned giving website (www.pvamulegacy.org) in August 2012. The goal was to educate alumni “on the how, what and why of estate planning and giving,” said Bowman. The school also has a quarterly newsletter related to planned giving. While it’s not the same as having a planned giving officer (a prospect researcher on staff manages and markets the planned giving program), Bowman said the site does provide a presence and introduces another giving option. Traffic to the site and information requests increased last year, including $800,000 in irrevocable estate gifts initiated through the site, a 50-percent increase compared to 2012.

Gift planning marketers often suggest that it’s never too early to talk to people about estate planning. But recent research suggests that decisions on the final will – the one that matters – are not made until the very end.

U.S. data shows that the final will is likely to include a lot of charitable changes, dropping or adding charitable components, creating a period of instability right before death, according to James, the Texas Tech professor. Most people add or drop a charitable component in their estate plan within two to five years of death. “Because wealthy, charitable people die older, you’re looking at a decision framework in the 80s,” he said. “There’s a period of high instability in the plans that occurs.”

Recent data from Australia indicates that 31 percent of wills were signed within 24 months of death, according to James. More than three-quarters of all charitable bequest dollars were from wills signed at age 80 or older — and half from 85 or older — compared with less than 10 percent for those age 68 or younger.

James said the data coincides with what psychologists call “Terror Management Theory.” James said, “When death becomes real, it causes plans to become unstable,” he said, both in dropping or adding charitable components to a will. “A lot of these end-game changes are taking place here. It’s not good news because there are a lot of fundraisers who don’t want to hear those answers.”  NPT