Study: Legacy Societies Boost Bequests, Planned Gifts

Legacy societies remain a popular method of both engaging donors and securing repeat gifts. All but 10 of the 120 largest American universities in terms of endowment size had a university-wide legacy society as of this past March. Nearly all, 104, of the institutions require no minimum gift for membership.

The Indiana University Lilly Family School of Philanthropy partnered with Pentera, Inc., an Indianapolis, Ind.-based planned-giving marketing and communications firm, to dig into the realities and opportunities around planned giving. The study looked at the top 120 universities in terms of endowment and especially five geographically and endowment size-representative schools. The schools themselves are not named. Researchers found that 97 percent of the sample universities’ nearly 6,200 planned-giving donors were members of legacy societies. More than a fifth (21 percent) of donors in the subsample have made more than one planned gift to the same institution.

“There’s been some talk based on some research that donors weren’t interested in legacy societies anymore,” said Caroline Donikian, CEO of Pentera. “I think this study shows that legacy societies are very popular…We also know that they make multiple gifts, so there’s a wonderful opportunity. It might start with a bequest and then they might give different types of gifts as they grow old. Maybe an annuity as time goes on.”

Clear member benefits, staff dedication to stewardship of members and consistency in communication delivering benefits over the time are qualities of top legacy societies, Donikian said.

The study further shows that prior ties to the school and location matter a great deal. Excluding uncertainties in data, 87 percent of primary-constituents in the sample were alumni and 44 percent lived in the same state as the university, with 16 percent living in a neighboring state. Donikian attributed this high volume to the closer alumni being able to get back to campus for events, but also the ease in which planned-giving staff might be able to interact with them one-on-one.

The takeaway should not be to focus on the state in which one’s university is located, Donikian said, but rather the need to deploy the same strategies used on nearby donors as those living across the country. “They should really put budget in the travel budget and marketing budget to get outreach to form the relationships that culminate in a gift,” Donikian said.

Other key findings from the report include:

  • Bequests were the most common type of planned gift based on the subsample (42 percent), followed by unclassified gifts (22 percent), charitably gift annuities (12 percent), and trusts and unitrusts (11 percent);
  • Alumni who obtained a degree were the most generous planned givers, unknown datasets aside, with gifts averaging $550,619 and a median of $102,214. Non-degree alumni ranked second with gifts averaging $474,239 ($85,236 median), followed by faculty and staff, $470,987 ($139,739), friends of alumni, $449,866 ($100,122), and parents or spouses of alumni, $397,809 ($90,512); and,
  • The 80/20 pyramid holds true. More than four out of five dollars (82 percent) given by subsector donors came from the top 20 percent of donors. About two-thirds (66 percent) came from the top 10 percent.

Donor relations and stewardship can play a major role. Nearly half (49 percent) of the subsample donors were between the ages of 51 and 70. Likelihood of making a planned gift increases sharply at age 50 and even age 45 when excluding trusts and annuities.

Planned giving staffs should look inward to see if they are capable of targeting donors in their mid-40s and stewarding them for decades to come, according to Donikian. Factors necessary for a strong infrastructure include multiple gift officers, minimal turnover and buy-in from the top down.

Ivy League schools typically have the capacity to engage donors in planned giving early on. For institutions without such resources, Donikian recommends focusing on a narrower age group, perhaps 60 and older, as opposed to attempting to spread planned-giving departments thin.