10% Of Bequests Surprise Charities

For the United Way of Yavapai County, it was like winning the lottery. The Prescott, Ariz.-based affiliate, located about 100 miles north of Phoenix, received an unexpected $3-million bequest during 2019.

“We had no idea until we got a letter from the estate’s attorney,” sometime about late October or early November of 2019,” Executive Director Annette Olson said. “We just have heard from his nephew that he’d been in this area as a retiree and had been paying attention to what’s going on with local nonprofits,” she said.

Daniel Huband Roberts died in 2018 and left the bulk of his estate, about $3 million, to the United Way of Yavapai County. Given that he was a veteran of World War II, Olson said the affiliate initially established a Veteran Scholarship Fund for local veterans.

Bequests continue to be the most likely way that donors make a planned gift but Yavapai County was in the minority when it came to charities being made aware of planned gifts.

More than half of donors (52.4 percent) reported “always” telling organizations about their planned gifts while more than one-third (38.7 percent) “sometimes” informed the organizations. That leaves fewer than one in 10 donors who never tell a nonprofit about their planned gifts, according to “Leaving a Legacy: A New Look at Planned Giving Donors.”

The study, published by the Giving USA Foundation and featuring research from a team led by Elizabeth Dale, Ph.D., assistant professor of nonprofit leadership at Seattle University, surveyed more than 860 donors interested in planned giving and conducted interviews in early 2019.

Respondents were most likely to make a bequest, 68.1%. Other avenues for planned gifts weren’t nearly as popular, including a charitable beneficiary of a retirement plan, 29.7%; insurance policy beneficiary, 18.5%, and a charitable trust, 18.5%.

Bequest giving accounted for 9.6% of the $449.64 billion contributed to charity in 2018, or about $43.21 billion. Bequest contributions have exceeded $30 billion in each of the previous five years.

The top three motivations donors cited in the survey for making a planned gift were:

  • Importance of the cause;
  • Belief that the nonprofit makes a significant impact; and,
  • Donor’s ability to make a larger gift through an estate gift than during the donor’s lifetime.

The average age donors wrote their first will was 44 and almost all used a legal advisor. More than half of donors (53%) established their first planned gift at the time of writing their first will. The average age at which donors made their first planned gift was 52.8 years old. Among gay and lesbian donors, the average age of first gift was 50.

Yavapai County received the funds at the beginning of December 2019, with a timeline to develop a strategic plan. When people see a gift of that magnitude, it gives confidence to others that it’s where they want to invest their donation dollars, Olson said, noting that they already had seen a spike in individual giving after the news of the seven-figure bequest came out.

“I’m sure that’s what happens to a lot of lottery winners. We’re not going to be impulsive,” Olson said, adding that it’s safe to immediately do a veterans’ scholarship fund because there’s so much more meaning to it. “To honor him and his service seemed like a no-brainer,” she said, in addition to increasing the amount that goes to program partners.

“It is important to keep focused and to consider all of your options, bring in advice as you go along, if you need experts in different areas, to explore your options,” Olson said.

“I’m sure we’ll make funds a lot more available for their yearly grants, for now. It could be a lot we do in the future,” Olson said, being mindful of new strategic plans since it’s a new way of looking at things. Sustaining the gift will be important but also providing for organizations and serving the community no matter what happens, not just a financial crisis, as far as the economy, but any kind of crisis. For example, the Prescott Fire Department’s Granite Mountain Hotshots lost 19 of 20 members while fighting the Yarnell Hill Fire in 2013.

In a typical year, the affiliate generates between $2,000 and $5,000 in bequest revenue, according to Olson, executive director for the past four years and one of four part-time staff that run the affiliate. Overall, Yavapai County reported about $231,000 in contributions and $308,000 in revenue in 2018, and fluctuating in recent years: $425,000 in 2017, $307,000 in 2016, and $533,000 in 2015. The affiliate grants typically between $200,000 and $280,000 to its 25 to 30 program partners, about every six to 12 months, sometimes those change throughout the year.