Charitable Gift Annuities Making A Rebound

Activity in charitable gift annuities in 2019 hit the highest level in five years, according to a new report from a national wealth management firm.

Nonprofits represented in the 2020 Annual Charitable Gift Report, released by BNY Mellon Wealth Management’s Planned Giving Practice, saw charitable gift annuities increase 21 percent and the average gift amount jump 56 percent during 2019.

Gift sizes increased, with $100,000 or more accounting for 82 percent of total gifts. Gifts of more than $1 million grew from 17 percent of all gifts in 2018 to 35 percent of all gifts in 2019.

Nearly three quarters of donors (74 percent) made gifts to organizations that were outside of the state of their primary location, up from two-thirds (66 percent) during 2018. More than half of gifts (58 percent) were from repeat donors.

Charitable gift annuities can help create lifetime engagement with donors at all levels of support and can open the door for deeper conversations about other ways to make an impact with their giving, said Crystal Tompkins, national director of gift planning services at BNY Mellon Wealth Management.

There is an increased focus on legacy and intergenerational giving through estate plans, according to Tompkins. “The increased deduction for cash gifts in 2020 and the impact of low-interest rates are also leading many nonprofits to focus on split-interest life income gifts that provide current benefits to donors who want to both make an impact and be assured of financial security,” said Tompkins. “Despite these incentives, however, nonprofits are concerned about the impact of the economy and election on support for their organizations.”

The 28-page report provides analytics and observations on charitable gift annuity and charitable remainder trust activity for more than 100 nonprofits, as well as insights gained from BNY Mellon’s Planned giving clients on gift acceptance policies and donor behavior. BNY Mellon Wealth Management had $254 billion in total client assets as of June 30.

Among the 35 organizations that provided feedback on the impact of COVID-19 as part of the 2019 planned giving program client survey in April, just more than half (51 percent) indicated that COVID-19 had “negatively impacted” planned giving efforts. Almost one-third (31 percent) reported no impact and 17 percent reported a positive impact.

In response to the pandemic, 40 percent of organizations said they changed the tone of marketing messages and 20 percent focused on specific giving strategies. Only 3 percent decreased planned giving marketing. And, 40 percent of organization leaders also indicated a decrease in the level of “donor-initiated contact,” such as notifications of bequests and changes to estate plans or personal conversations.

If there’s a positive takeaway from the pandemic, according to the report’s authors, it’s that it revealed the importance of key operational imperatives:

  • Effective digital communications and social media strategy paired with personal, safely distanced outreach and connection;
  • Deep expertise in how all legislative changes create opportunities for donors to serve their families and their values well; and,
  • Leadership development, perhaps taking advantage of how COVID-19 has shifted many professionals’ focus to find more fulfilling work.