Are your bequests in trouble?


Every nonprofit board and executive should read this morning’s Wall Street Journal article, Counting on an Inheritance?  Count Again.  The article is primarily a discussion about the long-term impact on families of the economic declines of the last few years.

Interestingly, WSJ found that nationally, “alling asset values reduced projected inheritances for baby boomers an estimated 13%.”  In addition to the falling asset values, because of better medical care and a focus on more healthy living, older Americans are living longer, which means a greater reliance on savings and hard assets (i.e., they’re dipping a little deeper into pool available for future wealth transfer).

As family budget priorities shift to ensure parents and grandparents are cared for, we could see a shift in bequest commitments.  If your organization is counting on significant identified bequests for your long-term success, this should at least be cause for increased focus.

Here are some things you can do to protect your future bequest income:

1. Don’t “count” on bequest income.  Sure, you can make some assumptions for future income, but be very careful not to budget spending against future bequest income (until the check actually arrives).

2. Stay close to your donors.  Once a donor has notified you that you’re included in their estate plan, don’t just stop there.  These are your most committed donors, so treat them that way. I’m not suggesting you pester donors about their estate on a regular basis.  Instead, simply show them you care about them and want to keep the relationship alive.  This way, if something does change, you’ll have a much better chance of finding out about it early.

3. Use a conservative projection model.  Rather than using national average figures for projecting the average amount of future planned gifts (for those instances where you know of an estate commitment but don’t know the amount), use a more conservative projection.

4. Cast a wide net.  Assuming that at least some of your future planned gifts might be smaller than anticipated, or might not materialize at all, you’d be smart to more aggressively court additional planned gifts.


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2 thoughts on “Are your bequests in trouble?

  1. While most of us have seen our assets eroded in recent years, we are likely to recover if we live long enough. That’s the upside of having donors who live longer. While a bequest commitment is not a guarantee of future revenue, having many bequest commitments is a real plus for a nonprofit organization. Some might be smaller than anticipated while others might not be realized at all. However, overall, it’s still wise to secure bequest commitments. Realized bequest gifts will continue to be an important source of revenue for wise nonprofit organizations.

    For readers who want to better understand what a bequest commitment could really be worth, check-out my blog post on the subject: My post relies heavily on the findings of Texas Tech researcher Russell James.

    • Michael,

      Thanks for commenting! You’re absolutely right. Securing bequests and other planned gifts is still one of the smartest strategies any nonprofit can have for long-term revenue growth and sustainability.

      On my way over to check out your post on this subject. Thanks again! – Andrew