By Pat Munoz, Director of Organizational Development, River Network

For most small grassroots river and watershed groups, seeking bequests (gifts made through wills) is not a fundraising strategy frequently employed, and yet donations made through bequests each year consistently represent as large a piece of the charitable pie as corporate donations!

In the 1980s, when I worked at a large nonprofit, my new boss instructed me to start putting information about how to make a bequest in our newsletter. I was skeptical, afraid our members would be put off by talk of "wills" and "leaving a legacy", but followed his direction. For several years, nothing happened, outside of a few inquiries about the bequest process. Then, seven years later, we received our first large bequest, a six-figure gift, from a member who was a river guide and had died very young. Since that time, the organization has received several more of these windfall gifts, made usually by long-time members who are passionate in their love of rivers.

According to the American Association of Fundraising Council, bequests amounted to $16 billion, or 8% of the total private sector charitable pie in 2000. It is likely that this percentage will grow even larger over the next few decades, based on demographic reports that project a massive transfer of wealth between generations in the years ahead.

When and How to Use Bequests

A bequest program is a long-term strategy, not one that will produce immediate income for your organization. Bequests are unpredictable, particularly during the early years of developing a program, and as such should never be included as a line item in your annual income budget. At the same time, they represent a potentially large source of revenue comparable in size to foundations or corporations, and for this reason should not be overlooked by any organization which plans to be around for the long haul. I recommend a bequest program for any organization that has been around for at least five years, has a stable income base, a membership of at least 500, and a mission and long-range vision for the organization for at least the next 20 years.

While bequests can be used for almost anything, ranging from special projects to ongoing operating support, my view is that, unless the bequestor stipulates otherwise, they should be employed to create or increase an organization's reserves. Bequests are unexpected gifts and as such, provide organizations with a unique opportunity to create a financial cushion which could save the organization's life in periods of transition or financial difficulty. As part of the reserve, the money can be invested prudently and provide a small but steady stream of general operating funds.

Three Misconceptions

Why do small organizations usually fail to seek bequests? First, there is a misconception that seeking bequests is complicated, and that you have to be familiar with tax laws, estate planning, etc. in order to get involved. In my experience, this is not true. Encouraging your members to make bequests, and receiving these gifts when a bequestor dies, are simple transactions and can be undertaken by almost any grassroots group. Should technical questions arise, there are plenty of experts out there who can advise you on what to do.

The second reason that small organizations shy away from bequests is that it seems an awkward topic to broach with donors. I know that I worried that people would be "put off" the first time I talked about wills in a newsletter. Actually, the opposite is usually true. Giving your members information on how to make a bequest provides a way they can make their donation go farther and often reap tax benefits for their loved ones. It also provides donors who may not have much current income (because they are retired and living off savings) a way to make a future gift and enjoy the recognition for that gift in the present. Often, donors just don't think about bequests unless prompted, or they don't realize your organization is committed to being around for the long-term and is seeking this kind of gift.

Third, seeking bequests is usually regarded as a long-term strategy. And it is true that a strategy to encourage bequests will probably not generate revenues for five to seven years. But years have a way of passing by very quickly, so if your organization has a long-term vision and mission, and you have members who have been with you for several years, this is a strategy you simply cannot afford to overlook.

Benefits to the Donors

Bequests to a nonprofit provide a number of benefits for the bequestor and his/her loved ones (although all presuppose that the donor wishes to make a significant charitable gift):

• The bequestor is able to control how her/his wealth is used. By making a will and spelling out how s/he wants her money used, the donor has the satisfaction of knowing that her wishes for the use of her accumulated wealth will be honored.
• Estate taxes are avoided. Estates can be subject to taxes in excess of 55%. By leaving a portion of her estate to charity, a donor can reduce the tax liability on her entire estate.
• The bequestor can enjoy recognition while still living. If the bequestor advises the group of her intent to leave a bequest to the organization, the charity can honor the bequestor and express its gratitude while the bequestor is still around to enjoy it!
• The bequestor can be honored in perpetuity by the bequest. There are many ways an organization can do this. Groups have created planned giving funds, trails, memorial events, scholarship funds, intern programs, etc. to memorialize members who have made bequests.

Locating Bequest Prospects

Who are your best prospects for bequests? First, look for involvement. Basically, people who make a bequest to your organization are treating your nonprofit like a member of their family. Think of people who are connected to the organization, have been involved with it intimately, and know its needs. Board members, volunteers, and staff, both current and former, all fall into this category.

Apart from involvement, the best indicators of bequest potential are age (65 and over), frequency of gifts (two or three $10 annual gifts is often a better indicator than a single annual $1,000 gift), length of time as a member (three years or more minimum) and gender (the large majority of bequests to charities are from women who never married or who outlived their husbands). This is sometimes referred to as the FLAG system (frequency, longevity, age, gender) of identifying potential bequestors.

Since age (65 years or older) constitutes the most important indicator, it is important to record this information so that you can eventually separate out and mail to your older members. The best way to do this is by adding birth date information to member records, although creating a special code on the database for members who are over 65 may be another way to go.

You can add birth date information to your member files in a variety of ways. If you have a large membership (several thousand), it may be worthwhile to use a service which will match your names against an existing database containing birth dates. One firm that does this is Experian Marketing Services, in Schaumburg, IL, (561) 737-7477. For a fee, they will append birth dates to your files. You simply send your names to them on tape or disk.

It is usually worthwhile to look at your lapsed (unrenewed), as well as current members for bequest prospects, to increase the number of prospects you have to work with. Lapsed older donors are often excellent prospects for bequests. They may be on a fixed income and unable to send money, but still interested in your organization and willing to consider leaving you something in their will. Most development offices that have analyzed past bequests have found that a huge percentage of these gifts come from people who can't be found on their current donor files. Either these people never actually gave, or they stopped contributing so long ago that their names were deleted from the file. By using a combination of past giving history and age-and the age at which they stopped giving to your institution-you may find some prime bequest prospects in your lapsed files.

If you don't have enough members to warrant doing a data match, begin adding birth date information (or "over 65" codes) to your member records whenever you can. Ask for general information (a range of ages, for example) in your membership form and/or in any survey you do. Sometimes people volunteer information on their birth dates; other times you may get this information second hand, from other sources such as newspaper articles. The important thing is to start recording it on your member database. Before you know it, you will have a group of members who fall into the "over 65" category to which you can begin to provide detailed information about bequests.

Encouraging Your Members to Make Bequests

Here are some of the simplest and most cost-effective ways you can encourage bequests to your organization:

Letter/information sheet.
Prepare a very simple letter or information sheet which you can send out to your members upon request which gives the language they should put into their will in order to make a bequest. An example is given below:

Advertisements. Put a simple ad in every issue of your newsletter and annual report encouraging your members to make a bequest. Include a coupon or other information which enables them to ask for more details on how to do this.

Check-off sentences. Incorporate a check-off sentence such as "Please send me information about how to put XYZ Organization in my will" into the reply card for every special appeal or renewal mailing that you do.

Articles. One of the best ways to motivate your members to put you in their wills is by example. Include articles about specific bequests in your newsletter or on your web site. Don't just focus on large bequests-use examples people will relate to about small bequests. Tell a story about what another member did in this area and how it helped the organization.

Targeted mailings. If you have "over 65" information on a sizable number of members, do personal mailings to them. In these mailings, offer to send them more information, or even to come and talk with them personally about the possibility of a bequest.

Bequest Society. Once you have received notifications from several members that they have put you into their wills, create a bequest society. Coming up with a meaningful name for the society (the Red River Angels, the Connecticut River Legacy Society, etc.), providing certificates of membership, holding luncheons, receptions, and other events for society members, and recognizing them by listing their names in your annual report can provide the proper atmosphere for continued giving. At a minimum, these members should receive regular publications and information from your organization. This is key to keeping your organization in their will.

Workshops/seminars. Another good strategy for encouraging bequests is to have an estate planner do a seminar for your prospects. Be sure to include your own board and staff in the audience. Educating board and staff about this form of giving and turning them into believers and advocates for bequests is an effective strategy in itself.

Web Site. Be sure to put information about how and why to make a bequest on your web site. This information should include motivational material on why people should make a bequest, as well as a copy of the sample letter mentioned above, information about the benefits of making a bequest, who to contact for more information, and other important details.

With all these strategies, your role is to motivate and educate your members, board and staff about the benefits of bequests. One important caveat here is that you cannot be involved in the creation of someone's will, or give legal advice. Doing this opens you up to charges of exerting "undue influence." Always avoid giving specific advice or help and conversely, always advise a donor to use his or her own attorney or adviser to create or modify a will.

Record Keeping

We discuss above the importance of keeping information on members' age on your member database. In addition, I recommend opening a file on any member who indicates that he or she is considering naming your organization a beneficiary in her will. Use the file to record any visits or conversations you have with the member and to file any and all correspondence you exchange. This file will become the "organizational memory" for this very important group of members so that, should development staff leave, or computers crash, the record of the relationship you have established with these individuals will remain.

Budgeting

With small organizations, it is never wise to budget income from bequests, because they are so unpredictable. Most experts urge groups who receive bequests to put the funds into a reserve, or an endowment, where they will generate interest income and constitute a "safety net" for emergencies. If the bequest is a large one, perhaps the reserve fund can be christened with the bequestor's name, as a way of recognizing his/her gift in perpetuity.

How to Start

With bequests, the important thing is to begin and to be persistent. When you are putting your annual fundraising plan together this year, look over the strategies above and pick a few that seem feasible for your organization. If you, as executive director, development director, or board chair, don't feel that you can handle this additional work, ask someone on the board, or one of your volunteers, to take charge of this particular fundraising strategy. There are many examples out there (just look carefully at your mail from your college or hospital), and many experts and consultants who are knowledgeable in this field. It is a good idea to find a few experts in your community that you can call upon in case you have questions, or the donor needs to speak with a professional. A list of planned giving resources is given in the "Resources" section that follows.

Note:I gratefully acknowledge the debt owed to Kim Klein and John Jensen for many of the ideas and concepts discussed in this chapter.