Your SlideShare is downloading. ×
0
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Charitable Bequest Decision-Making
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Charitable Bequest Decision-Making

1,387

Published on

A review of research findings related to planned giving and charitable bequest decision making by Dr. Russell James

A review of research findings related to planned giving and charitable bequest decision making by Dr. Russell James

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,387
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
52
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Charitable bequestdecision-making:Practical lessons fromresearch findingsRussell James, J.D., Ph.D.Associate ProfessorDirector of Graduate Certificate of Charitable Financial PlanningDept. of Personal Financial PlanningTexas Tech UniversityPresented to the Big 12 Gift Planning GroupJune 6, 2012
  • 2. Neuroimaging Charitable Giving TheoryPsychology Tax Tips Demographics
  • 3. The speaker’s firstjob is to establishcredibility
  • 4. Our nextspeaker really knows what he is talking about
  • 5. Findings published or under review in peerreviewed academic journals ineconomics, sociology, marketing, andneuroscienceDr. James is the 2nd most frequently published author all time in ISI-ranked academic journal articles on the topic of “charitable giving” James, R. N., III. (2009). The myth of the coming charitable estate windfall. The American Review of Public Administration, 39(6), 661-when weighting for co-authorship (3rd in total articles) as of 2012 674. James, R. N., III & O’Boyle, M. W. (under review). Charitable estate James, R. N., III. (2009). Wills, trusts, and charitable estate planning: Aplanning as visualized autobiography: An fMRI study of its neural panel study of document effectiveness. Financial Counseling &correlates. Available at SSRN: http://ssrn.com/abstract=2000345 Planning, 20(1), 3-14.Wiepking, P. & James, R. N., III (in press). Why are the oldest old less James, R. N., III. (2009). An econometric analysis of household politicalgenerous? Explanations for the unexpected age-related drop in giving in the USA. Applied Economics Letters, 16(5), 539-543.charitable giving. Ageing & Society. James, R. N., III., Lauderdale, M. K., & Robb, C. A. (2009). The growthJames, R. N., III, & Baker, C. (2012). Targeting wealthy donors: The of charitable estate planning among Americans nearing retirement.dichotomous relationship of housing wealth with current and bequest Financial Services Review, 18(2), 141-156.giving. International Journal of Nonprofit and Voluntary Sector James, R. N., III., & Wiepking, P. (2008). A comparative analysis ofMarketing, 17(1), 25-32. educational donors in the Netherlands. International Journal ofJames, R. N., III, & Jones, K. S. (2011). Tithing and religious charitable Educational Advancement, 8(2), 71-79.giving in America. Applied Economics, 43(19), 2441-2450. James, R. N., III. (2008). Charitable giving and the financial planner:James, R. N., III. (2011). Cognitive skills in the charitable giving Theories, findings, and implications. Journal of Personaldecisions of the elderly. Educational Gerontology, 37(7), 559-573. Finance, 6(4), 98-117.James, R. N., III. (2011). Charitable giving and cognitive ability. James, R. N., III. (2008). Distinctive characteristics of educationalInternational Journal of Nonprofit and Voluntary Sector donors. International Journal of Educational Advancement, 8(1), 3-12.Marketing, 16(1), 70-83. James, R. N., III., & Sharpe, D. L. (2007). The nature and causes of theJames, R. N., III. (2010). Charitable estate planning and subsequent U-shaped charitable giving profile. Nonprofit and Voluntary Sectorwealth accumulation: Why percentage gifts may be worth more than Quarterly, 36(2), 218-238.we thought. International Journal of Educational James, R. N., III., & Sharpe, D. L. (2007). The “sect-effect” in charitableAdvancement, 10(1), 24-32. giving: Distinctive realities of exclusively-religious charitable givers. TheJames, R. N., III. (2009). Health, wealth, and charitable estate planning: American Journal of Economics and Sociology, 66(4), 697-726.A longitudinal examination of testamentary charitable giving plans. James, R. N., III. (2006). Multi-family housing, social capital, andNonprofit and Voluntary Sector Quarterly, 38(6), 1026-1043. charitable behavior: Does spatial connectedness influence social connectedness? Housing and Society, 33(2), 91-104.
  • 6. BackgroundPh.D., Consumer & Family Economics, U. of Missouri Dissertation on religious charitable givingJ.D., U. of Missouri School of Law, cum laude UMB award for most outstanding work in gift & estate taxation & planningDirector of Planned Giving, Central Christian College & practicing estate planning attorney, 1994-2000President, Central Christian College, 2000-2005Visiting Assistant Professor, University of Missouri, 2005-2006Assistant Professor, University of Georgia, 2006-2010Associate Professor & Director of the Graduate Certificate in Charitable Financial Planning, Texas Tech University, 2010-
  • 7. Quoted in media outlets including The New YorkTimes, The Wall StreetJournal, CNN, MSNBC, CNBC, ABC News, U.S. News &World Report, USA Today, The AssociatedPress, Bloomberg News and the Chronicle ofPhilanthropy.The ultimate endorsement from TheWall Street Journal’s SmartMoneymagazine…
  • 8. “On a recent day in the basement of acampus lab, Russell James is workingwith a brain-scanning machine thatwouldn’t look out of place in a top-notch hospital. James isn’t a madscientist…” -SmartMoney, February, 2012 =
  • 9. Charitable bequests financial significance • US charitable estate gifts over $22 billion; exceeds corporate giving of $15 billion (Giving USA, 2011). • In prior 20 years, charitable bequests more than doubled in real dollars (Giving USA, 2011) • Future growth from population aging and increasing propensity due to greater education and childlessness (James, Lauderdale, & Robb, 2009).
  • 10. • 70% to 80% of Americans engage in charitable giving each year (Giving USA, 2011).• About 5% of Americans have a charitable estate plan (James, 2009a).
  • 11. Over-50 Donors with Charitable Plans, 9.4% Over-50 Donors With No Charitable Plans, 90.6%* Donors giving $500+ per year, weighted nationally representative 2006 sample
  • 12. • Unlike current giving, it is difficult to measure experimental success in bequest fundraising• Ask-to-receipt may take 40+ years• Identification of distinct cognitive characteristics could inform fundraising strategies sensitive to these differences
  • 13. Neuroimaging
  • 14. Why use fMRI to study bequest decision-making?• Not all parts of decision- making are known to the decision maker• Activation reflects the type of cognitive processes
  • 15. Previous fMRI studies in giving: reward/salience• Moll, et al. (2006) found giving engaged mesolimbic reward systems in the same way as when subjects received monetary rewards.• Harbaugh, Mayr, and Burghart (2007) found giving elicited neural activity in reward processing/salience areas, e.g., ventral striatum.
  • 16. Previous fMRI in charitable giving: social cognition• Izuma, Saito, and Sadato (2009) found greater ventral striatum activation before a decision to donate when observers were present v. absent • Hare, et al. (2010), found giving value calculation was driven by input from regions involved in social cognition • Moll, et al. (2006) found decision to donate mediated by activation in areas which play key roles in social attachment and
  • 17. Basics of fMRI experiments
  • 18. We place subjects in an MRscanner where they canobserve a video screenand make choicesby pressing buttons
  • 19. We can then associate thosechoices with bloodoxygenation levels indifferent brainregions
  • 20. Subjects spend time in the scanner working with the buttons andscreen to acclimate to the environment
  • 21. A single image A contrast can contains much subtract out unrelated brain the noise activations Task A-Task A Task B Task B
  • 22. Think of study results in terms of contrastsImage Image of Image task A-of task of task A Image of B task B
  • 23. TheExperiment A comparison ofbequest decisionmaking with givingand volunteering decision making
  • 24. QuestionWhat brain regions are differentially activated bybequest decisionsas compared with giving and volunteering decisions?
  • 25. Exploratory expectations• Increased activation in areas involved in death-related contemplation• Unfortunately, very limited fMRI research on what these areas are
  • 26. Death-related words: precuneus • Gündel, et al (2003) worked with subjects who had lost a first-degree relative in the previous year. The only region showing significant activation (at p<.05, FWE) in response to grief-related (v. neutral) words was the precuneus. • Freed, et al. (2009) examined subjects who had lost a pet dog or cat within the previous 3. Four of twelve areas showing activity in response to the deceased reminder (v. neutral) words, were in the precuneus.
  • 27. Methods• Sixteen adult male subjects• Prior to entering the scanner, subjects reviewed terms along with the names and a one sentence description of each charitable organization.• Subjects had two right and two left response buttons for each hand, for a total of four response options.
  • 28. Comparison Questions1. “If asked in the next 3 months, what is the likelihoodyou might GIVE money to ______”2. “If asked in the next 3 months, what is the likelihoodyou might VOLUNTEER time to ____”3. “If you signed a will in the next 3 months, what isthe likelihood you might leave a BEQUEST gift to_____”96 questions: 28 x 3 large charitable organizations and4 x 3 family member recipient categories.16 second pairs (2B, 2G, 2V or 2G, 2B, 2V)
  • 29. TheResults
  • 30. Behavioral Responses (3) Some (4) (1) (2) what Highly MissiCategory None Unlikely Likely Likely ng Avg.Bequest 30.7% 38.9% 16.6% 11.3% 2.5% 2.09Give 30.5% 28.3% 26.8% 12.7% 1.8% 2.22Volunteer 24.4% 29.1% 25.8% 19.9% 0.8% 2.42
  • 31. What areas aremore engagedduring bequestquestions thanduring giving/ volunteering questions?A flight through the brain:http://youtu.be/NKKKE_7aFqM
  • 32. Relative Activations Comparing Charitable Bequest with Giving and/or Volunteering (reporting only p<.05 FWE corrected cluster-level) peak-level cluster-level p Z- p MNI Co- (FWE- scor (FWE-Contrast Title ordinates corr) e corr) ke(1) Bequest>Give Lingual Gyrus -2, -78, -2 0.004 5.44 0.000 1399 Precuneus 26, -66, 42 0.102 4.64 0.009 313(2) Bequest>Volunteer Lingual Gyrus 2, -80, -4 0.007 5.32 0.000 2254 Precuneus 30, -66, 40 0.180 4.47 0.004 356 Precentral Gyrus -34, -3, 36 0.397 4.19 0.001 433(3) Bequest> Lingual Gyrus 0, -78, -4 0.001 5.82 0.000 2016(Give+Volunteer) Precuneus 26, -66, 42 0.007 5.33 0.001 475(4) Give>Bequest Cuneus 8, -88, 20 0.157 4.51 0.003 388(5) Volunteer>Bequest Cuneus 8, -88, 20 0.060 4.79 0.000 1008 Insula -38, -20, 8 0.323 4.27 0.001 462(6) (Give+Volunteer) Cuneus 6, -90, 22 0.011 5.22 0.000 1014>Bequest
  • 33. Activating with Increasing and Decreasing Charitable Bequest Agreement (Linear Parametric Modulation reporting only p<.05 FWE corrected) peak-level cluster-level p p MNI Co- (FWE- Z- (FWE- clusterContrast Title ordinates corr) score corr) size(1) Increasing Lingual 10, -68, -4 0.004 5.46 0.000 671with agreement Gyrus Postcentral -40, -22, 52 0.007 5.37 0.000 1200 Gyrus(2) Increasing Precentral 38, -20, 62 0.000 6.20 0.000 1387with Gyrusdisagreement Insula 42, -20, 18 0.171 4.61 0.013 196
  • 34. Core areas more engaged for bequest contemplation• Precuneus• Lingual gyrus – Also increased activation was significantly associated with increased projected likelihood of making a charitable bequest
  • 35. Visualized Autobiography Precuneus and lingual gyrus activation occurred when subjects were able to vividly relive events in an photo, but not where scenes were only vaguely familiar. (Gilboa, et al., 2004)
  • 36. Visualized “retrieving detailed vivid autobiographicalAutobiography experiences, as opposed to personal semantic information, is a crucial mediating feature that determines the involvement of hippocampus and two posterior neocortical regions, precuneus and lingual gyrus, in remote autobiographical memory.” (Gilboa, et al., 2004, p. 1221)
  • 37. Visualized Autobiography • In Viard, et al. (2007), four of six regions showing significant activation when reliving events by mentally “traveling back in time”, were in the precuneus and lingual gyrus. • In Denkova (2006), three of the four most statistically significant regions associated with recalling autobiographical personal events were in the lingual gyrus and precuneus.
  • 38. Visualized autobiography = visualization + 3rd person perspective on self• The lingual gyrus is part of the visual system. Damage can result in losing the ability to dream (Bischof & Bassetti, 2004).• The precuneus has been called “the mind’s eye” (Fletcher, et al., 1995), is implicated in visual imagery of memories (Fletcher, et al., 2005) and in taking a 3rd person perspective on one’s self.
  • 39. Precuneus: Taking a 3rd person perspective on one’s self• Differentially involved in observing one’s self from an outside perspective (Vogeley & Fink, 2003)• Greater activation when subjects described their own physical and personality traits as compared to describing another’s (Kjaer, et al.,2002)• Activation greatest when referencing one’s self, lowest when referencing a neutral reference person (Lou, et al.; 2004)• TMS disrupting normal neural circuitry in precuneus slowed ability to recall judgments about one’s self more than the ability to recall judgments about others (Lou, et al., 2004)
  • 40. Autobiography: The self across timeInter alia, the In Meulenbroek, et al.“precuneus may respond (2010), the precuneusmore strongly to familiar was the mostevents involving the statistically significantself and possibly region ofwhen the self activation foris projected autobiographicalacross time.” memory tasks v.(Rabin, et al., 2009) semantic true- false questions
  • 41. Lingual Gyrus:Autobiographical Visualization“activation of the visualcortex (in the lingual gyrus)might also be related toautobiographical memoryretrieval and in particularto visual imagerycomponents, which play akey role in autobiographicalmemory (Greenberg &Rubin, 2003)” (D’Argembau, et al.2007, p. 941).
  • 42. Simultaneous cuneus deactivation: 1st v. 3rd person perspective? • Jackson, Meltzoff, and Decety (2006) found both lingual gyrus association with third person perspective and cuneus association with first person perspective. • Similarly, Wurm, et al. (2011), found greater activation in the lingual gyrus for third-person perspective and simultaneously greater activation in the cuneus for first-person perspective. • Others have also associated cuneus activity with first-person perspective- taking as contrasted with third- person perspective-taking (David, et al., 2006; Lorey, et al., 2009).
  • 43. Applications to practice in bequest fundraising
  • 44. Visual autobiography in practiceRoutley (2011) identifiedthe importance ofautobiographicalconnection wheninterviewing donors withplanned bequests, writing,“Indeed, when discussingwhich charities they hadchosen to remember, therewas a clear link with the lifenarratives of manyrespondents”
  • 45. Visual autobiography in practice“‘[In my will] there’s the Youth Hostel Association, first ofall...it’s where my wife and I met....Then there’s theRamblers’ Association. We’ve walked a lot with the localgroup...Then Help the Aged, I’ve got to help the aged, I amone...The there’s RNID because I’m hard of hearing...Thenfinally, the Cancer Research. My father died of cancer and soI have supported them ever since he died.’Male, 89, married‘The reason I selected Help the Aged...it was after my motherdied...And I just thought – she’d been in a care home forprobably three or four years. And I just wanted to help theelderly....I’d also support things like CancerResearch...because people I’ve known have died...An animalcharity as well...I had a couple of cats.’Female, 63, widowed” (Routley, 2011, p. 220-221)
  • 46. Visual autobiography in practiceFundraisers may consider emphasizing theautobiographical connections between thedonor and the charity,rather thanfocusing on thecharity’s needfor funds
  • 47. Psychology
  • 48. Death salience• Bequest decision making processes differentially activated areas similar to those involved in using death- oriented words to evoke memories of a recently deceased loved one (Gündel, et You al., 2003; Freed, et al., 2009).• This association is consistent with the rather obvious idea that bequest decisions involve reminders of mortality.
  • 49. Terror-management theory Suggests two levels of “defenses” to mortality salience (Pyszczynski, et al., 1999). Proximal defenses: avoid death reminders (Hirschberger, 2010), e.g., deny one’s vulnerability, distract oneself, avoiding self-reflective thoughts (Pyszczynski, et al., 1999). Distal defenses: attempt to achieve literal (i.e., religious) or symbolic death transcendence through support of one’s worldview or self-esteem (Hirschberger, 2010, p. 205). Some part of one’s self – one’s family, achievements, community – will continue to exist after death.
  • 50. Proximal • the most common initial reaction will be to avoid or postpone thedefenses in topic practice – Even among older adults, most have no will or trust (James, Lauderdale, & Robb, 2009) – For fundraisers, the enemy of the planned gift often isn’t “no”; the enemy is “later” • create deadlines, make appointments, or promote time- limited campaigns – Rosen (2011) pointed to the example of a challenge gift where a donor agreed to match 10% of bequests, up to $10,000 per donor, signed prior to a deadline
  • 51. U.S. Over 50 Population Charitable Plans, 5.7% Plans Without No Planning Charity, 38.2%Documents, 56 .10% * Weighted nationally representative 2006 sample
  • 52. Distal defenses in practice• Symbolic immortality requires something, identified with the decedent, which will live beyond them, typically descendants. Hence, childlessness is most significant predictor of charitable bequest (James, 2009a).• Large share of charitable bequest dollars go to permanent private foundations, typically bearing the deceased’s name (James, 2009b).• Donors may be particularly interested in lasting gifts (endowments, named buildings, scholarship funds, etc.) to stable organizations.
  • 53. Demographics
  • 54. Previous studiesOne time survey After death• Non-response bias if the whole survey was about charitable giving distributions • Only for taxable estates • Rare single county probate studies
  • 55. Current study Longitudinal DistributionsSame people asked every two years After death nearest relatives are asked about final distributions
  • 56. New Questions Changes Intentions v.Not just who has charitable plans but when do they add and drop them Outcomes Did during life plans result in after death distributions
  • 57. Details• Nationally representative of • Started in 1992 over 50 population since 1998. • Questions within• Over 20,000 people per survey. larger Health &• In person interviews, some Retirement Study follow up by phone. • Respondents paid
  • 58. What share of peopleover 50 in the U.S. have“made provisions forany charities in [their]will or trust?”
  • 59. U.S. Over 50 Population Charitable Plans, 5.7 No % Charitable Plans, 94.3 % * Weighted nationally representative 2006 sample
  • 60. U.S. Over 50 Population Charitable Plans, 5.7% Plans Without No Planning Charity, 38.2%Documents, 56 .10% * Weighted nationally representative 2006 sample
  • 61. What share of over-50 charitable donorsgiving over $500 per year indicate that they have a charitable estate plan?
  • 62. Over-50 Donors with Charitable Plans, 9.4% Over-50 Donors With No Charitable Plans, 90.6%* Donors giving $500+ per year, weighted nationally representative 2006 sample
  • 63. Can that be right? • Maybe a lot of donors will eventually get around to making a charitable plan?Willdonorsever getaround tomaking acharitableplan?
  • 64. Projecting based on age, gender and mortality or tracking actual post-death distributions 88%-90% of donors($500+/year) over age 50 will die with nocharitable estate plan.
  • 65. You mean 90% of our You mean we could generatedonors will die without 9 times more estate gifts from leaving a gift? our current donors?
  • 66. Among donors ($500+)over 50 with an estateplan, what is the singlemost significant factorassociated with having acharitable estate plan? Age? Education? Wealth? Income?
  • 67. Among Donors ($500+) with an Estate Plan % indicating a charitable estateFamily Status plan No Offspring 50.0%Children Only 17.1%Grandchildren 9.8%
  • 68. Regression: Compare only otherwise identical peopleExample: The effect of differences in education among those making thesame income, with the same wealth, same family structure, etc.
  • 69. Likelihood of having a charitable plan (comparing otherwise identical individuals)• Graduate degree (v. high school) +4.2 % points• Gives $500+ per year to charity +3.1 % points• Volunteers regularly +2.0 % points• College degree (v. high school) +1.7 % points• Has been diagnosed with a stroke +1.7 % points• Is ten years older +1.2 % points• Has been diagnosed with cancer +0.8 % points• Is married (v. unmarried) +0.7 % points• Diagnosed with a heart condition +0.4 % points• Attends church 1+ times per month +0.2 % points• Has $1,000,000 more in assets +0.1 % points• Has $100,000 per year more income not significant• Is male (v. female) not significant• Has only children (v. no offspring) -2.8 % points• Has grandchildren (v. no offspring) -10.5 % points
  • 70. Find your estate donor… A Bmakes substantial doesn’t give to charitable charity, doesn’t gifts, volunteers volunteer,regularly, and has and has no children
  • 71. From an Australian study by ChristopherBaker including 1729 wills:“Australian will-makers without surviving children areten times more likely to make a charitable gift fromtheir estate”
  • 72. How did giving during life compare with post death transfers?$ $ $ $
  • 73. Estate giving and annual giving for 6,342 deceased panel members Average Last Annual Annual Average Estate Gift Offspring Volunteer Hours Giving Estate Giving MultipleNo Children 32.6 (6.6) $3,576 $44,849 12.6Children Only 25.4 (7.1) $1,316 $6,147 4.7Grandchildren 23.2 (2.1) $1,497 $4,320 2.9Total 24.3 (1.8) $1,691 $8,582 5.1
  • 74. When did people drop charitable plans?
  • 75. Yes! Yes! No. What happened here?
  • 76. Factors that triggered dropping the charitable plan 1. Becoming a grandparent 0.7226* (0.2997) 2. Becoming a parent 0.6111† (0.3200) 3. Stopping current charitable giving 0.1198* (0.0934) 4. A drop in self-rated health 0.0768† (0.0461)Some factors that didn’t seem to matter: Change in income Change in assets Change in marital status*Fixed effects analysis including 1,306 people who reported a charitable plan and later reported
  • 77. When did people add charitable plans?
  • 78. Factors that triggered adding a new charitable plan• Starting to make charitable gifts .1531† (.0882)• An improvement in self-reported health .0927* (0.0446)• A $100k increase in assets .0061** (.0023)One factor dramatically reduced the likelihood that anew charitable plan would be added:• The addition of the first grandchild -.4641† (.2732)
  • 79. Do the estates of peoplewho make charitableestate plans growdifferently than thegeneral population?
  • 80. After making their plan, charitable estate donors grew their estates 50%-100% faster than did others with same initial wealth
  • 81. 2000000 2500000 3000000 3500000 4000000 45000001912 (Age 100) 1915 (Age 97) 1918 (Age 94) 1921 (Age 91) 1924 (Age 88) 1927 (Age 85) 1930 (Age 82) 1933 (Age 79) 1936 (Age 76) 1939 (Age 73) 1942 (Age 70) 1945 (Age 67) 1948 (Age 64) 1951 (Age 61) 1954 (Age 58) 1957 (Age 55) 1960 (Age 52) 1963 (Age 49) 1966 (Age 46) 1969 (Age 43) 1972 (Age 40) The Fall and Rise in Live Births - US 1975 (Age 37) 1978 (Age 34) 1981 (Age 31)
  • 82. 25,000,000 Total Resident Population by 5-Year Age Groups [(NP-T3-B) U.S. Census] Dramatic increases on20,000,000 the horizon 2001 Temporary drop in key demographic 2002 population 200315,000,000 2004 2005 200610,000,000 2007 2008 2009 5,000,000 2010 2011 2012 0 50 to 55 to 60 to 65 to 70 to 75 to 80 to 85 to 90 to 95 to 100+ 54 59 64 69 74 79 84 89 94 99
  • 83. Drop in this key demographic combined with health care improvements Deaths in the U.S. (Red is Actual; Black is Trendline)255000024500002350000225000021500002050000195000018500001750000 1990 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1992 1994 1996 1998 2000 2002 2004 2006 2008
  • 84. Projecting future bequest giving Frequency of future bequest gifts • Change in population • Change in tendency to make bequest gifts
  • 85. Charitable Estate Planning among US Adults Aged 55-656.0%5.5%5.0%4.5%4.0%3.5%3.0% 1996 1998 2000 2002 2004 2006
  • 86. Increases in charitable planning are driven by increases in childlessness and education Time trend disappears Time trend when including exists childlessness and education Estimate Estimate Estimate Variable (s.e.) p-value (s.e.) p-value (s.e.) p-value Year 0.0138 <.0001 0.0033 0.3298 0.0015 0.664 (0.0032) (0.0034) (0.0036) Any children -0.6251 <.0001 -0.6224 <.0001 (0.0345) (0.0479) Years of 0.1412 <.0001 …. …. Education (0.0048) full set of control variablesProbit analysis of all respondents age 55-65 in 1996-2006 HRS. Outcome variable is thepresence of charitable estate planning.
  • 87. Charitable estate planning among adults aged 55-65 40% 35% 30% No Children - No College Degree 25% No Children - College Degree 20% Children - No College Degree 15% Children - College Degree 10% 5% 0% 1996 1998 2000 2002 2004 2006
  • 88. Basic relationship• The trend of increased charitable estate planning is driven by changes in childlessness and education.• This allows us to predict charitable estate planning levels in the future.
  • 89. Upcoming cohorts and childlessness• Childlessness among women who will be entering the 55-65 age group over the next decade will be substantially higher than those in the 55-65 age group during 2006 (the year of the HRS data).• Women in the 56-61 age group during 2006 reported a childlessness rate of 16.0% in 1990 when they were aged 40-44 (Dye, 2005). In comparison, women in the 40-44 age range in 2004 (i.e., those who will begin entering the 55- 65 near retirement age group in 2015) reported a childlessness rate of 19.3% (Dye, 2005).
  • 90. Upcoming cohorts and education• Similarly, a college education is much more common among the upcoming cohorts of individuals nearing retirement age than among the current 55-65 group (Stoops, 2004).• In 1996, less than 27% of those in the 35-54 age group had at least a bachelor’s degree.• By 2007, over 31% of those in the 35-54 age group had at least a bachelor’s degree (Current Population Survey, 2007).• Thus, one can expect the upcoming cohorts of individuals nearing retirement to be more educated than individuals currently in the 55-65 age group.
  • 91. Big take-aways• Don’t just recruit estate givers by giving level, also know your donors without children• After making their intention, charitable estate donors grew their estates 50%-100% faster than did others.• Future demographics are generally positive based on population, childlessness, and education
  • 92. Charitable Giving Theory
  • 93. New Ideas for legacy promotion from a theoretical framework Applying “The Generosity Code”
  • 94. Why theory instead of just a list of techniques?• Limitations of “war stories” research – So called best practices may just be practices• Theory based strategies are more flexible – New techniques can emerge as circumstances change• Guides practice even where, as in bequest giving, interim measurement is difficult.
  • 95. What does a fundraiser do?• Bring in money?• This description is “true”, but not very informative. Applies to essentially all private sector jobs.• What does a Lawyer do? Makes money. What does a grocer do? Makes money. What does an artist do? Makes money.• You could bring money to your organization from government contracts, operation of a charitable business, or other means, but it wouldn’t be as a fundraiser.
  • 96. What does a fundraiser do?A fundraiser …
  • 97. What does a fundraiser do?A fundraiser …Encourages Generosity
  • 98. Encouraging generosity• An issue of fundamental human significance• An independently valuable mission separate from (although complementary to) your organization’s mission
  • 99. Understanding generosityGiving occurs whenthe “potentialenergy” of a gift’spotential value isunlocked by the“catalyst” of arequest
  • 100. Potential Value Quality of Gift of Gift Request (Energy(Potential Energy) (Catalyst) Released) x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 101. Interdependent Utility (Recipient’s experience) • I am happy because you were benefitted • Empathyi X Change in well-beingi Act ofReceiving Interdependent Utility (Recipient’s experience)Act of Self-Identity Self-EfficacyGiving (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms Others’ (Response of Recipient (Response of Others to (Response of Others toResponses to Donor) Donor) Others)
  • 102. Self-Identity (Donor as giver)• I am happy because I am generous, faithful, concerned, etc.• Importance of value and felt adherence to it Act of Receiving Interdependent Utility (Recipient’s experience) Act of Self-Identity Self-Efficacy Giving (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms Others’ (Response of Recipient (Response of Others to (Response of Others toResponses to Donor) Donor) Others)
  • 103. Self-Efficacy (Donor as change agent) • I am happy because I was the one who benefitted you • My actions were the cause of the change that I selected Act ofReceiving Interdependent Utility (Recipient’s experience)Act of Self-Identity Self-EfficacyGiving (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms Others’ (Response of Recipient (Response of Others to (Response of Others toResponses to Donor) Donor) Others)
  • 104. Reciprocity (Response of Recipient to Donor)I receive benefits from therecipient or representative charity Act of Receiving Interdependent Utility (Recipient’s experience) Act of Self-Identity Self-Efficacy Giving (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms Others’ (Response of Recipient (Response of Others to (Response of Others to Responses to Donor) Donor) Others)
  • 105. Social Exchange (Response of Others to Donor) I receive benefits from others because of my giving Act ofReceiving Interdependent Utility (Recipient’s experience)Act of Self-Identity Self-EfficacyGiving (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms Others’ (Response of Recipient (Response of Others to (Response of Others toResponses to Donor) Donor) Others)
  • 106. Cultural Norms (Response of Others to Others) I influence others in the way they behave towards others Act ofReceiving Interdependent Utility (Recipient’s experience)Act of Self-Identity Self-EfficacyGiving (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms Others’ (Response of Recipient (Response of Others to (Response of Others toResponses to Donor) Donor) Others)
  • 107. Theoretical background These value channels exists for reasons rooted in social psychology (proximate causes) and natural selection (ultimate causes) Act ofReceiving Interdependent Utility (Recipient’s experience)Act of Self-Identity Self-EfficacyGiving (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms Others’ (Response of Recipient (Response of Others to (Response of Others toResponses to Donor) Donor) Others)
  • 108. Theoretical backgroundWe can rearrange by their valuetype including both material andpsychological value sources Psychological Self-Identity Self-Efficacy benefits to donor (Donor as giver) (Donor as change agent) Material benefits to Interdependent Cultural Norms similar others Utility (Recipient’s experience) (Response of Others to Others) Material benefits Reciprocity Social Exchange to donor (Response of Recipient to Donor) (Response of Others to Donor)
  • 109. Understanding generosityGiving occurs whenthe “potentialenergy” of a gift’spotential value isunlocked by the“catalyst” of arequest
  • 110. Potential Value Quality of Gift of Gift Request (Energy(Potential Energy) (Catalyst) Released) x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 111. Quality of requestDefinitiveness• How clearly is a decision required?Observers• Who observes the decision?
  • 112. Quality of a request: Definitiveness General General Indefinitely Requires a issue support deferrable definite awareness concept response “no”No request General request Specific request• Definitiveness: The degree to which a request demands a definitive “yes” or “no”• The enemy isn’t “no”, it is “no response”
  • 113. Quality of a request: Definitiveness General General Indefinitely Requires a issue support deferrable definiteawareness concept response “no”No request General request Specific request “100,000 children have died in West Africa’s current food crisis.”
  • 114. Quality of a request: Definitiveness General General Indefinitely Requires a issue support deferrable definiteawareness concept response “no”No request General request Specific request “100,000 children have died in West Africa’s current food crisis. Please help one of the relief agencies if you can.”
  • 115. Quality of a request: Definitiveness General General Indefinitely Requires a issue support deferrable definiteawareness concept response “no”No request General request Specific request “Please give $50 to Oxfam to support relief efforts for children caught in West Africa’s current food crisis.”
  • 116. Quality of a request: Definitiveness General General Indefinitely Requires a issue support deferrable definiteawareness concept response “no”No request General request Specific request “We are sending an office gift to Oxfam on Friday. Put in whatever you like and I will stop by to pick up your envelope in the morning.”
  • 117. Quality of a request: ObserversObservation of a decision point adds a socialcost to saying “no” and a social benefit to saying“yes” based upon:1. Perceived likelihood of observance2. Observer’s social significance and level of commitment to beneficiaries
  • 118. Office beveragesavailable withpayment on an“honor” system.Picture abovepaymentinstructionsrotated weekly.Payments werehigher whenpicture of eyeswas posted.M. Bateson, D. Nettle & G. Roberts (2006). Cuesof being watched enhance cooperation in a real-world setting. Biology Letters 2, 412–414.
  • 119. Two groups with two computer backgrounds. Eachperson receives $10. Computer question: Do you want toshare any of it with another (anonymous) participant? A BK. J. Haley (UCLA), D.M.T. Fessler (UCLA). 2005. Nobody’s watching? Subtle cues affect generosityin an anonymous economic game. Evolution and Human Behavior, 26, 245–256
  • 120. Normal Eyes Screen Screen Not Sharing 12% Not Sharing 45% Sharing 55% Sharing 88%K. J. Haley (UCLA), D.M.T. Fessler (UCLA). 2005. Nobody’s watching? Subtle cues affect generosityin an anonymous economic game. Evolution and Human Behavior, 26, 245–256
  • 121. Applications to legacy givingPotential Value of Gift Quality of Gift (Energy (Potential Energy) Request (Catalyst) Released) x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 122. Unfortunate reality of legacy giving“74% of the UK population support charities andwhen asked, 35% of people say theyd happilyleave a gift in their will once family and friendshad been provided for. The problem is only 7%actually do.” From www.rememberacharity.org
  • 123. Over-50 Donors with Charitable Plans, 9.4% Over-50 Donors With No Charitable Plans, 90.6%* Donors giving $500+ per year, weighted nationally representative 2006 sample
  • 124. So, why is legacy giving so low? What is missing? x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 125. People may not consider charity during document creation (practice of advisors and mistiming of communications from charity). x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 126. Will drafting and legacy planning is easy to postpone (avoid facing mortality). x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 127. Will drafting is not public, and not an acceptable forum for peer observation. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 128. Most legacy giving benefits can only be anticipated, not actually experienced. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 129. Reciprocity or social exchange is limited. Prior to the gift, the intention is revocable. After the gift, the donor is gone. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 130. Charitable bequests may be viewed as competitive with transfers to offspring x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 131. What strategies withinthis framework mightimprove participationin charitable bequestmaking?
  • 132. Spend more efforts with those donors who do not have offspring (and thus lower competing interdependent utility). x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 133. Promote self-identify of the planned legacy donor as a current identity of social worth. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 134. [Legacy club] members haveIdentify an important a love for animals that lastsvalue. more than a lifetime.Associate currentplanned giving statuswith that value.Create experiencedgift value today, ratherthan only anticipatedpost-mortem value. Become a [legacy club] member today.
  • 135. Death creates a natural self-efficacy void. Emphasize giving opportunities with permanence. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 136. Self-efficacy in legacy giftsWith death we “disappear”, a serious impositionon self-efficacy. – The desire to overcome this is natural. – Humankind develops memorials emphasizing permanence.
  • 137. Self-efficacy in legacy giftsIt is easier for the wealthy to imagine charitablegifts with permanent impact. Buildings, large charitable foundations, parks, artConsider developing permanent givingopportunities for mid-level donors. • Named giving opportunities limited to legacy donors (so as not to pull from current giving) • Permanent memorial trusts for legacy donors only • Scholarships, lectureships, sponsor a child, sponsor a rescued pet, annual performances, etc.
  • 138. Develop small permanent giving opportunities exclusively for legacy gifts. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 139. Emphasize data on how quickly inheritances are spent by family members as compared to longevity of a “permanent gift” x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 140. Legacy societies to publicly recognize planned donors and create functioning donor communities through social events. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 141. Always reminding so that the option is “top of the mind” whenever planning happens to occur. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 142. Creating planned giving campaign deadlines to interfere with ease of postponement. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 143. A small organization’s two-year campaign to reach 100 planned legacies http://www.fcs.uga.edu/alumni/legacies.html
  • 144. Encourage will making in donor population. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 145. Provide free planning services to donors with high potential. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 146. Create immediate commitment pledge devices with follow up verification. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 147. Targeting advisors to include charitable questions in their document creation process through information and recognition. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 148. Why not recognize the intermediaries?• Intermediaries, such as a will drafting lawyer, are essential to the process.• Often the simple act of specifically asking about a gift to charity by an advisor is key.• A “new” idea?
  • 149. Magdalen HospitalList of Contributors, 1760From: Sarah Lloyd, ‘A Person Unknown’? Female supporters ofEnglish subscription charities during the long 18thcentury, Voluntary Action History Society ResearchConference, Canterbury, UK, July 14-16, 2010
  • 150. Recognizing intermediaries• Friends of charity solicitors society• Sponsoring free CPD (continuing professional development) charitable planning related education opportunities – Advertising those who have completed the CPD program.• Publishing recognition of active solicitors authoring charitable wills probated in most recent 6 months in particular county, town. – Shows frequency of professional activity.
  • 151. Consider legacy arrangements that involve children in charitable decisions. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 152. Public notice of founding of the Bible Society (1804) and listing of donors The Morning Post(London, England), Monda y, March 19, 1804; pg. [1];Issue 11061. 19th Century British Library Newspapers: Part II.
  • 153. Executors become votingGovernors for life
  • 154. The framework doesn’t provide automatic answers, but may help generate ideas about value creation and realization in your context. x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 155. Potential Value Quality of Gift of Gift Request (Energy(Potential Energy) (Catalyst) Released) x = Interdependent 1. Definitiveness Utility 2. Observers (Recipient’s experience) Self-Identity Self-Efficacy (Donor as giver) (Donor as change agent) Reciprocity Social Exchange Cultural Norms(Response of Recipient (Response of Others to (Response of Others to to Donor) Donor) Others)
  • 156. TaxTips
  • 157. 2012 special tax considerations• IRA qualified charitable distributions (QCDs) – not available• Roth IRA conversions• Low interest rates resulting in high valuations of future gifts
  • 158. Roth Conversion$1MM in standard $1MM in Roth IRA (withdraws IRA (withdraws are taxable) are tax free)
  • 159. Roth Conversion$1MM in standard $1MM in Roth IRA (withdraws IRA (withdraws are taxable) are tax free)
  • 160. Roth conversions and charitable planning can work together to matchIncome Deductions
  • 161. Roth Conversion$1MM in standard $1MM in Roth IRA (withdraws IRA (withdraws are taxable) are tax free)
  • 162. Where can I find offsetting deductions?
  • 163. Where can I find offsetting deductions? • Direct charitable gift • Charitable remainder trust • Charitable lead trust (grantor) • Charitable gift annuity • Donor advised fund • Private foundation Or give a remainder interest in a residence or farmland to a charity
  • 164. Charitable deductions maybe limited (with five yearcarryover) to 20%, 30%, or50% of income dependingon gift and recipient
  • 165. If I have unuseddeductions, how can Ipull future income intocurrent year?
  • 166. If I have unuseddeductions, how can Ipull future income intocurrent year?With a Roth conversion
  • 167. Roth Conversion$1MM in standard $1MM in Roth IRA (withdraws IRA (withdraws are taxable) are tax free)
  • 168. Roth conversions and charitable planning can work together to matchIncome Deductions
  • 169. Charitable gift of remainder interests in homes and farms
  • 170. A remainderinterest givesthe right to ownthe propertyafter a set timeor after thedeath of aperson
  • 171. CharitableDeduction
  • 172. Deduction for remainder interestin $100,000 of farm land byage 59 donor 11.6% (May 89) 1.4% (April 12) $15,684 $74,033
  • 173. Unlike a will, a remainder interest is notrevocable, and can even be sold
  • 174. A deductibleremainderinterest infarmland or ahome must betransferred bydeed, not bytrust or contract
  • 175. A farm is any land and improvements used (even by a tenant)to raise crops or livestock
  • 176. A remainder interest in anypart of a farm may be gifted (Rev. Rul. 78-303)
  • 177. 12.5% 25%Can I give a remainder interest of an undivided share in farmland?
  • 178. 12.5% 25% Yes, donor may deduct a remainder interest shared bycharity and others as tenants in common (Rev. Rule 87-37)
  • 179. 12.5% 25% However, IRS may deduct costof partitioning (of forcing a sale or division)
  • 180. • No deduction formineral rights remainder just in mineral rights because it is not a “farm” Reg. 1.170A-7(b)(4) • Can gift remainder in entire “fee simple” farm (even if land and mineral rights go to separate charities) PLR 8316037 • Can gift remainder in farm without mineral rights if you don’t owned them
  • 181. How do you calculate the deduction for a remainder interest in farmland?1. Find the 7520 interest rate (http://www.irs.gov/businesses/small/article/0,,id=112482,00.html)2. Multiply value of land by remainder percentage in IRS Pub. 1457 (one or two lives or specific term) (http://www.irs.gov/retirement/article/0,,id=206601,00.html)
  • 182. Ex: A remainder interest in $100,000 of farmland given by a 59 year old donor 5/121. Find the 7520 interest rate 1.4% http://www.irs.gov/businesses/small/article/0,,id=112482,00.html
  • 183. Ex: A remainder interest in $100,000 of farmland given by a 59 year old donor 5/121. Find the 7520 interest rate 1.4% (http://www.irs.gov/businesses/small/article/0,,id=112482,00.html)2. Multiply value of land by remainder percentage in IRS $100,000 Pub. 1457 (one or two lives X 0.74033 or specific term) = $74,033 (http://www.irs.gov/retirement/article/0,,id=206601,00.html) Table S - Based on Life Table 2000CM Interest at 1.4 Percent Age Annuity Life Estate Remainder 55 20.8206 0.29149 0.70851 56 20.2495 0.28349 0.71651 57 19.6800 0.27552 0.72448 58 19.1129 0.26758 0.73242 59 18.5479 0.25967 0.74033
  • 184. Leaving land to charity Leaving land to charity by will by remainder interest• Revocable • Irrevocable• $0 income tax deduction • $74,033 immediate income tax deduction• Impacts charity after death • Impacts charity after death or immediately if charity sells remainder interest
  • 185. Because farmland can be giftedin parts, a donor could annuallygive remainder interests up toincome limits or desiredmarginal tax rate • Allows for increasing valuation each year • Avoids risk of losing carryover deduction at death • Could use value of annual deductions to pay for ILIT life insurance passing tax free to heirs
  • 186. Donor can usemoney fromremainder taxdeduction to buytax free lifeinsurance (ILIT)for children’sinheritance
  • 187. Age 59 wealthy donor with $100,000 farmland on 5/12 remainder interest in will divides farmland 10% farmland given to charity to charity 90% to children$74,033 tax deduction x 35%combined tax rate = $25,911 $25,911 buys est. $70,000 paid up ILIT life insurance farmland worth $125,000 at death charity children children charityreceives receive receive receives$125,000 $70,000 $50,625 $12,500 farmland (tax free from (90% x 125,000 = (10% x $125,000) ILIT) 112,500, less 55% for post ‘12 estate taxes)
  • 188. Gifts of remainder interests in personalresidences can also be deducted
  • 189. Includes secondhomes, vacation homes, even a boat with bathroom, cooking, and sleeping facilities, if used by the donor as a residence
  • 190. Deduction for a house is reduced because, unlike land, it is depreciable (it wears out)Rules in IRS Pub. 1459 http://www.irs.gov/pub/irs-pdf/p1459.pdf
  • 191. 59 year old donor giving on 9/6/10 Remainder interest in Remainder interest in $100,000 farm $100,000 home .68233 x $20,000 (land) .68233 x $10,000 (salvage).68233 x $100,000 .41412 x $70,000 * $68,233 Deduction $49,458 Deduction *.68233 less .26821 depreciation reduction calculated on next slide
  • 192. Depreciation reduction factor R factor age now – R factor age after useful life of house D factor age now X Useful life of house Appraiser can estimate. IRS examples use 45 years. Table C(2.4) Factors for Reducing Assurances - Based on Table 2000CM Interest at 2.4 PercentAge Remainder R-Factors D-Factors Age Remainder R-Factors D-Factors Rx-0.5Mx Dx Rx-0.5Mx Dx x Factors x Factors0 .17830 1202916 100000.0 55 .56322 317860.0 24748.541 .17677 1185429 96977.54 56 .57383 304002.2 24008.452 .18060 1168311 94656.94 57 .58449 290311.8 23274.973 .18466 1151231 92407.69 58 .59517 276800.1 22547.024 .18888 1134179 90219.15 59 .60589 263478.6 21825.10… … …… … … … … … … …… … … …48 .49158 418809.2 30218.64 103 .95802 60.91156 35.6359549 .50143 404011.4 29397.77 104 .96077 33.72948 21.05020 263478.6-60.91156 Table C at http://www.irs.gov/retirement/article/0,,id=206601,00.html 21825.1-45 =.26821
  • 193. What if the donor leaves?
  • 194. What if the donor Give life leaves? estate to charity Agree with Give life the charity to estate to a joint sale charity in and divide exchange for proceeds a gift annuity Rent Sell life property estate
  • 195. What if I makeimprovementsto theproperty aftergiving aremainderinterest?
  • 196. You can deduct the remainder value of majorimprovements as additional gifts PLR 9329017; PLR 8529014
  • 197. EncourageGenerosity.com• New Graduate Certificate in Charitable Financial Planning at Texas Tech University 12 graduate credit hours No entrance exam On-campus or on-line• Free CFRE or CFP continuing education hours online

×