This week, CGP sat down with Patrick Schmitt, co-author of the recently published article “Philanthropy’s Missing Trillions” in the Stanford Social Innovation Review and CEO of the new social venture FreeWill, to discuss his research and his vision for the future of planned giving.
CGP: At this point, you and your team have done thousands of hours of research into the challenges and opportunities around planned giving. Why did you choose this as an area of focus?
Patrick Schmitt: We (three Stanford graduate students) spent several months trying to understand which areas of philanthropy, volunteerism, citizenship, and advocacy had the highest potential and the least attention.
We think planned giving — with $35 trillion to be inherited in the next twenty years — is by far the most important type of philanthropy in the coming decades, and frankly we are stunned at how little attention is paid to it in the broader sphere of philanthropy. (I served as the Head of Email Fundraising for President Obama and know many of the top digital fundraisers in the country — only one or two has ever thought about planned giving.)
CGP: In your article you discuss the absence of data in planned giving and why its holding the sector back. Can you explain?
Patrick Schmitt: In our interviews with more than 200 non-profit organizations, we realized that most places only know about 20-25% of bequests before they mature. This lack of a feedback mechanism has three negative consequences:
First, it becomes difficult to do long-term planning when an organization has no sense of how much money might come in over the next decade. (This is the most obvious result.)
Second, it holds back learning within organizations and across the sector. In email fundraising, you can test two versions and immediate know which performed better with donors. In planned giving, it might take 25 years to understand the value of a given mailing! So you have very smart people that aren’t getting smarter as quickly as their peers in other areas of philanthropy.
And third, it leads to chronic under investment across organizations, as planned giving officers cannot demonstrate their full value to their boss or their board.
CGP: You interviewed hundreds of donors who fall into the Baby-Boomer category. What did they tell you about planned giving?
Patrick Schmitt: There’s two pieces of bad news that we heard from that group.
First, Boomers hate estate planning, and routinely used the words “scary, complicated, and expensive” to describe the process. (More than half of Boomers don’t have any estate planning at all, which is unhelpful for philanthropy, and catastrophic for other reasons!)
Second, when they finally get around to estate planning, it is incredibly rare that they are prompted to think about charitable giving during the process -- either online (which is rapidly increasing as a means of estate planning as tools become much, much more sophisticated) or through an attorney.
CGP: Were there any positive results? And what can our field do to change these results?
Patrick Schmitt: Actually, most of this is great news, and points at an extraordinary opportunity in the years ahead. Given that bequests are already $30B annually and both demographics and processes are working against us, we think that number can triple with shifting demographics and a bit of work.
In our own experimentation with FreeWill.com, we found that under quasi-ideal conditions, more than 35% of people will include bequests in their wills, and more than $34 million has been committed to promising charities, with very little marketing effort.
Organizations should be focusing on making it as easy and clear as possible for people to start the estate planning and planned giving process, knowing that the idea that this is “scary, complicated, and expensive” is holding them back.
In a future post, I’ll talk through the “Donor Mind Map” based on our research, and how to better help people come around to making planned gifts.
Patrick Schmitt presented at NCPP 2017 with Helen Zou in the Marketing and Communication track with a presentation titled "The Real Reason Donors Aren't Making Planned Gifts, and What to do About it". Download their slides for FREE here!