When Plato wrote a provision in his Will to leave his farm to support

students and faculty at the academy he founded, little did he know that he

would create a tool that now accounts for 8 percent of all charitable giving

in the United States. No one knows for sure if this was the first planned

gift in history, but certainly one of the first. Despite the vital role that

planned giving plays in healthy endowments and the long term security of our

nation's nonprofits, it still faces formidable obstacles, both internally and

externally. Let's take a close look at the internal obstacles and save the

external challenges for another time.

"Endowments are essential to the health of every nonprofit," states David

Nicholas CPA, CFWC, a planned giving consultant from Bakersfield, California.

Harvard University's endowment, the largest, climbed $1.4 billion to $27.4

billion as of June 30, 2010 according to a report by Harvard Management Co.,

which oversees the fund. However, it's still well below $36.5 billion, the

2008 value before markets plunged and the endowment lost a record 27 percent,

leaving the school short of cash.

During the recent recession, when one regional hospital faced an operating

loss in the millions, it was their endowment that came to the rescue by

providing the needed funds. The hospital faced, as many nonprofits do, the

triple whammy: annual giving was down; the need for services was up; and

income from their shrunken endowment was down. According to a recent

Guidestar survey, 58 percent of nonprofits reported an increased need for

services and 1 in 12 say they still face closure.

The financial "safety net" benefits of a strong endowment have been

experienced profoundly through this recession; along with the clear message

that endowments must be strengthened even more in the future. However, the

benefits extend far beyond securing an organization through a recession. In

addition, they allow nonprofits to reduce the pressure on annual fund

raising; to fund special projects; to strengthen donor confidence; and to

give donors in-perpetuity options, thereby strengthening the lifelong

connection with donors.

"A proactive and sustainable planned giving program is essential to a strong

endowment and the long term stability of every nonprofit." says Sal Salvo, a

planned giving consultant from Parsippany, NJ.

Problematically, many nonprofits are struggling to maintain a strong, vibrant

planned giving program. Urgent financial needs and short-term organizational

goals often compete with the long-term nature of planned giving. Leadership

must face these issues with courage, conviction and commitment, particularly

during these times when short term needs threaten to dampen the commitment to

planned giving and drain limited resources - both time and money.

Think about this, how crucial are nonprofits to America's economic recovery

and future? Absolutely vital! As the government cuts back on social programs,

more of that burden will fall on many of our nation's nonprofits, increasing

the need for services and the cost to deliver those services. Most people are

unaware of the sheer size of the nonprofit sector and the role that it plays

in our economy. If U.S. nonprofits were a country, it would rank as the sixth

largest economy in the world—larger than Canada or Russia! Therefore, it

represents a significant portion of our economy, overseeing almost 13 million

employees, or 1 out of every 10 employees in the United States workforce.

U.S. nonprofits produce $1.1 trillion in annual revenues—5 percent of our

Gross Domestic Product (GDP).

Pittsburgh, my hometown, was recognized as leading the way in charitable

activity in a survey earlier this year, by Charity Navigator, which evaluates

the financial health of over 5,500 of America's largest charities. However,

the news is not so rosy around the country. The recession has negatively

impacted giving among individuals, who make up three quarters of U.S.

charitable giving, according to Giving USA 2010. In this last year, giving

from individuals dropped 3.7% from the year before, adjusting for inflation.

Giving USA 2010 states, "This reflects the continued recession..."

In terms of planned giving, bequests declined over 23 percent according to

the same report and have declined four of the last seven years. According to

the latest information from the IRS, the number of charitable trust tax

returns was essentially flat from 2002 to 2007, a time when market gains

should have made charitable trusts very attractive.

If a proactive, sustainable planned giving program is so essential to the

health of nonprofits, why do you face so many internal challenges? These

challenges include lack of board support, inadequate financial resources,

out-of-date donor tools, inability to focus your attention, and lack of

organizational stewardship due to short term myopia.

According to Philanthropy Journal's Planned giving can ward off disaster, "In

times of economic turmoil, planned giving provides a reliable way of building

endowments and staving off financial crisis, experts say... Especially during

economically stressful times, nonprofit fundraisers tend to set aside future

concerns to address immediate needs. As a result, they miss out on

opportunities to fortify their organizations." Yet, the boards of many

charities do not understand the value of planned giving in building and

stewarding relationships with key donors, and therefore do not prioritize

gift planning in the nonprofit's budget.

You know the phrase, "But we've always done it that way." It's rooted in our

desire for things to remain the same. Inherently, we resist change. Someone

once said, "I don't mind change as long as I don't have to change."

Meanwhile, times have changed. More importantly, donors have changed. The

tools of yesteryear are no longer producing sufficient results. We must

incorporate new and more efficient ways to communicate the benefits of

planned giving.

In the Non Profit Times latest survey, the 2008 National Salary Survey, the

national average was: Development Director - $70,568; Planned Giving Officer

• $79,112; Major Gifts Officer - $71,968. With benefits, that is an

investment of close to $100,000. If the typical planned giving officer can

see 100 to 150 donors per year, that puts the cost per donor contact at

between $667 and $1,000. More effective tools and systems must be used to

leverage the investment that nonprofits are making in planned giving and

major giving officers. Some belief that these tools and systems can be

created internally, that just doesn't make good business sense. If a

fundraiser is gifted at face-to-face meetings with donors, they will not have

the skills to create and perfect tools and systems to leverage their time and

impact. These tools and systems can be brought in. It's the very same reason

that franchises enjoy such a huge success rate - proven recipes and systems.

It's not simply doing more things... it's doing more "right" things.

The latest Gift Planner Survey 4 underscores the challenge every planned

giving officer faces: lack of focus due to too many priorities and not enough

time... like a one-armed paper hanger! Only 17 percent of fundraisers enjoy

the luxury of spending all their time and energy focused on planned giving!

That's less than 1 in 5... and 1 in every 3 planned giving officers spend

less than a quarter of their time focusing on planned giving.

Lastly, urgent, short term need and wants often overshadow an organization's

dedication to long term stewardship. Farmers have a phrase for it - eating

your seed corn. And any good farmer worth his salt will tell you, "Never eat

your seed corn." A number of farmers have vividly described to me times

growing up when their dad locked the seed corn in the barn, despite the fact

that their family was hungry. Nonprofits are eating their seed corn, putting

the burden on the next leaders and team that will follow in their footsteps.

Lack of board support, inadequate budget, out-of-date tools, inability to

focus, and lack of organizational stewardship due to short term myopia... the

result of these internal obstacles is a planned giving program that starts...

stops... starts... stops. What message do your donors hear when that is what

they see?

And a start/stop process is self-fulfilling, "We tried that for a year or two

and we didn't like the results. No, we didn't put enough time and effort into

it, but we were busy." You can't eat the fruit from farming when you don't

persevere. That's why the popular fitness program is called P90X... it

doesn't work as P20X or P35X or P45X. It's P90X! Planned giving is no

different than farming or fitness!

Granted, there are also external obstacles that make planned giving a

challenge. Yet, as an organization, we have the ability to remove the

internal obstacles and create the environment where planned giving can

thrive... and sustain. Let's recommit to a long term perspective and... get

our board - on board; allocate sufficient money and time; shed the old tools

in favor of more cost effective, time efficient tools and systems; and be

willing to persevere and enjoy the fruit of planned giving.