“Crisis of the Ages” Averted: How Nonprofits Can Survive and Prosper

laughing from the bankLast month I alerted you to a coming crisis that will befall nonprofits and businesses in general. You can read about it here Crisis of the Ages … Is Your Nonprofit Ready?.

I promised that I would provide you with ideas that will help nonprofits to withstand the crisis, and possibly help organizations to thrive during this critical time in our history.

In 1989 When I left the for-profit world and ventured off into the world of nonprofit management and fundraising, there wasn’t much being said about planned gifts at that time. Nonprofits gladly accepted bequests as their donors passed away, but those gifts were few and far between. The majority of nonprofits, except for colleges and hospitals, didn’t have planned giving as part of their overall proactive development strategy.

Then in the mid-1990s while serving as Director of Development for a Detroit, Michigan-based nonprofit, the good folks at Indiana University School of Philanthropy (now the Lilly Family School of Philanthropy) invited me to attend a series of seminars focused on major gifts, endowment and planned gift fundraising. These were terrific experiences! This was also the first time that I heard anything about the fast-approaching wealth transfer/planned giving opportunities.

The aging Baby Boomers are presenting the largest wealth transfer in history with an estimated $41 trillion dollars in wealth being transferred before the year 2052. Learn more about this wealth transfer and its opportunities for planned gifts by reading Wealth Transfer Report from Boston College.

Fast forward to today, and in the 20 years since I first learned of this historic wealth transfer, and since then having worked with many consultants who were advising the nonprofits I served on matters of planned giving and major gifts, not once did these consultants ever suggest what the nonprofits should do with the planned gifts as they are received, nor did they warn of what was coming after the end of The Great Wealth Transfer in 2052. Unfortunately, many nonprofit consulting firms, like many businesses, tell their customers what they want to hear. Nonprofit leaders are eager to learn how they can raise more money, but do not like being told how to use the funds they’ve raised.

What can nonprofits do now to be prepared for the forthcoming crisis?

First, every nonprofit small and large should have their own endowment. I learned this 20 years ago. And as often as I have advised nonprofit CEOs and Boards to establish an endowment, most were concerned only for today figuring that any huge benefit from an endowment wouldn’t occur until there was another Board and CEO in charge. So if your nonprofit doesn’t have an endowment — create one soon!

Second, make it a policy that as planned gifts are fulfilled the money is invested in the nonprofit’s endowment — that is unless the donor designates his/her planned gift for another purpose. You will be surprised how quickly the endowment will grow, and how it can provide revenue that the organization can use both now for its programs and later in response to a crisis.

You will find that your donors love this idea, and that the number of planned gifts will grow because of it. After all, a planned gift is a donor’s way of leaving a positive legacy. The way that many nonprofits spend their planned gifts, “the legacy” lasts only as long as the money. Once the money is spent, the legacy ends. If the donor’s planned gift is invested into an endowment, the money not only remains indefinitely, but grows over time with some of it that can be used now and every year to serve the cause so near and dear to the donor’s heart. Now that’s a legacy!

Imagine how much money will be in your nonprofit’s endowment by year 2052 if your planned gifts are being invested into it. Imagine how much money there would be now, had your nonprofit began investing its planned gifts in its endowment 20 years ago! If you do this now, when this historic crisis hits, your nonprofit will be best prepared to withstand it — and maybe even prosper through it!

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Crisis of the Ages … Is Your Nonprofit Ready?

older man - young woman

By Kevin D. Feldman

The largest generation of people in World history is aging and with many outliving their retirement resources because they are living longer than projected by their retirement plans. Those who were once generous givers, may no longer be able to give.

The shrinking numbers of the generations that follow will hardly be able to replace the “Baby Boomers” of yesterday. There will be a shrinking pool of individual donors and prospects because of this. The competition for the donated dollar will become fierce. 

Employers will be scrambling in search of qualified employees in a shrinking workforce. It is likely that many businesses will fail due to the shrinking number of consumers and lack of available workers. Corporate wealth may be stretched to its limits as companies consolidate to reduce expenses and adapt to the forthcoming decline is sales and worker shortages. The businesses that survive and were once generous donors and sponsors to nonprofits may have to reduce their levels of giving or stop giving altogether.

This historic contrast in demographics and world population levels will mean fewer people and companies to support the nonprofits that exist today, as well as those of tomorrow. The lack of needed nonprofits means a shortage of vital services to individuals, families, the environment, and much more.

A crisis awaits.

Is your nonprofit ready? If so, what has it done to prepare for this crisis? What are you doing now to prepare?

I have my own ideas that I will share with you in an upcoming post.