Everyone’s looking for new sources of revenue these days. You’ve no doubt got someone on your board who’s floating the idea of a social media campaign (“but they did it with the ice bucket challenge!”) or yet another special event (“why NOT have another golf tournament?”).
The hard reality of life is that we live in a very flat and static marketplace. Total charity revenues this year are going to be about the same as they were last year. And, next year isn’t going to look much different either.
I’ve never, ever meet a charity who’s planning on raising LESS money next year – but almost everyone thinks they can raise MORE. What gives?
We in the philanthropic world have huge hearts and sweet souls. But sometimes we’re not very good at staring at the cold, hard reality and planning accordingly.
Now that I’ve been a downer, let me share some good news…
If your charity does direct mail fundraising, you’re sitting on a huge source of additional revenue. You’re no doubt aware that it’s there – but I doubt if you fully appreciate its value.
That revenue source is…LEGACY GIVING!
Let’s do some basic arithmetic to see how much legacy potential you’ve got sitting right there in your direct mail donor database. I promise to keep this as simple as possible!
- Let’s start with my favourite mythical charity, Save the Pussycats Canada. They have 1,000 direct mail donors.
- Based on the age of direct mail donors (most of whom are 50+), it’s a very safe assumption that 80% of SPC’s donors have wills. This means that 800 of the Save the Pussycats Canada’s direct mail donors would have already made their wills.
- We also know from our State of the Legacy Nation report, that 11% of people with wills have named charities as beneficiaries. So, for Save the Pussycats, this would mean that 88 of their direct mail donors have included charities in their wills.
- We also estimate (conservatively, I would say) that each donor who has made charitable bequests has named four charities as beneficiaries on average. So, those 88 Save the Pussycats legacy donors will have made a total of 352 charitable bequests.
- Now for the money! The average charitable bequest amount in Canada today is about $30,000. The 352 bequests from the 88 legacy donors at Save the Pussycats are worth a total of $10.56 million!
- That modest little donor file of 1,000 people is going to generate more than $10 million for Canadian charities in the years to come. That works out to an average legacy value of $10,560 per direct mail donor!
So my friends, if you’re looking for new revenue for your organization, look no further!
find the legacy potential of your organization
Now, my purpose here is to show you a method and give you some tools. Play with what I’ve done to find the fit that’s most comfortable for you.
- If you think that you have younger direct mail donors (although I doubt it!), you can reduce the 80% have wills figure to 70% – or even 60%.
- If you know that your average bequest amount is higher or lower than $30,000, feel free to change that number in the equation.
- The key piece I haven’t done in these calculations is to target how much of that total legacy revenue ($10.56 million in the Save the Pussycats case) you want to win. Depending on how proactive you’re willing to get and how loyal your donors are to your cause, you should probably start by trying to win 5% to 10% of that pot of money. So, if Save the Pussycats went after 5%, their revenue goal would be just over a half million dollars.
I meet with charities every single week who are all looking to grow and diversify their revenue sources. In the vast majority of cases, legacy giving turns out to be the greatest source of potential revenue (and, at the lowest cost per dollar raised!).
So, you’ve now got the math tools and a formula you can play with. When you have a few minutes, grab your calculator and play around with your legacy potential. Maybe you’ll come up with the formula that will help convince your CEO and Board that a greater investment in legacy gift marketing is a smart move for your organization.