Sixty and Over: Elders and Philanthropic Investments

Willy Sutton was a depression-era bank robber. He was wanted for robberies in New York, New Orleans, and Miami. After his capture on March 9, 1950, a reporter asked him why he robbed banks. “Because that’s where the money is,” he replied. Aside from his lack of moral justification, his reasoning was sound. Go were the money is.

Today in America, the money is in the hands of people who are 60 years of age and older. Following Willy Sutton’s sage advice, this is the population that deserves attention.

Importance and Urgency of Topic Annually, 70.2% of all Americans make charitable contributions. Not surprisingly, the wealthy give the greatest amount of money. Indeed, the Bank of America Study of High Net-Worth Philanthropy, researched and written in 2006 by The Center on Philanthropy at Indiana University, found that high net-worth households—those with incomes of greater than $200,000 or assets in excess of $1 million—are responsible for approximately two-thirds of all household charity in this country, although they are only 3.1% of the total number of households in the United States. In 2006, there were more than seven million households with a net worth of $1 million or more. As those families become wealthier, more money in absolute dollars is expected to go to charity.

The Bank of America Study found the average total giving of high net-worth households is highest at ages 61-70, as shown below:

Average Total Giving of High Net Worth Households

Age of Head of Household                 Average Total Giving

51-60                                                              $102,726
61-70                                                              $155,066
71-80                                                              $142,192
81 & older                                                        $125,061

While the majority of American families are not wealthy, those headed by individuals who are 55 years of age and older have more assets than their younger counterparts. The U.S. Census report, “Family Net Worth—Mean and Median,” reported the following:

Age of Head of Household               Median Net Worth

55-64                                                             $127,500
65-74                                                             $146,500
75 & over                                                        $125,600
All families                                                       $71,600

In other words, families in which the head of the household is 65 to 74 years old have more than twice the median net worth of all American families combined—including these older age brackets.

(“Median” net worth means that one half the families in the age bracket have higher net worth and one half have lower net worth.) The cover story for the January 24, 2008 issue of “The Chronicle of Philanthropy”6 discussed the 50 biggest donors of 2007 in the United States. Their mega-gifts range in size from $1.2 billion (from 80-year-old William Hilton) down to $38.4 million (from Lillian Garner of Wisconsin who died in July at the age of 95).

Together those 50 gifts totaled $7.3 billion. I was struck by the size of the gifts, surely, but also by the age of the donors. Four out of five of America’s most generous donors last year were 60 or more years old.

Older Americans have the bulk of the money and they make the bulk of philanthropic investments. Nonprofit organizations must focus their fundraising efforts on their elder constituents— now.

Definitions

Before our discussion about successfully attracting philanthropic investments by elders —both current gifts and estate gifts, let’s begin by defining three terms.

1. Philanthropy.

Philanthropy and charity are not synonymous. Charity is reactive. An individual sees an immediate need and responds, almost without thinking. Philanthropy, on the other hand, is intentional and usually extends over a period of time. Effective philanthropy requires planning and attention, advancing by steps and, usually, surviving missteps.

2. Investments.

Investments are more than donations. Donations are often made by giving cash or writing a check without much consideration, consultation, or research. Philanthropic investments, on the other hand, are planned actions to help worthwhile nonprofit organizations raise the level of activity to achieve results or generate long-term sources of revenue to provide stability.

Donations are usually given for current operations or programs. Philanthropic investments are often longer term and may be given with payments stretched out over two or more years—or may be established to take effect sometime in the future, perhaps at the death of the donor.

3. Elders.

By elders, I mean those age 60 (or nearly so) and older, some much older. For purposes of our discussion today, we will divide this large group of prospective donors into three groups:

1. The GI Generation. Those born before 1930, who remember the Great Depression, were teenagers and young adults during the Second World War, and are now nearly 80 or more years old.

2. The Silent Generation. Those born between approximately 1930 and 1945 who grew up or were small children during World War II, were young adults during the Korean and Vietnam War and are now in their mid-60s and 70s.

3. The Early Baby Boomers. Those born between 1946 and 1964 who served in and protested against the Vietnam War, grew up on TV and rock and roll, and are now approaching or more than 60 years of age. (As you may know, sociologists divide Baby Boomers as a group into two sub-categories: the Early Boomers: 1946-1954 and the Late Boomers: 1955-1964.)

Overview

This presentation will cover four main topics. First, we will look at the characteristics of the three groups of generational cohorts: GI Generation, Silent Generation, and Early Baby Boomers. Second, we will discuss the characteristics of major donors, especially as they relate to the three cohort groups. Next, the charitable motivations and giving trends of elder donors will be described. Last, we will talk about ways to reach out to prospective older donors and how to increase philanthropic investments by current donors.

Much research has been done and many publications have been written about Baby Boomers (those born between 1946-1964) but relatively little about their older siblings, parents and grandparents—especially in terms of fundraising. I have rather arbitrarily chosen the birth years for our discussion today to include the Early Boomers (Baby Boomers-Cohort I), since they are quickly becoming elders as well.

While this paper primarily deals with wealthy elderly donors, focusing solely on the wealthy is a risky strategy. If an organization neglects its annual donors in fundraising efforts, it will fail to cultivate major donors for the future. If the organization fails to win over some or all of its wealthy ones, it will not have a firm foundation of more modest donors from which to rebuild. Further, modest long-term donors frequently make major gifts through estate plans.

Apart from the ballot box, philanthropy presents the one opportunity the individual has to express his meaningful choice over the direction in which our society will progress. —George G. Kirstein (1909-1986) 

Characteristics of Generational Cohorts

A generational cohort is the notion that groups of people are bound together by sharing the experience of common historical events due to their birth in a particular period of time. For development professionals and volunteers, understanding various generational cohorts can help us understand prospective donors and cultivate trusted relationships.

Of course, not all members of a particular cohort share all the characteristics and each individual experiences similar events indifferent ways. We must be careful, particularly in our multi-cultural American communities, about generalizations, even as we study cohort characteristics and motivations.

The descriptions below are based primarily on work done by Schuman and Scott in 1985 in which a broad sample of adults of all ages were asked, “What world events over the past 50 years were especially important to you?”  When the ages of the respondents were correlated with the expressed importance rankings, the distinct cohorts became evident.

GI Generation, the Seniors (pre-1930, ages 79 and older)

• Memorable events: The Great Depression, high levels of unemployment, poverty, financial uncertainty, men leaving to go to war and many not returning, women working in factories, focus on the defeat of a common enemy, age of radio and air flight.

• Key characteristics: strive for financial security, risk averse, waste-not-want-not attitude, nobility of sacrifice for the common good, patriotism, team player, empathetic, strongly interested in personal morality, near-absolute standards of right/ wrong, institutional loyalty, avoid debt, personal civic duty, marriage for life.

Silent Generation, the Builders (1930-1945, ages 63-78)

• Memorable events: sustained economic growth, social tranquility, McCarthyism, Korean and Vietnam wars, Big-Band/Swing music, labor unions.

• Key characteristics: conformity, conservatism, traditional family values, marriage for life, readers, disciplined, self-sacrificing, cautious, strong sense of trans-generational common values; near-absolute truths, expectation to move up (Chevy to Buick to Caddy).

Baby Boomers—Cohort 1, Early Baby Boomers (1946-1954, ages 54-62)

• Memorable events: Assassinations of JFK, Robert Kennedy, and Martin Luther King, Jr., political unrest, moon landing, Vietnam War, anti-war protests, social experimentation, sexual freedom, civil rights and women’s movements, TV, experimentation with drugs, free love, shift from moving up to moving out.

• Key characteristics: self righteous and self-centered, buy it now on credit; poor marital skills, begin “gay” toleration, individual rights prevail over the common good, optimistic, driven, experimental, free spirited, social cause oriented

Three additional cohorts have been identified and are not the subject of this paper: Baby Boomers—Cohort 2 (1955-1964); Generation X, the Busters (1965-1983); and Millennials, Generation Y (1984-2002).

Characteristics of Major and Transformational Donors

Capacity to Give/Wealth

It is no secret that individuals and families with significant assets are best able to make sizable gifts and enjoy the tax benefits that accompany such gifts.

“A sense of financial security has a strong positive relation to charitable giving,” said Paul Schervish, John Havens, and Albert Keith Whitaker from Boston College in 2005, discussing a survey quantifying the relationship between financial security and giving

Today, with uncertainty about the economy, decreasing home equity, rising fuel costs, and increased longevity, observers believe donors may hang on to what they have longer, or divert financial resources to compensate for the fall off in wealth or to help family members in need. Other analysts think these forces may not determine whether people give to charity but rather how much and when they give.

In the January/February 2008 issue of Philanthropy, Schervish said,“We still believe that regardless of debt, downturns and other factors, there is a huge amount of giving in the future, whether in bequests or over a lifetime.”

Interest in Adding Meaning to Life/Spirituality

Scott Fithian, a Boston financial planner who died at age 45 in 2006, used to describe what he called the Pyramid of Planning for wealthy donors. He argued life is about achieving financial success and turning that success into a sense of significance. In the earlier phases of life, people strive to achieve financial independence. Until a measure of security is achieved, donors and prospective donors are generally unwilling or unable to make major gift commitments. Financial Independence is the base of the Pyramid of Planning.

The next level up the pyramid is Family Legacy. Once it is clear financial independence is no longer an issue, donors consider the legacy they want to leave their heirs. They may want to transfer financial resources to their children and grandchildren with a minimum of resources lost to taxes. They may decide on a desired inheritance for their heirs and to give the remainder to charitable causes now. They may want to retain control over financial resources and their distribution. Our job, and the job of their financial and legal advisors, is to help them consider these options.

Once they have clearly defined their financial security goals and family legacy goals, donors very naturally shift their focus to how they can gain a greater sense of significance. The top of Fithian’s Pyramid of Planning is Social Capital, the portion of wealth that is not used for lifestyle expenses or passed on to children and other heirs— the part that will either be collected in taxes or given to philanthropic causes.

Jackie Jacobs, executive director of the Columbus Jewish Foundation, believes the last 40 years have taught Americans the necessity of balance, the emptiness of the “me-ism” of the 1960s and 1970s, and the importance of social values—of having an impact on others and on the future. The Early Baby Boomers, he claims, are already embarking on a serious exploration of the meaning of life.

Engagement and Volunteering

A few years ago, the Columbus Foundation conducted a research project to determine why some donors become engaged with the Foundation and why others do not, regardless of how long they have been involved with it. They found a significant difference between how an engaged donor relates to the Foundation versus a less engaged donor.

• Engaged donors are more likely to establish funds with the Foundation than other donors.

• Engaged donors are more likely than other donors to create unrestricted funds.

• Engaged donors are more likely than other donors to leave planned gifts to the Foundation.

Terry Schavone, the Columbus Foundation’s Vice President for Development and Donor Relations, states that engagement includes a variety of activities, including making additions to their funds on a regular basis, attending Foundation events, including the Foundation in estate plans, referring friends and colleagues to the Foundation, establishing multiple funds, and serving as ambassadors for the Foundation.

“However, the most important characteristic of engaged donors,” Schavone says, “is volunteering time and talent as a measurement of the likelihood and size of future financial investments.”

Being asked to give

It is important to ask people face-to-face to invest in the organization. Major gifts rarely come as the result of an e-mail or a letter—even a personal letter. Steve Braverman, vice president for development and community relations at Hebrew SeniorLife near Boston, believes qualified volunteers, preferably current or former board members, are the most effective major gifts fundraisers. They are able to provide personal testimony about their own commitment to the organization and what it has meant to them. A team, composed of the CEO and/or vice president of development along with a committed volunteer, permits the staff to answer questions about the programs who the prospective donor better, can draw out the donor’s interests, their own investment in and engagement with the organization.

life is a gift and if we agree to accept it, we must contribute in return. When we fail to contribute, we fail to adequately answer why we are here. —Albert Einstein

Motivations for Giving

In their book The Seven Faces of Philanthropy: A New Approach to Cultivating Major Donors, Russ Prince and Karen File describe seven categories of donors based on the donors’ motivations for philanthropic investment. Prince and File’s comprehensive study of wealthy donors places each affluent individual donor into one of seven distinct segments based on needs, motivations, and benefits the individual says are most important to him or her. As staff members and these categories can help them sort out and identify likely develop effective approaches for each donor.

The Communitarian: doing good makes sense (26.3%) Communitarians are typically business owners who find service on boards and committees of local nonprofits can be good for business because relationships that often develop in such settings.

The Devout: Doing Good is God’s Will (20.9%) The Devout are motivated to support say they believe it is God’s will for them to help others.

The Investor: Doing Good is Good Business (15.3%) Investors are affluent individual  nonprofit cause and one eye on personal tax and estate consequences.

The Socialite: Doing Good is Fun (10.8%) Socialites find social functions benefiting nonprofits an especially appealing way to help make a better world and have a good time doing it.

The Repayer: Doing Good in Return (10.2%) Repayers tend to have been constituents first and donors second. Often they donate to medical charities and educational institutions.

The Altruist: Doing Good Feels Right (9.0%) Altruists embody the popular perception of the selfless donor- the donor who gives out of generosity and empathy to urgent causes and often wishes to remain anonymous.

The Dynast: Doing good is a family tradition. (8.3%) Dynasts typically inherit their wealth and giving is something their family has always done.

Ways to Reach Out to Donors and Prospective Donors

Paul Schervish at Boston College contrasts what he calls the Scolding Model of major gift fundraising

The Scolding Model- presents organizational needs and sets norms for donor’s giving

You are not giving…

1. Enough
2. To the right causes
3. At the right time
4. In the right way

The Discernment Model-  Elicits a sense of responsibility through a process of personal discernment

1. Is there something you want to do with your wealth?
2.That fulfills the needs of others
3. That you can do more efficiently and effectively than government or commerce?
4. That expenses your gratitude, brings you satisfaction, and actualizes your identification with the fate of others?

This is also referred to as the Obligation versus Inclination Model. Through my own work with older donors and conversations with colleagues who interact frequently with donors over sixty years of age, I have observed the following six standards for attracting major philanthropic investments from elderly donors.

1. Take the Potential Giver Seriously.

Do your homework before you meet with donors or prospective donors. Learn as much about them as you can, including their giving record, family and business history, and relationships and interests. Take time to build trust through respect and consistency—two qualities highly regarded by people in the GI and Silent generations.

Don’t fall into the trap of patronizing older donors; they are quick to pick up on insincerity. Think through the way you want to ask the donor to invest so it doesn’t come off as awkward. The older the prospective donors, the longer they may take to decide to move forward. This is not an indication of senility, but rather of careful planning and low risk tolerance. You’ll need to exercise both patience and persistence.

2. Build Long-term Relationships.

Ask probing questions and listen, really listen. Let the donors tell you about their charitable dreams and aspirations.

Schervish talks about “archeological conversations” where fundraisers and trusted advisors help donors excavate their motivations, identifications, and inclinations in order to discover the donors’ philanthropic passions. Help them tell their own stories of gratitude, unmerited advantages, and experience of blessings. Once they recapture their sense of gratitude, they are on the way to transformational philanthropy.

3. Tell Stories.

Learn to tell stories about your organization and the experience of how other donors have invested in it to further your mission and to further their philanthropic goals.

Tom Hoffman, president and CEO of Ohio Presbyterian Retirement System Foundation, believes the best way to reach prospective donors, especially the GI Generation, is by sitting down face-to-face and laying out the story. “If you have built an environment of trust and your story is compelling and credible,” Hoffman says, “older donors are likely to want to help financially.”

 4. Respect Independence.

As people age, their bodies tend to wear out and their minds may slow down—but not necessarily at the same rate or at the same age.

Let go of preconceived notions or prejudices about older people and treat each donor as an individual. Look at your communications tools through the eyes and ears of people who need bifocals and may be wearing hearing aids. For example, turn up the sound when showing a video, lower the level of background music at events, use large type styles in printed materials and on websites, and make events easily accessible for people who use canes or wheelchairs.

5. Approach Donors from Their Perspective.

Individualized approaches for wealthy donors are critically important. Our natural tendency is to approach all donors from our own comfort zones. We need to reverse that preference and make our approach from the point of view of the donor.

Donors in the Silent Generation, for example, are often very cautious, worried about the financial implications of a long life, and may want to become active volunteers now that they have retired from their careers. Find ways to capture their interest and involvement.

Steve Braverman at Hebrew SeniorLife describes the Discernment Model as becoming donor centered. “Learn to read people, build relationships, and develop a trust level,” says Braverman. “Our donors, particularly older donors, need long-term consistency.”

This means we need to analyze and research donors and change our strategies and tactics as appropriate.The questions we ask and the stories we tell—even where we meet with them and what we wear—should be consistent with the donor’s frame of reference.

6. Provide On-going Stewardship.

Stewardship is the process of involving the donor in the life of the organization—not just showing up when you want to ask for another gift. Send notes to donors, perhaps in recognition of a birthday, the anniversary of a major gift, or to explain news about the organization.

Invite them to participate on committees, attend selected events, and sit-in on a board meeting. The most appreciated ways to honor donors are often simple and personal benefits, customized to the donor’s needs and interests.

Tell donors how their gifts are being used and who has benefited. Show how the donor’s goals have been advanced by the gift. This kind of personal communication, directly related to the gift, is greatly appreciated and deepens the donor’s relationship with the organization. Don’t send big gifts to the donor. Demonstrate your care by reporting back the wise and careful use of the money.

After the donor has made the gift, don’t stop calling or visiting. Tom Hofmann, of Ohio Presbyterian Retirement Services Foundation, tells about the GI Generation resident at one of OPRS’ retirement centers who met with members of the development staff for years about a potential gift. One day, the resident told the development officer, “I’m afraid if I finalize this gift, I won’t see you any more.” Make it clear that your relationship will continue—and then stop by to check in, not just to ask for a gift. And send notes, lots of written notes.

Good stewardship, even with good intentions, does not happen unless the program is formalized and institutionalized. Braverman at Hebrew SeniorLife requires his development officers to spend 20% of their time on stewardship.

Avoid Pitfalls

• When working with GI Generation prospective donors, have them sign a release form before permitting staff to talk with adult children about the parent’s philanthropy.

• Document the gift process from the very beginning for two reasons:

1. to track donor interactions so staff and volunteers are aware of all donor cultivation and solicitation steps;
2. to allay adult children’s concerns about coercion.

• Consider a donor cultivation, solicitation, and recognition check list for the staff.

• Practice various approaches to donors with a trusted colleague. This will decrease your fear of broaching the subject with prospects and alleviate awkwardness.

• For some organizations, such as Jewish federations and community foundations, donor advised funds have become the launch pad to develop relationships that eventually lead to opportunities to talk about current and deferred gifts of all kinds.

I shall pass through this world but once. Any good therefore that I can do or any kindness that I can show to any human being, let me do it now. Let me not defer or neglect it, for I shall not pass this way again.
—Mahatma Gandhi

How to Increase Giving by Current Donors

Current donors already know and support your organization. They are your best prospects for major gifts. Braverman states the key to increasing the level of giving by current donors is to raise the profile of the institution. “Never,” he says, “start with ‘we need.’ Rather, give them a reason to invest their social capital—not merely to make a gift.” Explain the return on investment they can expect and give them a personalized prospectus.

Moves Management

Many development offices of nonprofit organizations practice variations on Moves Management, a process of appropriate cultivation practices to move annual donors toward other larger investment opportunities. With elders, the process cannot be rushed and must be targeted to the donors’ interests and priorities.

Keep Donors Informed

In the Bank of America Study, households were asked what factors would cause them to give more to charitable organizations. High net worth households stated if charities spent more on helping the constituencies they serve and spent less on administrative and fundraising expenses, they would give more.
They also said they would give more if they were able to determine the impact of their gifts and if they felt more financially secure. Perhaps fundraisers can’t solve all these issues but clear and frank communications would surely help.

Gift Clubs

Gift Club recognition can both honor donors and encourage other people to contribute at increasingly higher levels. They can encourage some donors to stretch to the next level of giving or give to special campaigns in addition to the annual fund. Position the recognition as not only thanking donors for their generosity but also encouraging other people to give.

One Percent Clubs.

Some cities across the country have started One Percent Clubs, honoring individuals and families who make voluntary commitments of one percent or more of net worth or five percent of yearly income, whichever is more, to worthy causes of their choice. A small group in Minneapolis started the first such group in 1997. By 2000, the membership was up to 360 families and the average gift was $234,000.

Conclusion

The elderly hold the bulk of the household wealth in the United States of America. They yearn to make positive contributions to their communities and help to make the world better for themselves, their children, and their grandchildren.
Nonprofit organizations should—in fact, are obliged to—encourage their older constituents to invest their money in the programs and causes that are most important to the donor. My hope is that this paper encourages and enables the leadership—both staff and volunteer—of nonprofit organizations to systematically reach out to older people as philanthropic investors in their organizations and communities.
 Elder donors are not only “where the money is,” as Willy Sutton said. Elders are also generous with their money.
When you stop giving and offering something to the rest of the world, it’s time to turn out the lights.
— George Burns (1896-1996)