How to Help Older Donors Give to Your Ministry in 2023

Stepping into a New Year with bigger fundraising goals than last year can be daunting. What are you going to do differently to get bigger and better results — say nothing of your hopes to improve work/life balance?

Technology is advancing at breakneck speed, significantly altering outreach and marketing. Millennials give half of what their predecessors gave yearly, which means every new donor you attract doesn’t provide as much for your organization. And, well, inflation is hard to ignore when a dozen eggs cost $4 at the cheap end. With so many legitimate challenges, is it possible to improve fundraising from last year? 

Absolutely, 100% yes! But before you write me off as insensitive to the times we’re living in or too optimistic you should know: 

• I was cutting my teeth as a major gifts officer during a $60 million church-wide appeal in 1987 when Black Monday hit. 
• As vice president for advancement at a church-related college, I was leading a $100 million campaign during the Dot-Com Bubble. 
• I was leading a planned giving consortium of 12 ministry organizations and 250 congregations during the recent Great Recession. 

I know what it’s like to be responsible for charitable gift income during unpredictable times and how fears about a ministry's financial future can test one’s faith. 

During each of these difficult economic times, the organizations I served adjusted and refused to retrench — they managed to retain their momentum and continued to thrive. On the other hand, the nonprofits that hit pause out of fear lost several additional years just trying to regain their stride.

With this article my hope is to equip you with the tools you need to pivot and progress, instead pause and peter-out. The most significant pivot organizations can make right now is understanding their older donors, their donor’s wealth, and which giving methods drive the largest donations.

Understanding Your Older Donors

I have a young friend who loves getting gifts. A candy bar, random nick-nacks from Dollar Tree, a dandelion you saw while walking — literally, anything — will make her day. But for me, gifts kind of fall flat. If, however, you scheduled time to meet for dinner and put away your phone so we could have a real conversation, I would feel like the most special person in the world. 

When you understand your friends you can communicate how special they are in ways that matter to them. Similarly, when you understand your donors you can communicate how valuable they are to your organization and help them embrace their capacity for generosity.  

So the million dollar question is: Do you know who your current donors are?

You can look through your CRM for data specific to your organization, but until then here is what research tells us about nonprofit donors. Generally speaking, donors 65 and older make up the majority of charitable donations to nonprofits. Together, these individuals — the Boomer generation and Silent generation — make up 61% of all contributions given in the US. 85% are loyal to specific causes or organizations and prioritize churches in their giving decisions more than any other nonprofit. 

Finally, these donors give a much higher percentage of planned and major gifts than other generations — especially true in congregations and ministry organizations where giving is impacted by lifelong loyalty and legacy families with multiple generations who have been impacted by the congregation.

Once you know your donors the next step is to understand their capacity to give. 

Understanding Your Donor’s Capacity to Give

No one wants to ask someone to give beyond their capacity, even fundraisers. That’s why understanding your donor’s capacity to give matters. Thankfully, the giving capacity of most Boomers and Silents is significant due to their many years of accumulating assets. That being said, understanding someone’s giving capacity should also take into account how and where wealth is accumulated and stored. For Boomers and Silents, this means understanding the 90/10 rule and IRAs. 

Your Donor’s Wealth and the Great Wealth Transfer

The Great Wealth Transfer is an economic phenomenon where 45 million households will cumulatively pass on $73 trillion from one generation, over the next 20-25 years! Cerulli Associates estimates that $10-$12 trillion of that will go to charity. Where that wealth goes is being decided right now!

According to research by FreeWill, this staggering transfer of wealth is made possible by a few characteristics of the Baby Boomer generation:

• 50% more people than the previous generation
• A dramatically increased number of female Baby Boomers joined the workforce, resulting in twice as many wage earners
• Wage earners had a significantly higher education than previous generations
• Earnings were invested during an incredibly robust time in the market, which resulted in a significantly higher return on investment
• The value of Baby Boomer homes has appreciated dramatically 

Additionally, the Baby Boomer generation had fewer children than previous generations which concentrates wealth per child. Baby Boomers were also more likely than other generations to have no children. This makes baby boomers more likely to will their wealth to an organization. 

If your donors have this wealth the next thing you need to know is how their wealth is stored. Neglecting to gather and understand this piece is where most fundraisers and nonprofits get overwhelmed and throw in the towel. But if you keep reading I will put it in the simplest terms possible.

Is Your Donor’s Wealth in Cash or Assets?

Imagine two buckets; one small bucket and one large bucket. The small bucket is filled with regular income. This represents the amount of wealth an average American has in cash. Only 10% of an average American's wealth is in cash. Most nonprofits spend too much time focusing their fundraising efforts on the modest capacity of this small bucket.

The large bucket is filled with your retirement funds, house or other real estate, life insurance, investments, etc. This bucket represents the 90% of an average American’s wealth that is accumulated in assets. Even though most of a person’s wealth exists in the large bucket, most nonprofits spend too little time focusing their fundraising efforts on the high capacity of the big bucket.

Most of your donor’s wealth is not held in cash. In fact, most of your donor’s wealth is probably held in real estate, stocks, or retirement funds. 

Your Donor’s Retirement Funds

When it comes to gifts from retirement funds there are two terms you need to be familiar with: IRAs and QCDs.

• IRAs are Individual Retirement Accounts. Owners are required to begin withdrawing from this fund at an age specified by law. 
• QCDs are Qualified Charitable Distributions, formerly known as an Charitable IRA Rollover. This allows an IRA owner to make direct a distribution from their IRA to a qualified charity. 

Even though the IRA required minimum distribution laws have changed recently, anyone age 70.5 and older can still make a gift through a QCD. 

It’s important for fundraisers to understand QCDs because they often provide mutual benefit to both the donor and receiving organization (we will unpack this in the next section).

Giving Methods That Will Drive The Largest Gifts In 2023

At this point in the article we understand that your donors have wealth and it’s probably mostly held in assets. So what’s the best way to invite one of these gifts?

There are three gifts that maximize a donor’s capacity to give and are mutually beneficial to both the donor and nonprofit.

Give From Retirement Funds

QCDs are beneficial for donors and nonprofits because they allow donors to take their RMDs (required minimum distribution) while avoiding the associated tax. FreeWill explained it like this:

“Since RMDs are taxable income, this required withdrawal may place donors into a higher tax bracket. …[T]hey face a 50% tax penalty on the amount of their RMD if they don’t withdraw. This [leads] many QCD donors [to] become recurring givers — they can meet their RMDs, while saving on their taxes each year.”

The benefits of giving a QCD are also possible for people with 401(k) or a 403(b) type of retirement fund. Those funds can easily be converted to a traditional IRA in order to take advantage of this giving opportunity. 

Finally, when people start gifting from assets like IRAs, the gift size typically doubles and they continue to give this way. And maybe, most significantly, a donor can name your ministry as a beneficiary of their IRA at death — gifts now AND gifts later.

My parent’s story is  beautiful example of QCDs being beneficial for both the donor and the receiving ministry:

As a self-employed farm couple, my parents invested in their IRA for years. By the time they reached the age for Required Minimum Distributions, they had already been living on other retirement income sources for several years, and didn’t really need their IRA income to maintain their lifestyle. 

When Dad and Mom discovered that they could use their IRA as a more tax-efficient way to make gifts, the IRA soon became their charitable fund of choice for gifts they would continue to make not only during life but also upon their death. All those years of carefully stewarding what God had entrusted to them is now being shared with ministries that are important to them. I cherish the joy I’ve watched them receive from making these gifts over so many years.

Gifts That Give You An Income

A Charitable Gift Annuity (CGA) is a unique way for older donors to make gifts to the organizations they care about. CGAs pay a donor a fixed income for life in exchange for a gift. The revised IRA legislation also allows donors to contribute up to $50,000 to fund an organization of their choice. 

My friends, Bob and Dorothy, are especially happy that the new legislation will allow them to make this kind of a gift. In their advancing years, they rely on their IRA income more than others might. But they also want to leave a legacy gift for their church. At their ages, they can gift $50,000 to establish a CGA and receive fixed payments for both lives of 6% or $3000 per year. After the second death, their church receives the charitable gift annuity’s remaining value.

Charitable gift annuity payment rates increase with age. For example, the current rate for a single 71-year old is 6%, but for a 90+year old, those rates top out at 9.7%.  

NOTE: Churches and small organizations can’t typically administer these gifts themselves, so you need to identify a charitable gift administrator. Organizations like National Christian Foundation, Thrivent Charitable, or your local community foundation or your church body’s foundation could provide the support you need.

Legacy Gifts

What do you want others to say about you when you no longer walk the earth?

Your answer to that question is the legacy you want to leave. We can pass on legacies through our values and our finances. Planned giving, a term you are probably familiar with, describes the financial legacy someone makes through gifts of assets. 

When talking about planned gifts, I prefer the comparable term ‘legacy gift’ because it infers more about what planned gifts accomplish. I also think it’s important to point out that when we leave a legacy we’re passing something forward. It’s through legacy gifts that we play a role in passing on the legacy of faith to future generations.

Your older donors are making these decisions NOW and you want to be front of mind.

On average, colleges and universities receive more than 20% of their total gift income each year from legacy gifts, bequests, and other gifts at death. The average nonprofit receives 8-9% of its total gift income each year from bequests and other gifts at death. Finally, religious ministries and organizations receive far less than the average 8-9% of legacy gift income of other nonprofits.

The difference between these three types of organizations and the gifts they receive are the kinds of gifts they regularly ask for and have normalized. To receive legacy gifts you need to actively invite them — people don’t know that you need legacy gifts or how they will impact your ministry unless you tell them.

Establishing a well-orchestrated legacy giving program will help you extend these invitations regularly and to the individuals who have the capacity to make them. A well-orchestrated legacy giving program will also help your donors trust that you’ll use and steward their gifts when you receive them.

Help Your Older Donors Make Wise and Meaningful Gifts

Your older donors have spent a lifetime of stewarding their hard-earned resources. If they are not actively finding ways to care for it, there’s a high probability they don’t know what to do and no one is helping them figure it out. Be the person who helps them figure it out! 

Remember, you are not about to ask for money they can’t afford to give. You are about to educate them on the most tax effective ways to steward their wealth while caring for the people and ministries that they want to see flourish. What an extraordinarily beautiful gift to give someone?

If this still feels overwhelming, schedule a call with my team! Our hallmark is transforming intimidating fundraising terms and strategies into simple and actionable stepping stones that make the ministry work you’ve been dreaming of possible.

This article was co-authored by Brenda Moore, CFRE and Sisi Roose.