Many Americans are now contemplating their mortality and planning for the future because of the coronavirus pandemic.
AP Photo/Bill Cramer – The Conversation
This trend is evident in the fact that the number of people who use will-writing websites has risen by up to 200% since March, when most states had ordered social distancing.
As a scholar in philanthropy, who also used to raise funds for non-profits, I see a chance even in this difficult time. When deciding who should inherit their assets, Americans are not inclined to leave money to charity.
Many nonprofits are also facing dire financial difficulties as a result. While demand for their services is increasing, many nonprofits are seeing their revenues drop. They are also losing out on the revenue from ticket sales, which is crucial for their survival, in the case of shuttered museums and symphonies, as well as theaters.
Few people will.
Recent estimates show that only 32% of Americans have a Will, compared to 42% just a few years back.
However, the percentage of Americans who plan to give money to charity is much smaller. It is only 5%. This represents a small percentage of people who support charities in any given year. A Gallup poll found that 73% of Americans donated to charity to support religious institutions or other charities last year.
A bequest, which is technically a planned gift, is the most common way to make what's technically known as a planned donation. This is when a person leaves a legacy to a charity that is mentioned in their will. The intention can be expressed during the person's lifetime but the money and other assets are transferred to charities after their death.
According to the annual Giving USA report, even though participation is small, the amount of bequests has quadrupled to almost billion per year over the past forty years.
This is almost 10% of the total money that goes to charity every year. There is still plenty of room to grow.
There are many ways to give
Sometimes, these donations come as a surprise. Many donors prefer to notify the chosen nonprofits personally.
Because the IRS does not collect this information except from the estates the most wealthy Americans, it is difficult to obtain precise data about these gifts.
Other than bequest clauses in wills, there are other ways that money can be left to charity. You can leave money to charity from an Individual Retirement Account (or IRA), or from 401(k), or other employer-sponsored retirement plans. This is true for all types of assets including life insurance policies and trusts as well as tangible personal property such artwork.
A charity opportunity
My research has shown that people feel more relaxed writing a will, particularly if it requires money being left to charity. It is a way for people to make sense of their lives.
Ive been able express my appreciation to the organization and my commitment beyond my time here. This is how Diane, a donor, said it during an interview about her motivations to make a planned donation.
My research team and I conducted a nationwide study on planned gift donors last year. We found that the average age to write a first will was 44 years. More than half of those surveyed had their first planned gift established at the same time as their will.
It is easy for people who give gifts. 68% of 862 donors that we surveyed stated that making a planned gift was easy or very simple.
Not only for the 1%
Although many people believe that only the wealthy should write a will, anyone who has a family, a home or a bank account should have one. It doesn't take a lot of money to leave a bequest. Many middle-class donors make charitable gifts in their wills that exceed 0,000.
Many donors find that planned giving allows them to give more after their death than what their finances allow.
My research has shown that planned gift donors are often loyal supporters who have worked for or volunteered for the charity and believe in its mission. Nearly 92% of those surveyed said they had spoken to an attorney before preparing their will. It is important that financial planners and lawyers at least bring up the subject.
Nonprofits often receive estate gifts from donors who have a long history with the organization. We found that donors who had supported the nonprofit they wanted to receive their largest planned gift for 20+ years were most likely to have been doing so since before we interviewed them.
Many people will find it more difficult to give to charity due the coronavirus pandemic, and the resulting financial crisis. It is important to discuss with loved ones and lawyers how they can support the causes they care about after they die when someone drafts or revises a will.
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This article was republished by The Conversation, a non-profit news site that shares ideas from academic experts. It was written by Elizabeth J. Dale from Seattle University.
Elizabeth J. Dale received funding from The Giving USA Foundation to support her planned giving research. She also received funding through the Bill & Melinda Gates Foundation via Indiana University, and the Ford Foundation for research on philanthropy. The opinions expressed in this essay are solely mine and do not reflect the policy stances or Seattle University.