The Succession Plan Most Nonprofits Forget
Nonprofit leaders everywhere are planning for succession right now as the generations are changing.
Who will be the next board chair?
Who will step into the CEO role?
Who is ready to lead the nonprofit organization into its next chapter?
Plans are drafted, conversations are started, and pipelines are built as nonprofits consider what is next. This is crucial work.
But there is one critical piece of this process that most nonprofits are not even thinking about.
Their donors.
Why are nonprofits not thinking about the succession planning of donors?
What do I mean by this?
I mean that most nonprofits rely on major donors for a large portion of their funding.
And most of their major donors are in their 60s, 70s and even 80s.
But these donors will not be giving forever.
So how will that funding be replaced?
There are two strategies to focus on, and yes, you need both.
1. Transition Your Current Top and Long-Term Donors Through Planned Giving
Planned giving sometimes gets such a bad rap.
So many nonprofit leaders think of it as taking away from their annual campaign. Worried that their major donors will lessen their annual support if they make a legacy commitment.
But let’s look at the facts.
Dr. Russell James of Texas Tech, the preeminent expert on planned giving and data that goes with it, shares that donors on average actually increase their annual giving in the years after they make their commitment.
Planned giving is a tool to help your donors think of other ways to support your organization.
It’s not a product.
It’s a relationship strategy that helps to provide options for support through the donor’s estate.
Think of it this way, planned giving allows your most committed donor who are future-focused to plan out how they can both support your organization in the most tax-advantageous way for them.
And if the taxes scare you or the details around the different giving vehicles are not clear to you, I have a simple message for you: It doesn’t matter.
You don’t need to remember the differences of a Charitable Lead Trust vs a Charitable Remainder Trust.
You don’t have to remember that donors in the 37% tax bracket are now only eligible to receive 35% tax deduction.
You don’t need to remember the details.
You can look them up!
Your high-net-worth donors all have advisors. Let the professional advisors remember these details.
Your role is to look for opportunities to talk about leaving a legacy.
Your role is to remind the donor of the future needs of your organization.
Your role is to find a way to support the donor in their philanthropic journey and strengthen their long-term relationship with your mission.
2. Develop Your Pipeline of Future Donors Through Your Next Generation of Donors
Many nonprofit organizations have done some type of outreach to “younger” donors.
Next Gen
Young Leadership
Young Alumni
Ambassador Board
Auxiliary Boards
I’ve seen it all. But often these focuses on younger donors have been done so wrong.
Staff get frustrated because the young people don’t give and feel the young leaders ask for too much.
The “younger” donors don’t want to be treated like “young” people and want real responsibility, influence, and opportunities.
These younger donors can get frustrated because they feel like they are not wealthy enough to make an impact, so why even donate at all.
But here’s the thing when it comes to succession planning your donors – you need to educate and train your younger donors about:
Why to give
How to give
When to give
What to give
Your younger donors may have never made a donation independently.
They may not even have a checkbook.
They may not know that nonprofits budget on an annual basis, which is why there is a request to give each and every year.
They may not even know your nonprofit is reliant on charitable gifts.
Look, we’re in a time of tremendous change. The Great Wealth Transfer is here.
The wealth from one generation is moving to the next generations.
Some nonprofit organizations will also be beneficiaries of this transfer of assets.
Many will not.
It is not about the value of your work.