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| Path: Main Street > Resources/Library > Research Articles > Feature Article |
The donor life cycle: Life stages and resulting opportunities
By Sherry Clodman, Principal, EH Pearce Consultants
June 12, 2006
Closely associated with age, the concept of 'life stages' provides important insight to the marketing of planned gifts. This concept is of particular importance to gift planners because planned giving is very much a 'when' type commitment. There are certain times in one's life cycle when a significant event or rite of passage occurs. These may include events such as a marriage; birth of a child or grandchild; death of a loved one; or receiving of an inheritance. Some affluent individuals may feel compelled to write a will and/or make a planned gift when contemplating extended travel plans, such as a tour around the world.
Understanding the significance and timing implications inherent in the concept of life stages can be useful in targeting those who may be in a 'Yes' life stage. Note: Any of the following key life stages may occur at various ages (ie: children may marry and/or grandchildren may arrive at varying ages).
Single/Youth Stage
These are young single people, recently out of school, and into their early working careers. Generally, with few exceptions, they are not planned giving candidates.Planned Giving Opportunity:
Not at this time.Single Advanced Stage
These are older single people. Some are single because they have not yet found the 'right' mate, while others are single by choice. In either case, as they progress through their late 20s, their 30s, and perhaps beyond, they are in a position to begin earning fairly high incomes. Without family responsibilities (except perhaps a mortgage, etc.) they are likely to have high disposable incomes.The younger ones in this group could be a planned giving market if an approach were properly structured. While planned giving is generally made from assets, and these individuals do not have significant assets, they can, in effect, create assets, by the purchase of a life insurance policy. Because of their comparative youth, life insurance is relatively inexpensive. By paying for it over a period of say, five years, they are effectively making a planned gift of significance out of current income.
Planned Giving Opportunity:
Middle-aged singles with high income are excellent prospects for gifts of life insurance. Older singles with assets and few potential beneficiaries are excellent prospects for all forms of planned giving, especially gifts by will.Two-Person Household: No Children Stage
Individuals in this stage can range from young through middle age to mature. If the household has just been established, and children are expected in the next few years, then they will not be good candidates for planned gifts. However, often the birth of a child creates the need for a will, and in the writing of a will an opportunity exists for the establishment of a planned gift.If, however, there are no plans for children (just a couple), or if the children have grown up and moved out (empty nesters), then these groups with their high incomes and asset acquisition are excellent targets for planned giving. If they are younger, now is the time to start to cultivate them. If over 50, a planned gift commitment is a reasonable target. Look for opportunities around life events such as a marriage, the purchase of a home, a relocation to another country, etc.
Planned Giving Opportunity:
Look for significant life events (see section below on occurrences that impact on life stage). This is a good group for endowments funded either through cash, a bequest in the will, life insurance, or through securities and strip bonds. Charitable Remainder Trusts are less likely, and annuities are usually inappropriate instruments.Households with Children
Generally speaking, this group is not a target for planned giving, except in the instance where the children are grown and working, but still living at home. In addition, as stated above, the birth of a child will create the need for a will, and the writing of a will may create the opportunity for a planned gift.Gift planners MUST be patient and wait for the children to grow up, and for the household to move on to the empty nest stage. However, it may be appropriate to start cultivating this group.
Planned Giving Opportunity:
A life event such as the birth of a child may present the opportunity for a gift by will.Retirement
Generally, during retirement years, income is reduced and there is a need for ensuring an ongoing income stream. This provides a marketing opportunity for gift annuities and/or charitable remainder trusts.The single most important occurrence during retirement is the requirement by the Canada Revenue Agency (CRA) to convert RRSPs at age 69. Many people begin to consider the disposition of their assets at this time, and as a result, this presents a marketing opportunity for bequests and/or other planned gifts.
Planned Giving Opportunity:
This is an optimal stage for gifts by will and other planned gifts. If the prospects are in need of additional cash flow, charitable gift annuities providing tax-free income become the vehicle of choice. Look for increased inquiries at age 69.Occurrences that impact on life stages
Astute gift planners will watch for the following significant events that are likely to 'trigger' the donor's readiness to think, re-evaluate and/or express their values by making a planned gift.Birth of a Child:
Often, a new addition to the family creates the need for a will. In the writing of a new will an opportunity is presented for making a planned gift.Promotion/Partnership:
Part and parcel to an elevated business position and/or new financial success is the likelihood of increased disposable income. These people require investment and tax planning advice, and may respond favourably to a planned gift marketing approach using seminars and/or workshops.Death of Parent(s):
The death of parent(s) often brings to light one's own mortality, and brings to the forefront issues such as re-evaluating the will and/or life priorities. Additional disposable income may be available following the death of a parent if eldercare was being provided.Death of Spouse/Child/Loved One or Friend:
In much the same way as in the death of a parent, issues of one's mortality, succession planning, and personal values are brought to the forefront. Often, these individuals wish to memorialize their loved one. An endowed fund and/or other naming opportunities are good marketing approaches.Receiving an Inheritance/Windfall:
A significant number of recipients of an inheritance and/or windfall are willing to make a gift to charity, so given this group's interest and ability, it is wise to market planned gift opportunities to this segment. Alternatively, increased means that come with financial windfalls translate into an increased ability to make planned gifts.Divorce and/or Separation:
Divorce always requires a new will, however, both of these transitions are a time for the re-examination of one's personal life, finances, values, and future directions. These transitions may also provide a timely opportunity to express new directions through making a planned gift.Re-Marriage:
This life stage will trigger the necessity to write a new will. There are a multitude of issues that result from re-marriage. Ranging from the redirection of family assets to the provision for beneficiaries, a great deal of planning takes place at this juncture resulting in gift planning opportunities.Mortgage Paid:
Along with the realization that they are property owners, people are often moved to put their affairs in order through the writing of a will. This life event often occurs between ages 45-55. With the mortgage paid off, these individuals have a greater cash flow, and may be candidates for cash gifts and for planned gifts such as life insurance.
This excerpt is from the book WELL ADVISED: A Planned Giving Reference Source for Allied Professionals. Written by best-selling authors Sherry Clodman, CFRE, and the late Dr. Edward H. Pearce, this resource guide is for every allied professional and planned giving/advisory committee. For more information, call (416) 345-9403 or visit: ehpearceconsultants.com.
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