The Importance of Blending in Fundraising

I learned by trial and error many years ago that development professionals should listen to their donors. I also understood in the past that research on your prospects is vital to success. The more you know about the prospect/donor, the better prepared you will be to understand how to approach someone for first and second gifts. Another element to consider is knowledge of your institution. You must be knowledgeable of your institutional fundraising priorities, gift policies and best-of-class practices as you advance in the complex nature of development. As you progress in your knowledge of fundraising, the importance of the concept of blending will come into play.

The idea of blending gifts needs to begin with donor research. A DonorSearch article points out that donor giving capacity is more of an art form. Prospect research reveals information about prospects and donors critical in determining a strategy to most effectively approach a prospect. Donor giving capacity depends upon connection to your cause, philanthropic propensity and wealth markers.

Connection to your cause depends on such factors as past giving, event attendance, social media support and volunteerism. Philanthropic propensity can be found through research that indicates charitable giving generally and volunteerism, even for other organizations. Wealth markers that could indicate giving capacity are real estate ownership, stock ownership and FEC filings. Other research keys include visible assets and annual giving over time. The more research information you can obtain on your prospect, including their potential interest in supporting your organization, the better prepared you will be in determining ways to introduce blending gift options.

A Wealth Management article noted the emergence of the term blended gifts in recent years, although the concept has been in theory for at least 25 years. The term “blended gift” was originally intended to describe ways Baby Boomers and other seniors might make gifts. While a variety of concepts are used to describe blended gifts, one example is combining an outright, immediate gift, plus a commitment to make a future gift through a will, trust or other revocable estate-planning vehicle, into one gift ask package.

A basic blended gift is a combination of an outright gift of a small amount combined with a large testamentary gift. The donor will, in many cases, benefit from a charitable tax deduction for the outright gift component. A Forbes article points out that according to the IRS, the revised estate and gift tax exemption is now $11.58 million per individual and $23.16 million per married couple. Most individuals do not have to pay federal estate tax.

Many donors in today’s uncertain economic environment do not make substantial outright gift commitments. They make outright gifts as part of a comprehensive estate plan with sizable bequests to ensure they are secure financially for the remainder of their lives. The concept of blended gifts holds great promise for clients and organizations where both parties can benefit to a greater future degree from this collaboration.

A Pentera article notes that blended gifts address donor objectives, such as those of a philanthropic nature, financial planning, family and personal planning. While there are concerns that making a deferred gift might affect one's outright giving, many donors increase outright giving after making a deferred gift. Blending gifts can change thinking from transactional to transformational. It motivates the concept of personalized philanthropy that breaks down conventional siloed fundraising in the areas of annual giving, major gifts and planned to give into a more complex interrelationship approach.

Steven Meyers, PhD, promotes a blended gift concept that includes virtual endowments that chain current gifts with future gifts, philanthropic mortgage, where annual gift commitments maintain programs plus builds equity for endowments and step-up gifts, where outright gifts are made and stepped up over time. A variety of gifts and gift designs are used for transformational results.

When one thinks about the concept of blended gifts, the concepts of major gifts and planned gifts come to mind. If you study the concept, both types of gifts require planning. Several years ago, I worked with a $2 million prospect and his wealth advisor to create a new facility operational endowment fund in the name of his wife who had passed away. The donor had a net worth of at least $5 million dollars. I had originally encouraged him to make annual gifts, which he did at a low level. Over time, he stepped up to make several major gifts. With discussing an endowment concept, he did not want to make a large outright gift as he was fearful about his declining health and related expenses. He was a widow with no children.

Through the cultivation efforts of his wealth advisor, who made personal major gifts to our institution,  and the prospect’s personal secretary, who had also supported our organization for many years through low-level annual gifts, he agreed to fund a new $2 million endowment with $50,000 annual gifts until the time of his passing. His annual gifts will build the endowment over time, and his estate gift would provide the balance of the endowment when he died. After he made his first gift, he passed away, and the endowment was immediately created.

To be successful, you must be prospect-focused and donor-focused. Do your homework and research on each prospect. Determine their ability to give, inclination to give and possible interest areas. Think about your approach and if this prospect will always be an annual donor, possible major gift donor and/or planned gifts donor. Also determine when the concept of a blended gift can and should be introduced. The concept of blending is especially important. Build relationships with wealth advisors and get them involved in your organization. The concept of resource development is very intense and complex. Do your homework. The use of blending gifts, when applied, could be amazing and transformational.