Rethinking the Pyramid

For those of us who have been in fundraising for any amount of time, we've all seen the classic fundraising pyramid. It supposedly applies to any charity. There are different levels inside the pyramid, none being necessarily more important than the other - though it might seem that way to one with a hierarchical mindset. At the bottom, or base of the pyramid, is one level titled "Entry Level Gifts". Using my employer, The Salvation Army as an example, this would be our Christmas Kettles where millions of shoppers put nickels and dollars into a red bucket each holiday season. Odds are, your favorite charity has its own gimmick or method to spark these kinds of small donations and raise awareness. This bottom level has the largest number of givers, thus encompassing the widest range on the pyramid. As one moves up the pyramid to the next level, they'll usually find mail appeal gifts and annual donations. Here there are fewer people giving, but the per capita contributions are larger than the level beneath. Continuing up the pyramid, there are different levels featuring various kinds of special gifts, including Major, Capital Campaign, and Lifetime gifts. Again, fewer and fewer people give at each level as one progresses up the pyramid, but the average dollar contributions increase also. At the pinnacle, we supposedly have "Planned Gifts", defined as those gifts coming through estates or testamentary vehicles. Or do we? This model is what was taught to me when I first entered the fundraising profession 18 years ago. I saw it again presented in this fashion at last year's national PPP conference in Washington D.C. I found myself asking about this top tier of the pyramid, labeled "Planned Gifts". I realized we may need to rethink the pyramid after I simply asked "Where does an intervivos charitable lead trust fit into this pyramid?" The presenter answered, "Oh, that would be under the second or third level down from the top - that being Major or Capital Campaign gifts." "But isn't a Lead Trust a classic, true-blue kind of 'planned gift'?", I asked. "Yes, but...well...that's a good point..", was the response. In the 1970's and 80's, most shops used the term "Deferred Giving" to define the practice and role of their department operating at the top tier of the fundraising pyramid. Again, the question I posed at the conference surely came up, "Why, after all, would we call a complex gift (like an intervivos lead trust) a 'deferred gift' in situations when the gift is to provide immediate income to charity?". "Planned Giving" was coined to encompass all sophisticated gifting strategies, both testamentary (deferred gifts) and intervivos. As a result, most charities re-named their deferred giving departments or specialists as such. Today, besides the Lead Trust, there are all kinds of complex or "planned" gifts that do not necessarily involve death considerations, such as the charitable IRA rollover or the charitable bailout for small business owners. It seems that no one took the time to simultaneously edit the fundraising pyramid accordingly. Indeed, the presenter at the PPP conference is right. You would call an intervivos (living) lead trust a planned gift andyou would also call it a major gift. Are the two terms mutually exclusive? Not necessarily. I submit we need to re-embrace using the term "deferred gifts" and put it back on the top of the fundraising pyramid while at the same time retaining the term "planned giving" (just not on the pyramid). The fewest number of people giving the largest per capita gifts still come from wills and other testamentary giving instruments, which is the definition of a "deferred gift". Do we just cast aside the term Planned Giving as a result? No, but we do set it aside as a (dotted-line) bracket which encompasses the top tiers of the pyramid, these being "Deferred Gifts", "Capital/Lifetime Gifts" and "Major Gifts". Planned giving techniques can be used at each of these levels, but not always. For example, if Fred is asked to make a $500,000 gift to our capital campaign he might do so through a Major-Outright Gift of cash/stock or a Major-Planned Gift involving the sale of assets from his privately held business. Both options provide immediate income to our campaign, but one takes a whole lot more planning and tax/legal expertise than the other. Some may ask "Are not all Deferred Gifts by definition Planned Gifts?" Most people say yes, though I'm one of the minority that disagrees (see NCPG Ethical Standards for Gift Planners article seven, which suggests a planned gift is one that includes the charity's input while a deferred gift is being planned). My minority viewpoint notwithstanding, what is more significant about replacing "Planned Gifts" as a specific level on the pyramid with the now forgotten term "Deferred Gifts", is that it frees planned giving from being pigeonholed and forces charity CEO's and development staff to shift their paradigm about its scope and application. Planned Giving should not be (nor never should have been) considered as being a small part or segment of the overall fundraising pyramid. Instead, it should be considered a "method" of raising bigger and better Major, Capital, Lifetime and of course, Deferred Gifts. As I try to remind the colleagues at my charity, "Think assets before you simply ask for cash." In fact, this model is what seems to be happening in our industry already. Whether a charity maintains an expert staff to work with development officers and donors at the top three levels or they instead decide to require all development officers to become neo-experts in planned giving techniques, is the subject for future debate and articles, Nonetheless, most charities have or are soon arriving at the conclusion that planned giving should not be a category among the various levels inside the fundraising pyramid, but is instead should be applied as a method or option at each of the pyramid's top levels, to enhance and improve philanthropic outcomes. Marc Littlecott is a Certified Planned Giving Professional and Director of Planned Giving for the SW Ohio/NE Kentucky Division of The Salvation Army, where he has worked since 1999. He holds a bachelors from Virginia Military Institute and lives in Loveland, OH.