AHP Connect Articles

Originally published in the June 2017 AHP Connect.

News flash: people are getting older! As the demographics of our communities change, organizations should respond by optimizing the ways in which health care fundraisers communicate with donors.

Baby Boomers and their accumulated wealth offer an unprecedented opportunity for fundraisers seeking to make direct connections. According to the Deloitte University Press, Baby Boomers will continue to be the wealthiest generation in the United States until at least 2030. And a study by Boston College researchers in 2014 predicted $58 trillion dollars would transfer by 2061, with $6.3 trillion dollars reaching charities as bequests.

But it’s only an opportunity if we know how to take advantage of it. We do not expect the inter- generational transfer of wealth to produce a sudden windfall for philanthropic endeavors. It’s likely that assets will continue to flow to heirs, to taxes, and only to those charities with whom close relationships have been fostered.

AHP thought leaders agree fundraisers need to create active, strategic plans to reach out to potential Baby Boomer donors. Be wary of predictions that suggest the growth in transferred wealth alone will translate into positive consequences for philanthropy supportive of hospitals and health care systems.

There are also several dynamics that characterize the impending Baby Boomer wealth transfer that could impact philanthropy:

1. The relatively smaller number of children to whom Boomers will pass on wealth compared to the WWII generation. Wealth may be consolidated among fewer hands.
   
2. The geographic dispersion of parents and children. Among other things, this means that an older generation’s home is less likely to be handed over to children and more likely to be sold by their heirs.
   
3. The production of liquid assets presents opportunities for substantial philanthropic giving, but only if meaningful relationships have been created with the institution in the parents’ lifetime or with the heirs.

It’s always challenging to encourage the inclusion of a healthcare institution in estate planning when the donor’s contact with the institution comes later in life. For example, a 2015 Bentz Whaley Flessner survey indicated that fewer affluent households donate to hospitals per se, as compared to “healthcare causes” such as research, disease-specific organizations, and support groups. The same is true for estate planning, where the survey showed healthcare causes were included in planned giving more than three times as often as hospitals.

It's also important to note that if the transfer of wealth coincides with and exacerbates the consolidation of wealth, philanthropic giving in general may see negative consequences. The tendency towards consolidation of wealth is manifested in the growth of family foundations and donor-advised funds, often driven by tax-savings considerations. The consolidation of wealth could lead to a smaller group of highly affluent individuals and families making “mega- gifts,” creating disincentives for more modest donations.

We suggest focusing on the following strategies as you continue to shape your strategies in the coming years:

1. Build a donor base and stay in constant, meaningful contact with them.
2. Focus on major gifts. Use major and planned giving strategies to create that donor base, but work on the two areas of giving separately. Although some shops have tried, blending the roles of major gift and planned gift officers has not necessarily been effective. Make sure you dedicate the appropriate resources to each function.
3. If you don’t have one already, put a concierge service in place for large donations.
4. Allocate more resources to target mega gifts and use fewer methods intended to ask for smaller gifts, such as direct mail and email solicitations. Social media is gaining traction, but still only accounts for 2-3% of funds raised.