It takes about fifteen years for our perceptions to catch up with reality. Americans are just beginning to understand that the majority of us are living well into our ’80s and ’90s, rather than the “three score and ten” we were told we would need to plan for.
- The numbers of persons over fifty is skyrocketing. The 76 million Americans born between l946 and l964 will push the number of 50 to 64 year olds from 33 million today to a peak of 59 million in 2020 with the first of the “baby boomers” hitting traditional retirement age around 2011.
- In l960, only one American in ten was aged 65 or older. Today, that ratio is about one in eight, and it could reach one in six within 30 years. Americans aged 85 and older have increased from 940,000 in l960 to 3.l million today and will reach 5.4 million in 2020. True life expectancy in the United States is currently 82.91 years.
- Of all the people who have lived to age 65 in the history of the world, more than half are alive now. The general U.S. elderly population grew 89 percent compared with the total population growth of 39 percent. People age 85 and over have increased 232 percent since 1960. The latest census figures show that 57,000 Americans have reached 100 – a growth of 77 percent from the 1980s. And, projections through 2050 suggest nearly one million Americans will live past the century mark within fifty years!
- The number of Americans who celebrate 100 years is dramatically increasing. There were less than 37,000 individuals who could claim that distinction prior to 1990. By 2000, the number had increased to 68,000. And, by 2050, more than 834,000 Americans will have passed the century mark!
How does our increasing longevity affect major giving?
By focusing on bequests and planned gifts, many organizations will actually bring in more money from a broader base of supporters than they can through a focus on current gifts!
A Merrill Lynch survey of adults ages 45 to 64 has shown that 45 percent of the respondents say they are afraid they will outlive their money and a whopping 69 percent see a risk of being overwhelmed by health care costs. Affluent adults of all ages and both sexes worry about the longevity of their assets. Forty-seven percent of women and 33 percent of men in households with annual incomes greater than $50,000 are “very” or “somewhat” concerned that they will outlive their retirement savings, according to the International Association for Financial Planning in Atlanta, Georgia. As Americans understand their own increasing longevity and the financial implications, “ultimate” gifts — sacrifice gifts of assets during one’s lifetime — will be made reluctantly, at best.
The typical major gift was a one-time “sacrificial” contribution from an older donor near the end of his or her life. It was usually directed to a charity’s capital needs. However, concerns about outliving one’s assets suggest that there will be an increasing reluctance to part with assets until one’s death. Economic and demographic changes are forcing pre-retirees and young retirees to reevaluate how they’re going to fund “the golden years”.
While there are still a number of older individuals who wait until close to the end of their life to make a grand gesture, many mid-life and younger persons are able and willing to join the party if we redefine what gets them in!
The “new look” in major giving includes:
- Larger annual gifts made from the donor’s income as opposed to his/her assets.
- Committed giving over a period of months, years, decades.
- Special gifts throughout life when lifestage changes provide opportunities.
Think more boldly about annual gifts. Higher productivity, two income households, lower taxes, more college-educated adults, lower inflation, among other dramatic developments, have combined to produce new levels of affluence. In the past decade, affluence in the United States has increased at a phenomenal rate, enlarging an already under tapped market of potential donors.
With an average age of 47 and equal numbers of men and women, today twenty-four percent of all American households are affluent: defined as having a annual income of $75,000 or more, with a median household income of $121,000 and a median net worth of $50,000. According to the U.S. Census Bureau, each of these household’s has a minimum of $10,000 of discretionary income – the pocket from which charitable giving along with recreational activities and the small luxuries of life are taken.
Encourage lifelong donor loyalty. Focus on renewal and upgrading rather than on donor acquisition. With life expectancies lengthening out, a loyal donor can give for fifty, sixty, seventy or more years. But, it requires a shift from being methodology driven to being donor driven. We’ll worry less about conducting annual appeals, special events, and capital campaign and listen more to how and when our donors want to give.
Recognizing life is cyclical, not linear. As life has lengthened out, we don’t all go through various stages at the same time. Knowing when major changes – parenting, empty nesting, grandparenting, new jobs, sabbaticals, retirement – are taking place, provides charities with an opportunity to suggest special gifts to commemorate this special times.