COMMENTARY: A New Study on Giving in Retirement

Working with retirees is just part of everyday life for those of us whose business is charity in Door County. Yet there is surprisingly little research on philanthropy in the retirement years. Thankfully, a new study was just released in July that for the first time looked at how charitable giving patterns change as people transition from their careers into retirement.

How Women and Men Give Around Retirement was researched and written by the Women’s Philanthropy Institute, a part of the Indiana University Lilly Family School of Philanthropy. Within the study are several conclusions with implications for Door County’s charitable community.

One of the most heartening things in the research is how robust people’s commitment is to the charities they care about, even as their financial situation changes. Not surprisingly, when someone retires, household consumption tends to significantly decline. Spending on housing, transportation and education tends to fall dramatically from the years just prior to retirement to those immediately after retiring. Food spending also declines, although more modestly. Overall, total household spending drops 16 percent on average in the five years immediately before and after retirement. Thankfully, charitable giving is an exception.

In contrast to the drop in overall consumption, charitable giving tends to hold fairly steady during the transition into retirement. This is equally true whether you measure it in terms of the average size of a charitable gift or the percentage of total household income that is donated to charity.

The study also found that many differences in gender and marital status tend to continue into retirement. Numerous studies have shown that single women are more likely to give than single men and they generally give higher amounts than men. Similarly, married couples and single women are consistently more likely to give than single men, even when adjusting for other factors. These same patterns hold true into the retirement years.

One of the more interesting observations among retirees is that single retired men demonstrate far greater volatility in their giving. The study notes that the trend line for giving by single retired men fluctuates dramatically, both in terms of likelihood to give and the amount that is ultimately donated. Women and married couples are far more stable in their giving patterns.

Were we to view the data purely as a market analysis, then charities might reasonably conclude that retired single men present the greatest new market opportunity for those raising money for a special campaign such as a new building or to create an endowment fund. The study notes that retired men “tend to be more transactional in their giving, often responding to personal appeals and not engaging as deeply with their organizations they support.” As a group, retired men have been shown to be more volatile in their giving, but research also demonstrates that they can be motivated to make significant charitable gifts with the right approach. The data shows that retired single men may not require a long, deep relationship with a charity before they make a gift. Presumably some combination of a good idea and/or the right fundraising volunteer is sufficient to motivate single retired men to donate. This means that retired single men with financial capacity are a good new market opportunity for Door County’s charities to approach with a request for single, one-time commitment that is the very definition of a special campaign.

The data in the study also supports the idea that a different kind of approach is necessary when asking for charitable gifts from single women and couples who are retired.

Single women are the only demographic studied whose level of volunteerism goes up in the first year after retirement. In fact, it goes up dramatically. Volunteerism among couples declines slightly immediately after retirement but rebounds quickly in the next few years. Eventually retired couples will volunteer their time at a rate higher than during their working years. Single men, on the other hand, are far less likely to volunteer during their retirement.

This difference should cause charities to approach retired single women and couples differently than single men. Rather than the transactional approach of asking single men to give to a special campaign, Door County’s charities would do well to develop vibrant volunteer programs that engage retired single women and couples in their work. The study notes that “women’s deeper engagement and loyalty to the causes they support may lead to more sustained giving, which helps explain their more stable levels of giving around retirement.” The study notes that retired single women and couples tend to be far more consistent in the organizations they support. These kinds of donors provide for the regular and dependable income stream that charities need to thrive.

Finally, when you think about retirees and charitable giving, inevitably the conversation turns to a gift in an estate plan. What the study found, however, is that if charity waits to discuss planned giving until a person retires, they’ve often missed the boat.

“Retirement is a process,” notes the study. “People think about estate and bequest gifts many years before they retire.” The data shows that the idea to make a planned gift typically begins around ages 45 to 50. Although it may be a decade or more before a charitable donation is actually incorporated into an estate plan, potential donors are ready to have a conversation about an estate gift many years before most charities even think to make the suggestion.

Of course, as fascinating as this study is, it speaks to what most people do. We all can think of exceptions to the rule. Regardless, it would behoove the charities of Door County to try to better understand the motivations and actions of those people upon whose generosity the charitable work depends.

Bret Bicoy is president and CEO of the Door County Community Foundation. Contact him at [email protected].