A generational transfer of over $59 trillion is underway through 2052. Approximately 97% of donors leave a planned gift to an organization because they care about the charity. Nonprofit organizations need to take steps today and build necessary infrastructure to allow donors to leave a legacy and impact society in perpetuity.
Planned Giving Overview
- Why do donors make charitable bequests?
- 97% care about the charity
- 82% want to do something special
- 35% as income or estate tax planning strategy
- What is Planned Giving?
- Planned giving is a program of various financial instruments that can be adapted to each donor’s needs.
- Each donor is unique; what works well for one, does not work well for another.
- Why is Planned Giving important?
- $57 trillion transferring between generations through 2052
- Three options for wealth transfer: Government, Heirs, and Charity ($8 trillion transferred to charity in 2003)
- If you don’t ask, someone else will!
Common Types of Planned Gifts
- Gift in a Will or Trust
- Last will and testament or a trust are the legal documents that give the individual right to exercise the disposition of assets
- Bequest: specific provision in the will
- Beneficiary of a life insurance policy
- A donor can buy a life insurance policy naming your organization as the beneficiary and pay premiums on it
- The donor may claim a tax deduction
- IRA Rollover
- Donors 70.5 and older
- Charitable Gift Annuity
- Contract between charity and donor where the donor transfers cash or property to a charity for a lifetime income stream & partial tax deduction
- When the donor passes, the gift stays with the charity
- Charitable Remainder/Lead Trust
- More complex, usually executed by a designated professional
- Individuals with larger incomes (i.e. those who may be inheriting money from parents)
- Donor or charity receives a set percentage of the value annually
- When the donor passes away, the remainder goes to the donor or charity
Is Your Organization Ready?
- Simple steps to start:
- Clean up database to determine best prospects
- Targeted mailings, asking donors if they’ve considered leaving a legacy
- Cultivation is key; how cultivated are your donors? How much do they know about your organization; where does your organization compare?
- Utilize CPA’s/Attorneys who may be on your board and have estate planning experience
- Marketing Strategies
- Greatest & Silent Generation
- Hard-copy information
- Baby Boomers
- Hybrid: hard-copy & online
- Generation X
- Transitional generation = multiple channels
- Online/text appeals
- Want a seat at the table
- Different definition of support
- Heavy advocacy
- Others include:
- Planned Giving inserts
- Donor Stories (people like to see their name in print!)
- Planned Giving ads
- Internet and social media outreach
- Tagline in stationary and flip envelopes
- Greatest & Silent Generation
Non-Negotiables: Make Sure You Have Proper Documentation
- Gift Agreement
- Letter of Intent
- Attorney Letter
- Scholarship Agreement
- Who is your target? Overlay with generational metrics
- Consistent annual fund donors over 70 who have given the last 3-5 years.
Debunking a Planned Giving Myth
- “If they leave a planned gift, they won’t contribute to my annual fund.”
- According to Dr. Russell James, annual giving increases 75%, due to increased investment.