About Planned Giving

Laying the Groundwork (4th in a series of 4)

A planned gift is a charitable gift made to a nonprofit as part of a donor’s financial or estate plans. For any nonprofit with a view to a long-term future, a planned giving program should be among the fundraising opportunities it actively markets, particularly in conjunction with an annual or capital campaign.
This four-part series offers a primer that should prove helpful to any nonprofit eager to make the case for starting or growing a planned giving program.

Planned giving opportunities should be offered by any nonprofit that intends to have a long future, and has a mission that is likely to remain relevant for a generation or more to come. Even a modestly staffed development office can add planned giving to its fundraising program portfolio.
Get educated. To prepare your board and colleagues for a planned giving program, and to speak knowledgeably with donors, read through the resources and guides available online, take a class at Indiana University’s Lilly Family School of Philanthropy (offered online and in various locations), or attend an Association of Fundraising Professionals conference. Look for materials specific to your nonprofit, like one published by the National Association of Independent Schools.
Put policies in place. Ensure donors’ confidence in a planned giving program by putting necessary policies in place. Chief among them are a board-approved Investment Policy and a Gift Acceptance Policy. A board committee can review and approve certain types of gifts – particularly those that come with restrictions or obligations, and those that involve assets that may not be readily saleable, such as real estate or closely held stock.
Put practices in place. Routinize tracking and reporting of endowment performance and its use in a way that’s easy to share with inquiring donors. Routinize the stewardship of all planned giving donors so they feel close to your nonprofit which may encourage them to increase their commitment.
Plan A Advisors is particularly grateful to the National Association of Charitable Gift Planners among many sources of wisdom for this series.
Enjoy the summer! Look for the next Plan A Advisors series in September.


Counting in Campaigns (3rd in a series of 4)

Planned gifts can help a nonprofit reach or exceed a campaign goal. But how to account for a gift promised now but likely received well beyond the close of a campaign?
Campaign Asks. When soliciting a campaign gift, there’s a once-in-every-five-or-more-years opportunity for a conversation about a donor’s long-term commitment to a cause. Solicitors can show a donor how the combination of a current commitment or multi-year pledge combined with a planned gift (e.g. bequest, life insurance policy, etc.) can help the donor make a bigger gift.
Accounting vs. counting vs. crediting. For campaign purposes, all donors who have made commitments are “credited” by name in the roster of campaign contributors. But only those planned gifts that are verifiable and valued can be counted, in dollars, towards a campaign’s total. And only planned gifts that are unconditional and irrevocable can be accounted for on the nonprofit’s books.
Ask for proof. For campaign purposes, a planned gift may be counted towards a goal if the donor has provided a verifiable commitment of a specified amount (or indicated the value of an irrevocable gift once assets have been transferred to, say, a trust). The campaign may also count a credible estimate of the value of a percentage of an estate or trust, a retirement plan, or a life insurance policy not yet fully paid. Ask for a signed letter, agreement or notification form; a copy of the donor’s will or codicil (amendment); or a legally binding deferred pledge agreement.
No double counting. A gift’s value can only be counted towards one campaign. A planned gift with an unspecified value may be credited to the current campaign but not counted in dollars; when the gift is finally received, its value may be counted toward the then-current campaign.
In two weeks: About Planned Giving: Laying the Groundwork


Marketing to Donors (2nd in a series of 4)

Unlike gifts made outright in any given year, a nonprofit may encourage a loyal donor to renew a membership, give to the annual fund, respond to a matching challenge, support a program or special initiatives, and buy tickets for a fundraising event like a gala – on the nonprofit’s timetable. By contrast, donors make commitments of planned gifts on their own timetable. The nonprofit’s job is to prompt its donors, offer guidance, and cultivate relationships that encourage such commitments.
Inform. Members and annual fund donors can be great prospects for planned gifts, even if they are modest contributors. Planned giving should be promoted to donors through collateral materials like print or electronic mailings and newsletters, or keep-sakes like bookmarks, and reinforced regularly. (Look at other organizations’ materials for models.)
Educate. Information sessions and free financial planning seminars offered to constituents can educate them about the benefits of including a nonprofit in their estate plans. For bequests make it clear: there’s no minimum commitment; even a small gift is welcome.
Cultivate. Loyal donors should be given opportunities to get to know the nonprofit as an insider to better appreciate the value of a planned gift. Invitations to exclusive or “behind the scenes” events can also build lasting relationships between donors and staff.
Bundle. Discuss planned giving when soliciting a loyal donor for an annual or major gift. It’s an opportunity to encourage donors to think holistically about their commitment and support, and you reduce the risk of annoyance by asking too many times for gifts during the year.
Recognize. Recognize those who have committed to a planned gift with a special moniker, such as membership in a legacy giving “society.” Then publicize the list in print or online (with permission).
Steward. Continue to engage with donors who have made planned giving commitments just as you would cultivate a major gift prospect. Feeling close to and invested in the nonprofit’s work may encourage an even more significant commitment.
In two weeks: About Planned Giving: Counting in Campaigns


What and Why (1st in a series of 4)

Unlike gifts made outright during the year or pledged to be paid over several ensuing years by a donor or via a foundation, planned gifts are typically deferred commitments, promised for the future and often at an uncertain date. They may also be promised gifts made using a financial instrument such as a trust.
Size doesn’t matter. A planned gift is generally structured so that the donor or donor’s estate receives a tax benefit from the gift. And planned gifts can come from anyone, not just the wealthy. A planned gift can allow a donor to make a larger commitment than might otherwise be possible during their lifetime, and perhaps to have a lasting impact that their current resources would otherwise limit.
Commitment. A planned gift can increase a donor’s loyalty, deepening their personal investment in the nonprofit’s long-term success. The donor benefits from recognition and attention, which can encourage greater annual giving.
Common types. Planned gifts that any nonprofit can encourage include bequests made in a donor’s will (either a specified allocation or percentage of the estate’s value); life insurance policies or retirement benefits where the nonprofit is named as the beneficiary; or the promised gift of a transfer of real estate or other marketable assets.
Trusts. More sophisticated financial instruments for planned gifts include Charitable Annuity or Remainder Trusts where the donor receives a financial benefit prior to death, or a Charitable Lead Trust benefiting the nonprofit prior to the donor’s death. The nonprofit’s board should provide prior approval for accepting such gifts.
Revocability. Planned gifts promised from a donor’s estate are usually “revocable” while the donor is still alive, while those transferred to a trust may be “irrevocable.” The former is, in some ways, less advantageous because it may be changed and cannot be recorded on the nonprofit’s balance sheet, but the latter may also put the nonprofit at some risk if the trust has a financial obligation back to the donor.
In two weeks: About Planned Giving: Marketing to Donors