Finding out that someone who passed away left a gift for your nonprofit typically is a heartwarming, pleasant surprise. This type of gift can allow your organization to do things and make improvements that you didn’t think you would be able to afford!
However, small nonprofits can turn planned giving into a reliable, sustainable source of funding by developing a sound strategy for identifying and engaging supporters who might consider planned gifts.
Let’s discuss what planned giving is, different types of planned gifts, and how to get started with a planned giving program.
What Is Planned Giving?
Planned giving, or legacy giving, is a donation planned for the future as part of an individual’s financial and estate planning process. The nonprofit usually receives the financial gift or asset(s) after the donor passes away, although a planned gift can be structured in a way that enables the donor to earn income toward the end of their life.
There are tax benefits associated with planned gifts for donors, who retain control and can use their gifts as needed. Most importantly, planned giving enables donors to have a lasting impact on causes that matter to them.
For nonprofits, planned giving provides financial support that is often significantly more than one-time donations. These funds or assets can be incorporated into budget planning to improve programs and develop new ones. Planned giving is also an opportunity to cultivate relationships with donors and strengthen their commitment to your nonprofit.
Types of Planned Gifts
By far, the most popular type of planned gift is a bequest (cash and/or assets) specified in a will or trust. This is considered a deferred gift, which means the gift will be distributed at a later date, typically when the donor passes away.
Other types of planned or legacy gifts include but are not limited to:
- Retirement plans
- Life insurance policies
- Trusts (living or revocable trust, charitable remainder trust/unitrust)
- Stocks
- Real estate
- Endowments
- Annuities
- Pooled income funds
Of course, various financial accounts and assets have different rules and tax implications, so donors should speak with their attorney, accountant, and financial advisor to determine which type of planned gift makes sense based on their individual circumstances and preferences.
How to Start a Small Nonprofit Planned Giving Program
The first step is to make sure leadership, the board, major donors, and long-time supporters buy into the concept of creating a formal planned giving program. Because many small nonprofits are created by individuals, there should be confidence that the organization will continue to exist and thrive even if the founder were to leave.
Once you’ve confirmed that key stakeholders are on board with planned giving, you should identify a point person to “own” the development and maintenance of the program. Stewardship and consistent engagement are needed for a planned giving program to work.
For example, once potential donors have been identified, they might seem enthusiastic about a planned gift. However, it’s important to meet regularly with donors to ensure you have a firm commitment that you can count on to include in your budgeting.
In fact, you may find that a donor has already established a planned gift that you otherwise would not have known about until they pass away. This gives you the opportunity to thank that donor, who will serve as an example to others who are in a position to make a planned gift!
An unexpected legacy gift is a wonderful surprise. Just think about the possibilities if you create a structured planned giving program that turned these gifts into a predictable source of funding to help sustain your nonprofit!
