Starting or Expanding Your Planned Giving Program: A Brief Overview for Nonprofit Organizations
Starting or Expanding Your Planned Giving Program: A Brief Overview for Nonprofit Organizations
Authored by CCS Fundraising’s Gift Planning Practice Group
WHAT IS PLANNED GIVING?
A planned gift is any current or future gift, made during lifetime or at death, in consideration of a donor’s overall financial or estate planning.
Planned gifts can be made with cash, securities, real property, life insurance, individual retirement accounts and a variety of other noncash assets. There are many planned giving vehicles which donors may consider, some provide income back to a donor or another beneficiary. Donors may also reduce estate, income or capital gains tax exposure by making a planned gift.
Basic elements of a Planned Giving program include:
• Board-approved gift acceptance policies
• Staff person with at least 40% time on planned gifts
• Frontline fundraisers committed to crafting blended proposals with their donors
• Adequate resources for recognition and stewardship
• Marketing outreach pieces for targeted audiences
• Donor management software to track contacts
IDENTIFYING PLANNED GIVING PROSPECTS
A planned gift is any current or future gift, made during lifetime or at death, in consideration of a donor’s overall financial or estate planning.
Planned gifts can be made with cash, securities, real property, life insurance, individual retirement accounts and a variety of other noncash assets. There are many planned giving vehicles which donors may consider, some provide income back to a donor or another beneficiary. Donors may also reduce estate, income or capital gains tax exposure by making a planned gift.
Basic elements of a Planned Giving program include:
• Board-approved gift acceptance policies
• Staff person with at least 40% time on planned gifts
• Frontline fundraisers committed to crafting blended proposals with their donors
• Adequate resources for recognition and stewardship
• Marketing outreach pieces for targeted audiences
• Donor management software to track contacts
INVOLVING LEADERSHIP
It is important that your nonprofit’s leaders – governing board, staff, and other key stakeholders – commit to a planned giving program and understand the role it plays in ensuring the growth and long-term stability of your organization. Key responsibilities include:
• Endorse the planned giving program
• Approve gift acceptance policies
• Approve and fund the budget to build or expand the planned giving program
• Make one’s own planned gift
• Identify potential donors and engage them to deepen the donor relationships
• Receive regular planned giving program reports
GIFT ACCEPTANCE POLICIES
Establishing gift acceptance and recognition policies is one of the important responsibilities of leadership, especially the governing board. These policies need to define clearly and concisely what types of gifts and noncash assets your nonprofit organization will and will not accept, who has the authority to accept gifts, the gift review process if there is one. Developing gift acceptance policies helps educate staff and board members, and will help your organization avoid potentially costly mistakes due to such things as related-use rules, valuation requirements, or pre-arranged sale issues. Some key areas to be addressed in gift acceptance policies include: • Nonprofit’s mission
• Purpose of the policies
• Use of legal counsel
• Gift restrictions
• Gift Acceptance Committee
• Types of gifts
• Minimum donor/beneficiary ages for some types of life-income gifts
• Donor responsibility for appraisal
• IRS filing requirements
• Donor communications, gift agreements, and acknowledgements of gifts
MARKETING PLANNED GIVING
Communicate your mission with social, donor-focused messaging which speaks to their life stage, interests, the needs of your potential donors, and the benefits to them of planned giving. Build trust and donor confidence by sharing stories of other planned gift donors – especially living donors – and the programs their gifts support. There are many ways to market planned giving, including on the organization’s website, through targeted planned giving newsletters, via educational sessions for donors, in your nonprofit’s regular magazine and other publications, through a legacy society brochure, and a comprehensive ‘ways of giving’ booklet. Much of this information can be included on your website as well.
Another key aspect of a planned giving program is a legacy society. Build and promote your legacy society to encourage more donors to consider giving a planned gift. Through the society you can: bring members together, acknowledge their commitment, recognize them personally, and offer continued support and stewardship. If you choose to offer society members special exclusive access to your organization’s leaders and provide “insider information,” you can increase the attractive ness of your Legacy Society, making it a group others will want to join.
MEASURING SUCCESS
Key metrics to help your nonprofit measure and evaluate your planned giving program include:
• Deferred gifts realized
• Deferred gift intentions documented
• Number of new legacy society members
• Number of meaningful contacts (visits, phone, email) with donors
• Number of new prospects identified and in the pipeline
PLANNED GIFT OPTIONS
Current Outright Gifts
Gifts of assets such as stock, real estate, and tangible personal property, while given for current use of your nonprofit, may be considered planned gifts because such gifts typically require thought and planning (unlike outright cash gifts made by writing a check or donating online from income.)
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Stock Appreciated stock represents the most common type of noncash gift. Nonprofits can easily sell publicly traded stock and its fair market value is generally easy to ascertain. Charitable IRA Rollover Qualified charitable distributions made be made by donors age 70 ½ or older. |
Real Estate Gifts of real estate can be a significant boost to your fundraising revenue. There are many issues your nonprofit should address before accepting a gift of real estate: • Is the estate subject to debt? • Are there liens or encumbrances on the property? • Are there any environmental concerns with the real estate? • Will the nonprofit sell the property, or retain it and use it for the organization’s exempt purpose? |
Charitable Lead Trust A charitable lead trust pays current annual income to your nonprofit for a specified period of years, then the trust principal reverts to the donor or the donor’s beneficiaries when the trust ends. |
Future Gifts
Future gift intentions will benefit your nonprofit at some future date.
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Bequests Donors like bequests because they are easy to understand and do not require the donor to part with assets during life. Charities like bequests because they are easy to explain and require little cost to promote. |
Retirement Plans and IRAs Easy to understand and implement, donors complete a beneficiary designation form from the plan administrator, naming your nonprofit as entire or partial beneficiary. |
Life Insurance Attractive because donors make a gift at a sizeable face value for a minimal outlay of cash. The best practice is for the nonprofit to own the policy and pay any remaining premiums. Donors may make annual gifts to the nonprofit to cover the premiums. |
Gifts that Pay Income to the Donor
Irrevocable transfers of cash or property, which provide income back to the donor or designated beneficiary/ies.
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Charitable Gift Annuity A contract between the donor and the charity where the donor makes an irrevocable gift. In return, the charity agrees to pay a fixed amount of money each year for the lifetime of one or two individuals. Most states regulate charitable gift annuities. Your nonprofit should familiarize itself with state regulations, asset reserve, and reporting requirements before initiating a CGA program. |
Charitable Remainder Annuity Trust A legal vehicle that establishes fixed dollar payments to the donor or his/her designees each year. Payout to the noncharitable beneficiary is based on the initial fair market value of the property transferred to the trust. The trust pays the income beneficiaries for life or a specified term of years. When the trust terminates, the corpus is distributed to the charities named as the charitable remainder beneficiaries. |
Charitable Remainder Unitrust Similar to the annuity trust, the Unitrust provides income payments to the donor or his/her designees, but the payments are variable, based on a fixed percentage of the annually revalued trust corpus. The trust pays the income beneficiaries for life or a specified term of years. When the trust terminates, the corpus is distributed to the charities named as the charitable remainder beneficiaries. |
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