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Differences in Legacy Giving vs. Planned Giving

If a member of your congregation passes away and names your church the beneficiary of the money in her IRA you could call that a planned gift and not be wrong. But if you used the more modern term of ‘legacy giving’ you’d be embracing a subtle shift that has happened in the past few decades in the world of nonprofit fundraising.

Legacy gifts and planned gifts are exactly the same thing. But one of those terms focuses on the outcome for the recipient while the other is about the outcome for the donor. And making the donor experience as good as it can be is one of the keys to sustainable giving.

What Is Legacy Giving or Planned Gifts?

These types of gifts are intentional donations made as part of an overall wealth management plan or an estate plan. 

·      Outright Gifts- These gifts can be given while the donor is alive or after the donor’s death. This includes cash, stocks and bonds, real estate and other personal property that may be meaningful to the church or charity.

·      Gifts for Donor Income- These gifts generate income or some other financial benefit for the donor. These include the charitable gift annuity when a donor gifts a nonprofit with cash or securities in exchange for a lifetime of fixed income payments. Another strategy is the pooled income fund. Donors contributing to the same nonprofit pool their gifts and each donor receives a quarterly income payment.

·      Gifts that are Payable After the Donor’s Death- These are gifts that are specified in a will and direct money to favorite churches or charities. These can be gifts of cash or gifts of property. Donors can also elect to have a favorite nonprofit be a beneficiary of a retirement account or life insurance.

Why the Name Change?

Labeling these donations legacy gifts adds a powerful motivating factor. Who isn’t concerned about the legacy they leave behind? Who doesn’t want to leave a legacy that includes supporting a favorite cause and making the world a better place? That’s why the new conversations about gifts include the word legacy.

Sure, the gifts are still planned. But when you talk about planned you talk about a donation the nonprofit is expecting more than how meaningful it is to the donor.

Churches and charities should always include legacy gifts in their overall donation strategy. Talk to existing donors and potential donors about the powerful message that legacy giving sends. About how it will fuel the future of a cause they care so much about. Explain that legacy gifts aren’t just for the wealthiest donors. Some donors who could never afford a large gift based on their immediate or fixed income can be more generous with a gift that is coming out of their final estate. 

Make it easy for your congregants to initiate a legacy gift. Include legacy gifting information in regular church communication. Dedicate a portion of your website to information about leaving legacy gifts. Consider making legacy gifting a specific ministry with a specialized staff member as the contact. And always engage with your donors. Engaged donors who feel a personalized connection to the cause are more likely to be givers.

Encourage all of your donors to make their legacy a giving legacy.