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Planned Giving — The Ultimate Guide

the ultimate guide

Planned Giving — The Ultimate Guide

Times are changing – tremendously. And this especially goes for charitable giving. With tech changing at the speed of light, the landscape of philanthropy has been irrevocably altered. But this isn’t a bad thing – it simply means that donors find, interact, and donate differently now since information is available and ready when they are at the click of a mouse. One such difference is planned giving.

planned giving

What is Planned Giving?

Planned giving, or legacy gifting, allows philanthropic people to give larger contributions to organizations, such as churches, than the organization might ordinarily see from normal donations.

Most planned gifts are thought out beforehand through estate or tax planning so that the receiving organization’s benefit is maximized, while minimizing the impact on the donor and his or her estate.

In other words, planned gifts are major gifts made over the course of an individual’s life or bequeathed upon their death as part of their financial plan. And planned gifts aren’t always cash – some donors gift equity, land rights, or other personal property. Regardless of what the planned gift is, this type of charitable giving can be quite attractive – to the receiving organization and to the donor.

On the other hand, normal gifts, such as church tithing, are given by a donor from their annual income. While these gifts may be a part of the donor’s budget, they aren’t the same as planned giving. If you have planned giving questions, DonorWERX is here to assist you.

Why Does Planned Giving Matter?

Regardless of the size of your church, charity, or other organization, planned gifting matters. It’s important to the long-term stability of your organization that you actively seek and locate benefactors willing to bestow a planned gift.

Large planned gifts can literally change the game for your non-profit. Even if the planned gift is small, it’s these smaller amounts that often equate to the sustainability of your current programs, established endowments, or the ability to launch a new initiative. Not to mention that planned gifts require very little cost or investment on your part. Asking for planned gifts regularly doesn’t cost much at all – you can create brochures or have events at your location – yet you can reap amazing benefits. Now is the time to launch a planned giving adventure, and DonorWERX can help your organization at every turn.

How Do You Start a Planned Giving Conversation?

As difficult a subject it may be to broach, discussing planned giving is a necessity. How do you begin the conversation?

Just talk about it

Leaving a legacy behind might be something people think of, but it’s something they think of infrequently – especially if they’re in good health and haven’t yet hit old age. In fact, they might not even have put together any final plans for their estates yet.

If that doesn’t give you pause, consider this – if your donors don’t know that your organization accepts planned gifts, it might never cross their mind to offer. It’s simply a conversation you must have at some point, because your donors won’t just leave a legacy gift out of the blue. And it’s likely that your donors give to other organizations, too. If those organizations have legacy gifting or planned giving conversations or materials – and you don’t – well, you can probably imagine the outcome.

It’s important, though, when you begin your planned giving conversation, that you speak of the benefits of planned giving – not the benefits you’ll see as an organization, but the benefits of planned giving for your donors.

And it doesn’t have to be anything fancy! Just a little blurb on your site, your physical and digital newsletters, or even in your email signature can help you illustrate the benefits of planned giving, such as:

  • Want to help conserve our natural resources? Consider a planned gift in your last will and testament
  • Leaving a legacy is important – ask us how your values can live on

These are simple yet effective “asks” that focus on psychological or emotional benefits rather than financial.

examples to increase

What Types of Planned Gifts Exist?

The methods of planned giving range from the simple to the exotic. For instance, a simple planned gift could be a bequest upon passing, whereas a more exotic planned gift could be in the form of an annuity or a remainder trust. While the latter is wonderful for your organization, it also helps out the donor with returned income.

While it’s a good idea to explore every available option, if you’re just beginning a planned giving campaign, consider sticking with simple bequest requests. After your campaign has gained a bit of momentum, you can look into foraying into other planned giving methods.

It’s important that clear explanations of these planned giving methods are available for your donors to read, either on a page on your website or in a physical hand-out document. Some organizations even set up separate sites just for their planned giving division.

What types of planned gifts provide lifetime income to donors?

If your donors are interested in making a planned gift, but would also like to see some type of returned income, a charitable gift annuity is a great, flexible option. These types of planned gifts provide fixed payments to donors and can either begin immediately or at some future date.

There are also many organizations that keep pooled funds, comingling donations, and pay their donors variable payments depending on how much the fund earns over given periods of time, also known as a charitable mutual fund.

Are There Tax Benefits for Donors on Planned Gifts?

Indeed. If your donors are on the fence because they’re unsure how a planned gift may affect their taxes, you can alleviate their worries.

Planned gifts offer the following tax benefits:

  • If the donation is appreciated property, the donor won’t pay the capital gains tax
  • If the donor is giving a planned gift into a charitable mutual fund, they get a tax break on the overall value of the original donation minus the value of the income from interest
  • While normal bequests and beneficiary designations don’t provide any source of income for the donor, the estate tax does not have to be paid on these gifts

What does your organization need to do to be ready for these types of gifts?

Aside from the above, there’s really nothing you need to do to prepare to receive planned gifts. Even exceptionally small non-profit organizations can accept these gifts according to the IRS. The only part of being ready you need to mind is the internal workings of your organization – the politics, the mindset, your motivation. Your members should be responsible and proactive and function as a team. Need training or other assistance for your planned giving team? Ask DonorWERX

Planned Giving FAQs

These are just a few of the usual questions asked by organizations about planned giving:

Who should you talk to about planned giving?

The usual planned giving donors are 65 or older, but that doesn’t mean this is the only group you can speak to. Those who fall into the following categories make fantastic candidates for planned giving:

  • Already frequently donate or attend consistently
  • Believe in the mission of your organization
  • The beneficiaries of work done by your organization
  • Want to give back much more than they’re currently able to do

How should you begin the planned giving conversation?

Although we’ve addressed this question somewhat already, here are some easy, detailed ways you can broach this subject:

  • We just started a new program at our church – a legacy initiative. It would mean the world to us if we could talk about this with you.

Before the actual meeting, gather as much info about this particular donor as possible and their connection with your organization. There’ll be some informal banter to start, then you’ll steer the conversation towards your planned giving objective with questions such as:

  • Why is our (church, hospital, or other organization) special to your family?
  • What inspires you and your family?
  • What was the motivation behind your first ever donation to us?
  • Do you foresee any challenges our organization might face in the future?
  • What legacy do you want to leave behind?

If these types of questions don’t necessarily steer the conversation in the direction you’d hoped, you can close with a simple ask of the donor to consider your organization when creating their estate plans.

How should our organization gain board support for a planned giving initiative?

Your board will probably have the following questions for you:

  • What will the initiative’s return on investment (ROI) be?
  • When will the organization begin to see these funds?
  • Will planned giving affect annual donations?

Every organization will have different answers to these questions, but to establish board support, consider the following messages:

  • Our program needs to be both a marathon and a core strategy of development going forward
  • As board members, you can support us by considering planned giving yourselves
  • Our organization and its board members must come together to plan for the future of the organization and discuss how planned giving fits into our overall mission

Does planned giving support annual fundraising efforts?

The conversations you have with your donors that lead up to a planned gift, and those you have afterward, often strengthen the bond between donor and organization. Because of this bond, donors will often carve out a piece of their planned giving legacy donation to bestow on your organization today. They’ll often ask, because they trust you and your mission if increased current donations or acceleration of their planned gift could help.

How can we breathe life back into a stagnating planned giving initiative?

If you already have a planned giving program, even if it isn’t what it used to be, it means you have legacy donors in your ranks today. Consider bringing them together for an informal meal. This is the perfect opportunity for you to show how much you’ve appreciated their support and to subtly ask for their input regarding program promotion.

When you put together your materials for your planned giving program, you can include – with their permission, of course – donor stories that illustrate the benefits of planned giving through the eyes of the donors. Developing a brand-new brochure keeps your organization fresh and up to date.

How do you measure success in a planned giving program?

You might be tempted to gauge your program’s success by the amount of money it’s brought in – but there are plenty of other indicators that should be looked at for a big-picture, real evaluation:

  • How many prospects have you identified?
  • How many meetings have you held?
  • What contact have you made with identified prospects?
  • How many “asks” have you made?
  • How many prospects have committed to leaving a legacy planned gift to your organization?

There are plenty of software programs available that can help you keep track of this information, or you can do it the old-fashioned way on pen and paper. Keeping track allows you to evaluate and create reports that identify expected legacy gifts and amounts and illustrates your potential pipeline.

Sure, you can’t count these funds as in the bank today, but it illustrates your potential future income. And even as few as five to 10 donors can set the stage for positive expectations.

Should you include planned giving bequests in capital campaigns?

You should determine early on how you will count planned giving donations in your overall revenue. Normally, you’d direct these funds to a separate component of your overall campaign, known as an endowment. By incorporating your planned gifts into the capital campaign lets your donors enhance their support level. For instance, say a donor has committed to leaving you $1 million upon their passing. They could significantly assist your organization now by committing to $500,000 split amongst the coming five years, with a $500,000 payment payable upon their passing. These types of arrangements allow this family to assist today and actually see the benefits of their dedication.

5 Simple Steps to Launch a Planned Giving Initiative

Are you ready? These simple steps serve as the perfect outline for any planned giving program. They provide the framework to develop a long-lasting initiative for your organization:

  1. Familiarize your entire team with the basics of planned giving
  2. Discover who your potential donors are
  3. Create marketing materials to get the word out – these should be in both digital and print formats
  4. Begin communicating about the program
  5. Acknowledge your donors

DonorWERX is here to help you at every step of your planned giving initiative journey. If you have any questions, please reach out.

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