A Beginner’s Guide To Planned Giving

Created By: Angela Mestre and John-Anthony Bruno
May 23, 2019

Often times, front-line fundraisers view planned giving as an esoteric proposition. It is known as a specialty dominated by attorneys and is often associated with uncomfortable conversations about mortality; an intimidating prospect to even the most seasoned fundraisers. We get it. You’ve developed great relationships with your major donors, keeping them engaged with stories of the impact their contributions make on your organization’s mission. You shudder at the thought of discussing planned giving options and worry that it may be inappropriate or insensitive.

That said, it’s important to keep in mind that today we are amid the greatest wealth transfer in U.S. history. Over the next several decades, $68 trillion will be transferred from the largest and wealthiest generation to their Generation X and Millennial children. Additionally, $6.3 trillion will be transferred to charities through charitable bequests and unless we as fundraisers position our missions as worthy of this ultimate investment, 90% of donor mortality will result in lost opportunity.

Planned Giving Elevates Impact

Did you know? In sophisticated development programs, planned giving can comprise up to 30% of an organization’s annual philanthropic revenue. When embarking on a capital campaign, for example, organizations should inspire donors to consider their lasting impact, offer a variety of creative financial tools to customize their planned gift and determine meaningful ways to recognize their commitment. Charitable bequests, on average, are more than two and a half times larger than a donor’s lifetime commitment, putting them at the top of the donor pyramid. If we are able to close even a percentage of our major donors as legacy givers, imagine how those dollars could advance your mission.

A Planned Giving Mindset

When working with potential legacy donors, it is critical to understand that the wealth of a person is defined by their total assets; not simply by the amount of cash in the bank, but also their real estate holdings, stocks, retirement accounts and personal property.

Donors of any capacity must plan for the dissolution of their estate (and wealth). Their goals often align with providing for their heirs and connecting their lifetime values to the legacy they seek to leave behind. There are generally three “buckets” to which their assets are assigned through estate plans:

• Heirs
• Charities
• Taxes

We believe, and most will agree, that the vast majority of donors (if not all) want to minimize their payable estate taxes and those incurred by their heirs. As donors consider the options to support their family, they may evaluate the level of financial independence their heirs may already have and how successful they are in their lives and careers. For donors who have heirs that are not in need of a financial inheritance, philanthropic impact becomes their primary goal.

As fundraisers, the best way to approach prospects for these legacy gifts is to lead with their impact. Throughout their history with your organization, these donors have presumably been kept updated on how their generosity has helped make a difference in the lives of those your organization serves. With this in mind, now is the time to begin talking with donors about their lifetime commitment and the sizable impact they can provide through a legacy gift.

Complexities of Giving Vehicles

Another obstacle facing us fundraisers is the perceived lack of knowledge in the often-complex gift structures needed to close these types of gifts. The truth is, however, that intimate knowledge of the mechanisms by which one structures a legacy gift is not necessary. Sophisticated donors, and even those who have given their estates little thought, will likely consult with their own attorneys, wealth managers and estate advisors. That said, it is important to have a general understanding of most of the giving vehicles your organization offers. These vehicles will be outlined in more detail in a future article however, be assured that there will always be help in bringing your donors to a place where they can make large commitments and be recognized by your organization for their lifetime of generosity.

And remember, once a donor commits, it is the responsibility of you as a fundraiser to make sure that stewardship strategies are executed, ensuring that your donor receives their promised recognition and that they remain engaged in the mission as many of these giving vehicles are revocable.

In conclusion, planned giving can provide significant revenue to your organization as well as build loyalty among your most passionate supporters. It does not need to be complex. A disciplined program can produce significant results and lead to elevated impact on your organizations mission.

This is the first in a series of three articles on planned giving and the services Orr Group can provide to any nonprofit looking to elevate its impact. Our next publication on this topic features the importance of proactive planned giving and some insight into current trends and innovative giving vehicles.

Contact us today to learn more about how Orr Group can help you with planned giving.