Navigating The Great Wealth Transfer: The Strategic Imperative Of Planned Giving

Created By: Steve Orr
April 26, 2024

The impending Great Wealth Transfer represents a pivotal moment for philanthropy, with billions of dollars set to move from one generation to the next. This shift isn’t just a financial transaction; it’s a transformation of the philanthropic landscape, offering an unparalleled opportunity for nonprofit organizations to secure sustainable funding through planned giving.

Understanding the Opportunity

The Great Wealth Transfer isn’t just a forecast; it’s happening now, reshaping the approach to philanthropic giving and nonprofit sustainability. This monumental shift in wealth presents a critical juncture for nonprofit organizations, compelling them to weave planned giving into their fundraising strategies not merely as a beneficial tool but as an essential component for securing their long-term impact and financial health.

Amidst this evolving landscape, nonprofits are spearheading fundraising campaigns and leading change. In collaborating with these organizations, many foresee a significant portion of their campaign funds originating from planned gifts, as highlighted by Austin Wrubel, Director of Planned Giving at Robin Hood: “Planned giving is emerging as a foundational strategy for our future, reflecting a broader shift in how donors are approaching their legacy and philanthropy.” This insight underscores the broader movement towards embracing planned giving, demonstrating how proactive adaptation to the Great Wealth Transfer is shaping the future of nonprofit fundraising efforts.

The Dynamics of Planned Giving

The intersection of philanthropy and tax planning creates a powerful incentive for donors to consider planned giving. Liz Wurster, Executive Director and Banker at J.P. Morgan Private Bank, highlights the dual benefit, stating, “Strategically, planned giving allows donors to achieve their philanthropic objectives while optimizing their financial and tax planning.” This synergy highlights the importance of strategic planned giving in modern philanthropy.

However, for nonprofits to effectively leverage this trend, a structured approach to preparation is crucial. This includes taking steps such as:

• Refining Gift Acceptance Policies: Establishing clear guidelines ensures that planned gifts align with your organization’s goals and capacity.
• Collaborating with Financial Operations: Effective management of planned gifts requires seamless coordination with finance departments for accurate tracking and reporting.
• Deepening Understanding of Giving Vehicles: Familiarity with donor-advised funds (DAFs), charitable annuities, and other planned giving instruments is essential. Nonprofits must not only understand these vehicles but also articulate their benefits to potential donors.

Understanding DAFs is crucial for nonprofits seeking to navigate the evolving philanthropic landscape. A Forbes report underscores this evolution, noting record DAF inflows and outflows last year, and spotlighting the role of Fidelity Charitable and National Philanthropic Trust. Their extensive DAF programs have not only made them among the largest U.S. grantmakers but also exemplified the transformative power of DAFs in directing philanthropic funds. For nonprofits, a nuanced understanding of and engagement with DAFs is a strategic necessity to attract informed donors and effectively channel these burgeoning resources toward their missions.

Looking Ahead

The Great Wealth Transfer is more than a financial shift; it’s a call to action for nonprofits to strategically embrace planned giving. This movement not only promises substantial resources for those ready to adapt but also redefines donor engagement and fundraising success. Looking forward, the integration of planned giving into fundraising strategies becomes crucial for organizations seeking to secure their future within a rapidly evolving philanthropic landscape. The path forward demands strategic insight, thorough preparation, and a steadfast commitment to adapt to the ever-changing contours of philanthropy.

Orr Group applies a business mindset to provide sustainable, revenue-driving solutions for our nonprofit partners. Get in touch to learn more about our planned giving services, from strategy development to management and administration.

Steve Orr is the Co-Founder and Managing Partner of Orr Group. Steve draws from his investment banking and finance background to bring a problem-solving approach, a focus on metrics, and an outcomes-driven perspective to the nonprofit sector.