Between 2007 and 2061, there will be an estimated great wealth transfer of $59 trillion dollars transferred from 93 million estates – of which an estimated $20 trillion will be given as gifts to charitable organizations just like yours.
We know that the amount a donor can give as a planned, or legacy gift, often significantly surpasses what they can give on an annual, or even one-time, basis. As an organization, it behooves you to create a Legacy Giving program, and let your supporters know about this important way they can make a difference.
It can seem daunting to integrate the complexities of planned giving into your fundraising activities. It can also feel awkward to have a meaningful (and sensitive) conversation with a donor about the end of their lives. But it doesn’t have to complicated or scary! This article will provide the steps to getting started, as well as the various ways donors can make a planned gift.
Brief explanation of planned giving options
There are many ways a donor can leave legacy funds to a non-profit. The most common, and easiest, is leaving a bequest in their will, either a specific amount or a percentage of their estate. The other giving vehicles are more complicated, and require a financial advisor to set up, but don’t let that deter you! Most legacy giving is in wills, and that is a good place for you to start.
That said, before we get into how to create a program, here is a very brief run-down of of the more common ways donors can make a legacy gift:
Wills & bequests
Donor may name an organization in their will as a policy beneficiary/recipient of funds.
Life insurance policy
These can be structured so that an organization is a beneficiary of the plan and will receive payment upon the donor’s death.
Charitable gift annuity
In return for an irrevocable contribution (and therefore an immediate charitable deduction) of cash or securities, a donor receives a fixed income, each year, for the rest of their life. The payout rates are based on your age at the time the gift is made.
Pooled income fund
This is like a charitable mutual fund where irrevocable gifts from various donors are mingled and invested, and donors receive a dividend. Upon their death, the remaining funds are distributed to the charity.
Charitable remainder trust
Non-charitable beneficiaries receive annual payments from the trust, and at the time of the donor’s death, or another specified time, the remaining funds are given to the nonprofit.
Charitable lead trust
Opposite of a remainder trust, in this case the nonprofit receives annual payments, and at the time of the donor’s death, or after a specified time, non-charitable beneficiaries receive the remainder.
How to create a Legacy Giving program
Every nonprofit should have a planned giving program. You can start small and simple! Here are the steps you need to get started:
Step 1
Get your board on board. Educate them on this new giving vehicle and get the approval you need. Encourage them to become members of this new group.
Step 2
Identify how to tag Legacy Society members and prospects in your donor software for recognition and communication purposes.
Step 3
Develop a legacy giving policy, including what you will accept (cash and/or non-cash gifts?) and your ethics rules around legacy giving.
Step 4
Identify planned giving prospects. You might assume that your planned giving donors are within your major gift prospect pool. In fact, your best planned giving prospects are often those donors who have been supporting you at lower amounts for a very long time. Also consider doing a donor survey with a question about recipient’s interest in making a legacy gift.
Step 5
Choose a name for your planned giving program. The Legacy Society is totally acceptable!
Step 6
Decide on the benefits of Legacy Society membership and create a webpage.
Step 7
Determine how legacy gifts will be used by our organization. Many choose to use these gifts to develop or grow an endowment, since their timing is unpredictable, and also to honor the spirit of giving in perpetuity.
Step 8
Start communicating! Develop an annual communications plan around legacy giving. This plan should include informational and acquisition outreach to reach new members, as well as thank yous and reporting to current members.
Once you have launched your Legacy Society, the key is to continuously let people know it is an opportunity for them to make a lasting difference! Send an annual letter to your top planned giving prospects, write a profile of a Legacy Society member for your newsletter, and include a simple message about the Society in all of your donor communications.