Getting Started With Planned Gifts

Planned gifts, which combine estate-planning concepts with what are often major charitable gifts, come in many shapes and forms. Some planned gifts are made to organizations after a donor’s death, while others provide a charity with assets while allowing donors to earn an income for a period of time during their life.

Sometimes called legacy gifts, these donations have the potential to help sustain organizations’ budgets and futures. Successful planned-giving programs enable nonprofits to generate significant gifts from donors who may not have the ability to give sizable amounts of cash right away.

“I always refer to planned-giving donors as major-donors-in-waiting,” says Phyllis Freedman, a planned-giving consultant. “It's not an outright gift, but it's probably equal to or larger than most major gifts.”

Like most fundraising, planned giving is first and foremost about building relationships. As fundraising consultant Robert Sharpe says, donors who give your charity an estate gift show that they regard your organization as a close member of their family.

Over all, the decision to contribute via a planned gift centers on donors’ trust in the organization—whether they believe the nonprofit has longevity and will put their funds to good use, says Jeff Lydenberg, vice president of consulting at PG Calc, a firm that provides planned-giving software, marketing, and consulting. That can present a challenge for younger organizations.

While planned giving can be intimidating—there are multiple gift types, tax implications, and financial considerations—it doesn’t have to be complicated.

And organizations are increasingly benefiting from this type of giving. Contributions from bequests, the most common type of planned gift, rose 7.2 percent in 2013, according to the annual Giving USA study.

If you’re thinking about getting into planned giving, here are some basics to get you started.