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Planned Giving

Planned giving is the process of giving a planned or deferred gift. They are commonly gifted to an organization through a will or trust once a donor has passed away. Diversifying an organization’s revenue stream, planned gift programs may be an integral and strategic method for cultivating strong relationships with your supporters. Keep reading for the best practices on establishing and strengthening your planned giving strategy.

Planned Gift Types

The three most popular planned gift types include bequests, charitable gift annuities, and charitable remainder trusts. While there are many more types of planned gifts, your fundraising team should be familiar with the fundamentals of planned gifts to identify prospects, offer informed counsel to your current planned givers, and promote your planned giving program.

Bequests: A strong majority of planned gifts are bequests, which are provisions in a will for passing money to a charitable organization upon death. Typical clauses in a will might specify the donation of an outright amount, a percentage of the assets, or the residual of an estate.

Charitable Giving Annuities: A donor gives money to a charity, which promises to pay back a fixed amount regularly for life. Although part of the annuity payments is taxable, the donor will also receive an upfront income tax deduction for the amount estimated to end up with the charity. Generally popular because they guarantee payments through the term of the contract, charity giving annuities are especially attractive to donors during slow economic times.

Charitable Remainder Trusts: These are irrevocable trusts that pay a specified annual amount to one or more people for a fixed number of years or for the life of those who benefit from the trust’s distributions. At the end of the term, the remaining trust property is distributed to the specified charity or charities. The size of these gifts is often significantly higher than bequests or gift annuities, usually requiring assets of a million dollars or more for establishment.

For more information on this topic, please visit: Planned Giving Programs


Identifying Prospects

Traditionally, planned giving cultivation starts by mass mailing newsletters or targeted informational pieces to groups of older, loyal donors. Many programs never advance beyond this technique or consider engaging middle-aged planned giving prospects, while other nonprofits’ programs implement sophisticated identification and marketing plans to better target and cultivate highly qualified planned giving prospects. Prospect research provides an additional tool to identify and solicit not only an organization’s larger prospect pool, but also to elevate its most capable constituents to major gift level status.

Consider these concepts to get started on cultivating planned giving donors:

Identify your organization’s first and second most commonly received planned giving vehicles. Do you often process non-cash assets, like securities or retirement accounts? Whether you receive cash, in-kind gifts, real estate, or all the above, assessing this data will help you uncover what donors in your area are doing and keep attuned to any preferences.

Determine if your present data is enough to “picture” your planned donors. Examining your donor file, you should be able to see whether your planned gift donors were regular donors, sustainers, or hardly ever gave at all. Try to look through any demographic data you have, as well as any recordings from your moves management history, and see whether you can segment these individuals.

Purchase or begin to collect the data points you are missing. Perhaps you’re interested in engaging with a prospect researcher or you’d like to conduct predictive modeling to see who in your community is able and inclined to give. Rounding out predictive data will help you to see what variables you’re missing and fill in any holes that your donor file has.

Conclude whether your organization has a single planned gift donor profile or several. There’s no single type of planned giving donor; everyone has their own motives for making a planned gift and their own connections to your cause. When you look at your data, you may discover that you have multiple personas within your planned givers. Between your young and older donors, grateful patients, alumni, and major givers, there are a variety of groupings that could represent your planned givers.

Prioritize the order in which you will contact prospects. Group together prospects who have made more than one gift to the organization. This helps to focus on loyalty and will filter out one-time donors. Then, add the criteria that one of their gifts was made in the past three years. This will not only keep you focused on loyalty but creates a narrow pool of “warm” prospects—those who are already in close contact with the organization and might be receptive to your call.

Once you’ve acquired some of this data, it’s critical that you share it across your fundraising and marketing teams. By realizing who is sitting in your file and refining who your best prospects are, you will have tapped into the resources needed to fuel your marketing and fundraising strategies.


Engaging with Planned Giving Donors

With terms like “present value methodology,” “four-tier system of taxation,” and “current IRS-mandated discount rate,” it’s no wonder why many of us hesitate to enter into discussions about planned gifts. However, studies and talks with donors remind us that the tax benefits of making planned gifts are not the primary reason they are made. Donors want to make a difference in the world they live in. Successful planned giving programs start with simple messaging and evolve into life-long relationships with constituents. Start with a few of these basics:

Focus outreach on your best prospects. You may want to segment your prospects according to the gift type they are most likely to show interest in—whether that be a bequest, charitable gift annuity, or other type of gift. According to The Next Generation of American Giving, over 80% of Mature donors report having a will or estate plan, followed by nearly 60% of Baby Boomers and almost 30% of Generation X-ers. Underscoring this, 36% of Generation X-ers and 42% of Millennials would consider making a planned gift in their will or estate, demonstrating high interest in this charitable vehicle.

Prepare. This is very similar to your other solicitation meetings, but you must have a little additional preparation. Be sure you’re familiar with the planned giving vehicles your organization accepts, and be ready to answer questions about this process. Prepare by checking out these fundamental planned giving phrases and terms in Preparing for Planned Giving Conversations—24 Terms You Need to Know.

Invite your prospect to a meeting. First contact can take many forms. Whether you approach a participant at an event, respond to a reply card seeking information about a specific gift type, or call to say “thank you” for a recent annual gift, your objective is clear: You want to engage your prospect. When someone accepts your invitation to talk about your organization or meet with you, you have an important clue—he or she cares enough about your mission to want more information.

Meet with your prospect. Use your first meeting or interaction as an opportunity to learn about their connection to your cause. Whether you attend solo or a current planned giver, a member of the board, or a development officer goes with you, use this opportunity to get to know your prospect on a personal level.

Meet more! You’ll want to develop a rapport with your prospect before jumping into an ask. Develop confidence in their interest in your organization by sharing details about your initiatives, strategic goals, and impact. If this individual is a current or former donor, be sure to convey your gratitude for their commitment as you open the topic of planned giving.

Ask for their commitment. If you are asking someone to consider a planned gift commitment, you should treat the cultivation and solicitation as you would with a major donor, and your solicitation will likely be a bit more formal. In most instances you will probably make a verbal request. Consider the following suggestions when asking your donor to make a planned gift: “As you plan for future gifts, would you consider making a planned or legacy gift to us?” If the response is positive or tentative, be certain to set a reasonable follow-up date. Making a planned gift takes time, and day-to-day activities can begin to take precedence.