CNL… Did You Know: Build a Planned Giving Pipeline

March 6, 2017

Since most of us won’t (a) live forever or (b) directly impact achievement of world peace, a legacy gift to further the mission of an organization we care about can leave an impact long after we are gone. What can nonprofit organizations do to position themselves to request and receive legacy gifts?

1)  Make the case for the long-term needs of your organization. Make sure that you have a mission or vision statement that clearly identifies how your organization will continue to provide its services into the future.  If you are asking for deferred funds, your donors will want to know that they will be put to good use.

2) Be a great steward.  The best way to convince your donors to invest in the long-term health of your organization is to consistently use funds efficiently and effectively and to tell your donors that story.  Make sure they understand how their current gifts of time and money are being put to good use.  Also, if they make you aware of a deferred gift, make sure they know that you value it and have a plan for how deferred gifts will be leveraged for maximum impact.

3) Train your advocates. Teach your board members, staff, volunteers, and donors about planned giving and the impact it can have.  Encourage your board members to make planned gifts so that they can speak from personal experience about why those gifts have special meaning to them.  Arm them with an understanding of basic planned giving principles so that they can refer potential planned giving donors back to development staff.

4) Be prepared to receive gifts. Review your gift acceptance policy to ensure that it gives you the flexibility to receive planned gifts.  Have draft bequest language on hand (and, ideally, on your website).  Have a good gift acknowledgment ready for confirmed deferred gifts as well as received bequests.

5) Be knowledgeable on planned giving vehicles. At the very least, understand and differentiate between the following.

  1. Bequest: A charitable bequest is a gift made through one’s will or trust.
  2. Beneficiary designation: Designation of a charity as the beneficiary of a retirement account, insurance policy, bank or investment account, or, in California since 2016, real property by transfer on death deed.
  3. Charitable Gift Annuity: An agreement through which a donor makes a gift to a charitable organization in exchange for a lifetime annuity.  Requires a state license.
  4. Charitable Lead Trust: A gift arrangement in which a donor gives assets to a trust, the charity receives the income for a period of time, and the assets are transferred back to the donor or another beneficiary when the trust terminates.
  5. Charitable Remainder Trust: A gift vehicle under which donors or other named beneficiaries receive income each year from assets they have given to a trust. The benefiting organization receives the balance in the trust after the donor’s lifetime.
  6. IRA charitable rollover: A gift directly from an IRA account to charity by a donor aged 70 ½ or over.  Avoids inclusion in the donor’s income and qualifies as a mandatory distribution.
  7. Real Property: A gift of real estate to a charity.  It may be made during life or at death.
  8. Retained Life Estate: An arrangement in which a donor makes a current gift of real property, but keeps the right to use and live in the property for life

6) Identify your experts. You do not need to be an expert on every area of planned giving, but you do need to know where to turn for advice.  Identify local attorneys and CPAs with knowledge of these concepts and develop a relationship (or, better, recruit them to your board).  Also, become familiar with the resources available.  Northern California Planned Giving Counsel is a great place to start.

7) Turn current giving from a gift to an investment. Help your donor see his or her giving as part of his or her own long-term plan for the organization.  Each annual gift or hour donated can be integrated into that plan.

8) The single best way to get planned gifts is to ask for them.  Some may come in “over the transom,” but in order to build a reliable pipeline of planned gifts, you need to be asking those who contribute to your program.  Annual donors are excellent planned giving prospects, but volunteers and staff who may not feel able to give money now may be willing to commit to an estate gift.

9) Remember that there is no gift too small (or too large). Terms like “legacy” or “planned gift” can leave people with the impression that all bequests have to be of high monetary value to have an impact.  Keep an open mind when you talk with your donors about planned giving as often those small gifts (especially percentage gifts) can grow over time as you continually steward your donor.  Worst case?  You will receive a gift sometime in the future for little extra work.

10)Thank and thank again. Thank your donors when they include you in their estate plans through personal notes and your legacy society and then meaningfully thank family or friends when the gift is received.  You may be able to cultivate another generation of donors.

Take advantage of tax opportunities to get gifts now:

There are also opportunities for current planned gifts.  Perhaps the best of these is the IRA charitable rollover which allows donors who are taking mandatory distributions from their IRA accounts (those 70 ½ or older) to make gifts directly from the IRA to qualified charities.  Such gifts are excluded from the donor’s income for tax purposes AND count toward the annual required minimum distribution.  This is an exceptional opportunity for donors who do not itemize on their tax returns (typically those who have paid off their mortgages and do not have high out of pocket medical costs).

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