Your Unanswered Questions On Planned Giving

By Laurence A. Pagnoni, MPA

This week, we address our readers’ pressing questions about planned giving. We’ve divided questions into four categories:

  1. Getting Started
  2. The Mechanics of Planned Giving
  3. Making the Ask
  4. Your Board and Planned Giving

Did you know that 7% of planned giving donors increased their annual giving after setting up a planned gift? That’s just one example of the timely information you’ll find in today’s blog post.

Getting started

Angela: We all understand planned giving is important. For those of us with limited staffing and resources what are three things you would do to start a planned giving program THIS year? What would you do in year two and three weeks?

Laurence: Planned giving is not just about setting up the many planned gift vehicles. It is also about finding your audience, marketing, and follow-through. Consider taking these crucial steps:

Make use of what you already have. Start slowly and build your marketing program. Begin by using your existing publications, direct appeals, website, and special events to advertise the types of planned gifts you’re set up to offer.

List a particular person as the planned giving contact. Provide a telephone number, email address, and mailing address. Many charities appoint a planned giving officer or consultant to coordinate the program and serve as the primary contact with planned giving prospects.

Include a link to a planned giving section on your website.

Explain the types of gifts available, the minimum level for each, and the benefits. Include a calculator. Calculators are available commercially (DonorCalcs is one example) for installation on your planned giving page or website. With a calculator, anyone can see how a particular type of planned giving works.

Educate the board and staff. If you have to fight for space on your website and in your publications, convince your board and your CEO that planned giving is necessary. Also, you may want to set up a planned giving advisory committee consisting of an estate lawyer, and a tax accountant. Bring in some outside advisors to help with this.

Establish gift acceptance policies.

Define and develop a legacy society. Tony suggests a unique name that reflects your unique agency. Perhaps naming it after your founder, or the donor who made the first planned gift to your agency, or the date you were founded.

Use methods that work. While direct mail, advertisements in your publications and on your website are still dependable ways to generate interest in bequests and other planned gifts, invest in social media as well. Pew Research found that significant numbers of older people use social media, such as Facebook.
Set a budget. Make sure you have an adequate budget for marketing planned gifts. Planned giving is a long game, so this is an investment that will pay off eventually.

Did you know that according to the GivingUSA study, 7% of planned giving donors increased their annual giving after setting up a planned gift. Wow.

Create new materials. After beefing up existing materials, move on to a multi-channel newsletter for existing planned givers as well as those who have inquired about such gifts. Send it to all ages, since planned giving can occur with any age cohort. According to Blackbaud’s study, “The Next Generation of Giving,” all age groups from GenZ to Matures make wills and indicate interest in including gifts to charities.

The mechanics of planned giving

Elizabeth: What are the elements of a planned giving program?

Laurence: There are many variations of planned giving, but the most basic ones include:

Bequests: These make up the majority of planned gifts. Anyone can make a bequest to a nonprofit through their will or estate plan. Donors can allocate a specific amount of money to give after they die, such as a lump sum or a percentage of their total wealth, or they can choose to give the remainder of their estate to a nonprofit after all of their other bequests are paid.

Charitable gift annuities: This is an agreement in which the donor gives a significant gift to a nonprofit, receives a tax deduction at the time of the gift, and then receives payments from the nonprofit during their lifetime. The nonprofit may invest the money and after the donor’s death, the nonprofit can use the remaining funds.

Charitable remainder trusts: Charitable remainder trusts are tax-exempt, irrevocable trusts that make annual payments to the beneficiaries for a certain amount of time, and then donate the remainder to a nonprofit.

Pooled-income funds: These are charitable trusts that are established by nonprofit organizations. Donors contribute to the fund, the nonprofit invests the contributions, and it pays dividends to the donors during their lifetimes. The fund distributes the remaining assets to the designated charity or charities.

Angela: What is the difference from Charitable Bequest and Revocable Living/Family Trusts?

Tony: A Charitable Bequest is from a will. The other is from a trust. Either one can be a valuable planned gift. In the trust, your donor specifies how the trust assets are distributed upon their death. Your charity can be one of one of the beneficiaries. Trust assets generally are distributed quicker than bequests by will.

Robert: What is the most tax efficient means of making a bequest – a direct gift from the estate, or a gift from a beneficiary that was requested by the person who died?

Tony: Taxes rarely play a role in gifts by will. Currently, only estates over $11.7 million are taxed. Estate taxes rarely motivate the gifts we talked about. Gifts from estates are preferred over anything more complicated.

Jennifer: What about a portion of an insurance policy?

Tony: Insurance policies can be good gifts, absolutely. They’re not nearly as common, however, as gifts by will.

Anonymous: Would you consider gifts from RMD planned gifts? Seems like that is annual giving not Planned/Bequest

Tony: I consider IRA gifts to be planned gifts, because they come from a retirement plan. It’s open to institutional policy though. I wouldn’t make a fuss over how to define a gift. Does it hurt to recognize the donor for an annual gift and welcome them to your planned gift recognition society?

Anonymous: Are there effective ways to ask planned giving supporters to estimate the value of their bequest?

Tony: You can do that with a gift intention form; but make that question optional. Ask if the person wishes to disclose the value, or approximate value. Here’s a sample of a gift intention form, sometimes referred to as a Planned Giving Statement of Intent:

This statement is an expression of my intent to provide for the future of [NAME of Your Nonprofit] through a planned or estate gift.  The provision(s) made include the following

_______ An outright bequest upon the passing of the donor, or the passing of the donor and spouse.

_______ A life insurance policy, in which the (insert the name of your nonprofit) is named as beneficiary or owner and beneficiary.

_______ Retirement assets, in which (insert the name of your nonprofit) is named as a beneficiary.

_______ Other (please specify)____________________________

THE ESTIMATED VALUE OF MY (OUR) GIFT IS $__________________

Dorothee: Our organization has never recognized donors in the annual report because other orgs may see this and assumes that donors would not like to be named… Should we change that. What are some arguments we can use?

Tony: I’ve never heard of nonprofits stealing planned gift donors from other orgs. If that’s a problem in your community, it’s rare. Rather than assuming donors don’t want to be named, ask them if they prefer to be anonymous.

Making the ask

Sarah: Once you ask people to put your org in their wills, what more do you ask of them? That they self-identify to you? Do you need any paper trail of gift intention for your records?

Tony: Yes, in your marketing, you’re always giving donors the option to tell you about their intention. Remember that only 1 out of 7-8 will do so. A written record is not required. Some orgs like to have a gift intention form. The commitment needs to be preserved in your CRM database.
Make use of what you already have. Start slowly and build your marketing program. Begin by using your existing publications, direct appeals, website, and special events to advertise the types of planned gifts you’re set up to offer.

List a particular person as the planned giving contact. Provide a telephone number, email address, and mailing address. Many charities appoint a planned giving officer or consultant to coordinate the program and serve as the primary contact with planned giving prospects.

Include a link to a planned giving section on your website.

Explain the types of gifts available, the minimum level for each, and the benefits. Include a calculator. Calculators are available commercially (DonorCalcs is one example) for installation on your planned giving page or website. With a calculator, anyone can see how a particular type of planned giving works.

Educate the board and staff. If you have to fight for space on your website and in your publications, convince your board and your CEO that planned giving is necessary. Also, you may want to set up a planned giving advisory committee consisting of an estate lawyer, and a tax accountant. Bring in some outside advisors to help with this.

Establish gift acceptance policies.

Define and develop a legacy society. Tony suggests a unique name that reflects your unique agency. Perhaps naming it after your founder, or the donor who made the first planned gift to your agency, or the date you were founded.

Use methods that work. While direct mail, advertisements in your publications and on your website are still dependable ways to generate interest in bequests and other planned gifts, invest in social media as well. Pew Research found that significant numbers of older people use social media, such as Facebook.
Set a budget. Make sure you have an adequate budget for marketing planned gifts. Planned giving is a long game, so this is an investment that will pay off eventually.

Did you know that according to the GivingUSA study, 7% of planned giving donors increased their annual giving after setting up a planned gift. Wow.

Create new materials. After beefing up existing materials, move on to a multi-channel newsletter for existing planned givers as well as those who have inquired about such gifts. Send it to all ages, since planned giving can occur with any age cohort. According to Blackbaud’s study, “The Next Generation of Giving,” all age groups from GenZ to Matures make wills and indicate interest in including gifts to charities.

Russell: Is approaching estate lawyers to let them know about your organization as an option for their clients worthwhile?

Laurence: It would be best to focus your work on cultivating the donors directly. Estate lawyers could serve on your planned giving advisory committee if you have one.

Dale: For a donor you know fairly well, is it better to ask a donor to consider a percentage, specific amount, life insurance or is it best to just leave it open?

Tony: Leave it open. The only time I’d specify an amount is as part of a campaign solicitation.

Anonymous: Do you have any suggestions for initiating the planned giving conversation with family foundations, particularly those that already donate significantly and that have multiple family members on the board?

Tony: Planned gifts must come from people. Foundations don’t have estates to give from. You can solicit the individuals as you would any others. Be sure they’re good prospects though. The best prospects are people who’ve been giving to you from their personal assets.

Neil: If we made the ask…do people usually answer right away? If they say yes, will they likely tell you the dollar amount?

Laurence: Timeliness of responses by donors is a mix of their age (over 60), if they have the capacity to give, and their passion for your cause. So, it varies. If they say they have included you in their will, it is highly unlikely they will disclose the gift amount. Often, the donor does not even know the value because the gift is listed as a percentage of the residual net value of their estate after their debts are paid off.

Claudia: Do donors respond better in a planned giving program if your board has targeted specific “big ticket” projects where a donor can see or designate where their bequest would go? For example, a building improvement or expansion?

Laurence: Yes, I do think donors respond with more giving if you have a transformational idea and plan. For over 50 years I have seen that major donors usually give at about the ten percent level in complement to the campaign or fundraising goal. For example, a $5 million goal is able to attract a $500,000 gift but probably not larger. Of course, there are plenty of exceptions to this rule.

Galit: Are there stats on PG gifts from women vs men? Is this an ask better made to a couple rather than an individual?

Tony: There probably are, but I’m not current on them. Solicit based on the relationship with your org. If both members of the couple are close to you then ask both of them to include your org in their respective wills. If you’re only close to one, ask that person.

Josiah: Does having an established endowed fund increase the chances of securing a planned gift/bequest? In other words, do donors want to see that their gift will be invested for a lasting impact, or does that not matter so much?

Tony: It’s something you can offer if you have endowed funds. If you don’t, I wouldn’t let that stop you from soliciting gifts by will. You can be very successful without the offer of endowment.

Anonymous: After giving the three things they need to give their lawyer, what is a tactful way to say “please notify us”.

Tony: “We hope you’ll let us know, so we can thank you.” Remember, only 1 out of 7 or 8 will inform you.

Your board and planned giving

Marti: We do an annual board engagement form — DD & ED meet individually with each board member to go over form and chat. We do have the question on that form and ask our board members if we are in their will (in a nutshell) — thoughts on that? Should we be asking all board members even though they would not be on that list after identifying by age & giving levels?

Tony: That’s a good practice, the annual personal meeting. You want 100% participation. All board members should have your org in their wills.

Christy: Is it appropriate and a good idea to ask your Board to donate/invest in your ministry/nonprofit? We’re starting up.

Laurence: Yes, because board members ought to be your biggest advocates, starting with your board is a great action. Ask each of the board members to include your nonprofit in their will.

One of our audience members, Terrence, offered this view which we agree with:  

I think it’s better to stay away from making recommendations to donors about will services and about attorneys or financial planners. The integrity of the planned giving program pretty much demands that people should choose their own advisors.

We welcome your comments about this post on the LAPA blog.

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