What’s a Planned Gift and Why Does it Matter?

Simply put, a planned gift is any gift that in order to be completed requires: A.) Advanced planning, and B.) Expert help from a professional (such as a lawyer, financial advisor or broker). Depending on a person’s circumstances, assets and goals, there are more than 20 different planned giving options available. However, planned gifts generally fall into three broad categories:

1. Ultimate gifts. The most common of planned gifts, ultimate gifts are designated by donors through their will or trust or by naming an organization as the beneficiary of a specific asset (such as retirement funds) at the time of their passing.
2. Gifts of non-cash assets. Typically, only 10 percent of a person’s net worth is in cash; the remaining 90 percent is held in assets, such as stock, real estate, business interests or retirement assets. These popular giving options allow donors to make a significant gift to ministry while reducing their taxes.
3. Life income gifts. These allow people to support their favorite ministries while retaining income payments for life.

Planned gifts are game-changing opportunities for any nonprofit’s fundraising operation.

Regardless of the type, planned gifts are game-changing opportunities for any nonprofit’s fundraising operation. Here are a few thoughts on the benefits of planned giving: 

• Planned gifts expand the giving capacity of individual donors. Asset gifts allow donors to give more for less because of the tax breaks, and because they are not constrained by cash flow. Ultimate gifts often allow people to give 10, 20 or even 100 times more than would than would ever be possible during their lifetimes.
• Organizations that accept noncash assets experience accelerated fundraising growth. Analyzing 2010 through 2016 tax returns from 205,000-plus organizations, Dr. Russell James, director of graduate studies in charitable financial planning at Texas Tech University, reported from his research that organizations that accepted only cash experienced an 11 percent growth over a five-year period (9.5 of which came from inflation).  Comparatively, organizations that accepted securities and other non-cash assets experienced a whopping 66 percent growth during that same period!
• Ultimate gifts increase current giving. A national study from the University of Michigan tracked giving patterns of seniors over more than two decades. The study found, on average, there is a dramatic jump in a person’s current giving to an organization – approximately double – in the years that follow the decision to add a gift for that charity in their will.

 Before you Begin

A solid and effective planned giving program starts with internal support, both among top administrative leaders and from the board. After all, your program will require significant short-term investments for long-term gain, the success of which will be measured in decades, rather than months. Key things your leadership will need to consider:

• Is your organization mature enough for planned gifts? (Consider donor demographics, longevity of support, staff capacity, annual fund needs and whether or not your organization has a trustworthy reputation.)
• Are you willing to devote the necessary resources to planned giving? (It requires considerable marketing, advancement and administrative support.)
• Do you have the expertise, capacity and resources to manage planned giving internally? Or should you use a third party to help market, accept and process planned gifts instead?

Once you decide to move forward, you’ll also need to establish gift acceptance policies. Careful work on the front-end will protect you from excessive delays, headaches and costly mistakes down the road. Clearly define what your organization will accept – and yes, there are gifts from which you should walk away! (Think: difficult-to-sell real estate or gift annuities for which administrative costs will likely exceed the ultimate gift’s total value.)

Be sure to create gift acceptance policies for all forms of planned gifts, including assets, bequests and life income gifts.

Your acceptance polices should include:

• Minimum gift size
• Minimum age for life income agreements
• When reinsurance will be considered, and
• Approval levels and procedures for staff, senior staff and board

Communicating with Supporters

Once you’re set up to receive planned gifts, it’s time to promote them with your supporters.

Whether in one-on-one conversations or in your broader marketing materials, remember these six general messaging strategies.

1. Deepen the connection to your mission. Too often organizations skip straight to the technical details – but people don’t give to your organization because it’ll save them on taxes. They give because they believe in your mission and vision. Make sure every planned giving message is couched in a broader conversation about the incredible impact supporters can have by making a planned gift – and then mention the tax breaks.
2. Communicate like family. Your planned giving copy should not read like a heavily reviewed, carefully crafted terms of agreement that came straight from your legal team. Imagine you’re sitting across from your grandmother or dear Uncle Harold, and use the same friendly tone.
3. Use familiar words and phrases. For example, replace “bequests” with “gifts in a will.” Instead of saying something is “revocable,” say, “you can change your mind.”
4. Avoid death like the plague. In his book, Inside the Mind of the Bequest Donor (CreateSpace, 2013), Dr. Russell James discusses how the number one barrier to conversations about estate planning is that it’s a reminder about one’s eventual death – which few people want to talk or think about! Minimize death talk as much as possible, emphasizing savvy giving and lasting impact instead.
5. Illustrate social norms. Whether we care to admit it or not, many decisions are based on the socially acceptable, normal way to behave. However, since planned gifts are rarely part of everyday conversation, people have no idea what’s “normal.” Donor testimonials and anecdotal stories are a great way to communicate “this is what other smart and generous people like you are doing.”
6. Keep it simple. The goal of your marketing materials is not to explain every nuance of planned giving; the goal is to spark conversation. Likewise, you don’t have to be a planned giving guru in order to have meaningful dialogue with your supporters. Introduce the basic concepts, and then when they’re ready to take the next step, redirect them to your resident planned giving officer or a third party expert.

Fewer Surprises

In order to be effective, planned giving programs require considerable planning, resources and intentional donor communication. However, they are well worth the investment since most planned gifts are exponentially larger than the annual gifts your supporters currently give.

So start researching, jump into the work and begin initiating conversations with your donors about the many smart and tax-wise ways you can help them achieve greater kingdom impact.

And when those substantial planned gifts start trickling into your ministry from your loyal supporters, you’ll be a little less surprised. After all, through faithful prayer, preparation and promotion, you’ve done everything in your power to invite them.

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Heather M. Day is the director of marketing for Barnabas Foundation, where she helps provide planned giving marketing strategy and resources to 800 churches and 200 member ministries.  She has more than 20 years of experience in nonprofit communications, including nine years as director of marketing communications for Olivet Nazarene University, followed by two years as director of communications for Lead Like Jesus.