Planned Giving Definition: What is Planned Giving?

Last updated: January 4, 2021

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Have you and your team been brainstorming ways to change up your fundraising strategy and reach a new audience? Planned giving is a top-level donor pyramid strategy that can result in big rewards for your nonprofit for many years to come.

Your fundraising partners at iWave are here to give you a crash course in planned giving. What does it entail and how you can leverage it into your next strategy change?

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From Fundraising Intelligence to Artificial Intelligence — How to Accelerate Planned Giving

What is Planned Giving?

Planned giving, also referred to as a legacy program, is a highly valuable type of fundraising often underutilized by nonprofits. This is because this type of giving takes place after a donor has passed.

Unlike an annual gift where a set amount is pledged yearly, planned gifts are set for an unknown time in the future. You may not know the gift amount until that unspecified future date. In addition to traditional monetary donations, such gifts can take the following forms:

  • Equity
  • Real estate holdings
  • Life insurance

Planned donations are not based on the donor’s current wealth. Regular yearly expenses may prevent a donor from contributing to your cause at this time even though they have a strong desire to support your mission. Once the donor has passed, however, they may be able to establish a legacy with your organization, without worry for their daily expenses.

Learn the difference between Planned Giving vs Major Gifts

The Most Common Types of Planned Giving

Planned giving can take many different forms, chosen based on the donor’s preference. Whether taking the form of real estate, personal property, or even cash, all planned giving can be broken down into the following options:

  1. Bequest

A bequest is a gift left in a will for a group, organization, or individual. For charities, this normally takes the following forms:

  1. General Bequests: Property taken from the assets of an estate.
  2. Demonstrative Bequests: Gifts from a source like a bank account.
  3. Specific Bequests: Personal property like cash, jewelry, and other tangible assets.
  4. Residuary Gifts: Gifts from the remainder of any debts or expenses that must be paid.

Bequests are the most popular type of planned giving, so your nonprofit should be familiar with them.

  1. Annuity

An annuity is a fixed sum of money that is paid to an organization every year. Annuities can create a reliable, decades-long stream of annual income for your organization.

While this type of planned giving isn’t as common, it has the potential to do the most good.

  1. Trust

A trust is a legal entity where an individual holds or invests property as the owner. Upon their death, the trust is usually divided among multiple beneficiaries.

The two different types of charitable trusts you’ll encounter include:

  • Charitable Remainder Trust: A tax-exempt trust created to reduce taxable income by dispersing earnings to beneficiaries over time.
  • Charitable Lead Trust: The inverse of a remainder trust, this trust provides financial support to multiple causes over a set period of time. After this time period, the remainder of the trust is given to the beneficiaries—usually family members.

Who Should Be a Part of Your Planned Giving Program?

There are many reasons why planned giving can be such an alluring option for donors with the capacity to give, the biggest of which may be their legacy. How do they want to be remembered? What impact do they want to leave on their community for years to come? These are all questions your nonprofit can ask prospects to make your planned giving program even more enticing.

When searching for the right supporters for this program, you’ll first want to look for prospects between the ages of 40 and 60. Planned gifts are normally established when a will is first drafted. For the average person, this will take place in their forties. Elderly donors may still be inclined to plan gifts, but looking to middle-aged donors first is probably ideal.

Planned Giving: Partner with iWave to Make Your Legacy Program a Success

Now that you have a solid understanding of planned giving, you’re ready to uncover the right supporters for your program. This is where we come in. Your planned giving program will start with donor cultivation, and our fundraising solution can greatly streamline this step for you.

Contact our team at iWave today to set up a free demo or fundraising assessment to learn more about how our software will take you to the next level of fundraising.

Written by Admin

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