The Planned Giving Guide: Maximize Your Gifts

Looking for new ways to take your fundraising to the next level? Wondering how Kindsight can help you with these new facets of major gift giving? Then, you’ve come to the right place!

There are many facets to a successful fundraising strategy. One popular way to increase success is to seek out planned giving donations. Let’s see how charitable organizations—from big to small—can leverage planned giving to enhance their current fundraising strategies.

What is Planned Giving?

Planned giving refers to charitable donations that are planned and often deferred. It involves donors making sizable gifts to nonprofits through financial and estate planning vehicles.

Planned giving usually occurs through a will or trust and is granted once the donor has passed away. For this reason, the circumstances preceding a planned gift can sometimes be sensitive. Be sure to approach them accordingly.

One of the ways you may want to implement planned giving is through a planned gift program. This resource helps you cultivate strong relationships with potential donors to gain gifts in the future. A planned gift program is also a great way to offer support to donors during the planned gift process—which can require a lot of paperwork. Planned giving is also commonly referred to as legacy giving (and legacy gifts).

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.

2. Annuity

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

While this type of planned giving isn’t as common, it has the potential to be a recurring income gift that does the most good.

3. 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.

Planned Giving Terms

Before we jump into the many ways you can leverage a planned gift program in your fundraising strategy, it’s crucial you understand some key terms.

• Bequest Intention: The donor’s notice of their intention of a planned gift. It’s not a legally binding commitment but is a common courtesy, so you know to expect a donation. Since this is a non-binding commitment, you still want to treat these donors as you would any major donor. However, keep their expenses in terms of marketing lower since the contribution is only expected.
• Bequest Expectancy: The approximate value of future planned gifts based on previous planned gift data. Every nonprofit will approach this number differently, but in general you want to take data from more than one year, excluding all outliers.
• Planned Gift Notification: The official notification that your organization will receive a planned gift. This does not mean you’ll receive the donation right away though; it simply means you can count on it. This gift amount usually appears as a percentage of an estate and isn’t a clear amount. You’ll want to use the bequest expectancy to calculate an estimated value of this amount.
• Non-Probate Transfer Vehicles: Allows planned donors to bypass the probate process and donate directly to your nonprofit following their death. These can be used on real estate, savings, and check amounts, money markets, and other investment funds such as retirement plans and life insurance.
• Non-Cash Asset: A gift that is not monetary. Often, these gifts are securities, life insurance policies, retirement accounts, or real property. Since these differ from cash assets, they may require a different process when it comes to receiving them or determining their worth.
• Real Property: Consists of land, property on land, or property associated with the land. It can either be encumbered or unencumbered. Encumbered property means a third party has some sort of claim to the property, such as a mortgage.
• Charitable Bequest: Official statement in a will, trust, or estate plan that designates a gift to your charity. Gift amounts can be stated as either a specific amount, a percentage, or a remainder of the leftover funds that you’ll receive after other bequests are paid.
• Charitable Gift Annuity: Occurs when a donor makes an agreement with a nonprofit. The donor gives a large amount of money to your nonprofit and the nonprofit then pays the donors an annual set income until the pay period ends (usually at the time of the donor’s passing). Your nonprofit will then retain the leftover funds. Each state has different laws when it comes to charitable gift annuities, so make sure you’re familiar with local laws.
• Charitable Remainder Trust: A trust gifted to your charity that pays an annual amount to the trustee(s). Once the trust is complete, your nonprofit receives the remaining funds over a set time period. In this trust, you will receive an annual gift while the other beneficiaries receive the remainder of the funds when the trust term ends.
• Present Value: The current value of a future gift. Before a gift is received the donor pledges either a set amount or a percentage, both of which will differ from when the gift is actually received. The future value of the gift will be worth less than the present value and will decrease over time due to factors such as inflation. Currency fluctuations, inflations, and other factors can be estimated, so speak to a financial advisory about how to help anticipate these changes.
• Fair Market Value: An estimate of how much an asset or piece of property is worth based on the free market. To assess fair market value, you’ll want a knowledgeable team member with non-cash asset experience. For example, if a member of your team has worked with the real estate market in the past, they may be able to help determine the fair market value of a real property.
• Cost Basis: An asset or property’s price at the time of initial purchase. When you receive this item through donation, you may need to pay taxes on the accrual value. The value of an asset can either appreciate or depreciate at the time of giving. Appreciated value means the original cost is less than the current value while a depreciated value is when the cost is greater.

Why Are Planned Gifts Important?

When you first started crafting your fundraising strategy, you probably laid the foundation with a donor pyramid that looked like this:

As you can see, the top of the donor pyramid is planned giving. Planned donors have the ability to make the largest contributions to your cause. Despite the incredible opportunity planned giving poses, it remains a largely untapped segment.

It’s not hard to imagine why planned giving is so rarely used as a cornerstone of a fundraising strategy, as it surrounds the passing of a donor. Planned gifts sometimes come as surprises; however, with a delicate and tactful approach, organizations can secure planned gifts today.

A planned gift is often the result of successful cultivation. Volunteers, members, annual donors, and major gift donors can all be cultivated into planned gift donors. In this sense, the planned giving level is not an exclusive segment. It is the culmination of fostering great relationships with existing donors, volunteers, and members.

The Benefits of Planned Giving

Perks for Donors

• Tax Breaks

Tax breaks are a huge incentive for many. The substantial tax breaks that go along with planned giving can encourage prospects to support your mission. Of course, every situation is different, so you’ll want to evaluate each donor on a case-by-case basis.

• Ability to Determine Allocation of Funds

When people support your cause, they want to ensure their gift is going to the right place. With yearly giving or one-time donations, very rarely can the donor detail how they would like their donation to be spent. However, with planned gifts, the power is completely in the donor’s hands, and they can stipulate how they would like their money to be spent.

Perks for Nonprofits

• Wider Donor Pool

Many donors long to support your cause during their lifetime but don’t have the financial flexibility to do so. With planned giving, you gain new supporters who can contribute after they have passed, unhampered by regular bills and other major expenses.

• Largest Yearly Gifts

According to research, planned gifts are typically on par with major gifts in terms of donation amount. For instance, charitable bequests are nearly three times larger than the donor’s total lifetime giving. Since these donors are at the top of the donor pyramid, these contributions can aid your mission potentially for years to come.

How to Incorporate a Planned Giving Program into Your Strategy

Step One: Research and Prep for Your Program

Before you can launch a planned giving program, you’ll want to make sure you fully understand the process and how it fits with your organization’s unique mission. While researching this topic make sure you’re addressing the following questions:

• How will planned giving fit into your organization’s infrastructure?
• What resources need to be allocated to your planned giving program?
• Are current staff members trained on planned giving, or should you seek outside help?
• What types of planned gifts will your program actively seek?

Using Software During the Research Stage

Around steps one and two is when you’ll want to consider tapping into Fundraising Intelligence such as Kindsight. Kindsight helps you to discover, engage and steward donors, saving researchers time to do more on-the-ground work. They’ll have detailed prospect lists, Live Profiles, and actionable insights that can be leveraged in new fundraising strategies.

Better yet, Kindsight is totally customizable. Its adjustable parameters allow you to define wealth capacity settings and choose different scoring weights for aspects like affinity and giving history. In other words, you can gear Kindsight specifically for a planned giving strategy.

Researchers can drill down to make profiles even more comprehensive. After adding in their custom charitable gift or real estate records, Kindsight will refresh and update scores. If you need any assistance in this, the Kindsight team is happy to work one-on-one, ensuring your organization maximizes the resource and its insights.

Step Two: Locate Prospects

Once you’ve familiarized yourself with the planned giving program, you’ll need to identify potential contributors. The best way to uncover a prospect is through a Live Profiles. Live Profiles scan billions of data points—such as age, wealth, and philanthropic interests—to help paint a clearer picture of who has the ability and inclination to support you.

Affinity to a cause is going to be the biggest factor when determining a planned giving donor, so make sure you’re looking for people who have given to your organization or organizations that have a similar mission to yours consistently over the years. Speaking of affinity, Kindsight is the only platform that provides each donor with an Affinity Score by looking at donations that have been given to organizations like yours, so you can easily identify strong prospects!

Step Three: Create Marketing Materials

For a planned giving program to work, it’s imperative to spread the word. Spreading awareness about your nonprofit in the present helps to create more charitable giving in the future. There are many different marketing techniques you may want to employ, some of which include:

• Branding your planned giving program as a legacy program
• Creating materials through various channels (direct mail, email, etc.)
• Sending reminders to encourage donors to announce bequest intentions

As noted above, the more marketing channels you use to spread awareness, the better. A multi-pronged marketing strategy keeps your planned giving program top of mind for prospects.

Step Four: Communication

As noted above, awareness is key to cultivating sponsorship. Marketing is a great first step to gain interest, but when you’re ready to take your program to the next level you’ll want to take a more personalized approach. Send out personalized and deliberate materials to potential planned givers, some of the ways you can do this include:

• Email
• Web pages
• Direct mail
• Newsletters

No matter how you decide to reach prospects, you’ll want to include testimonials and other personalized information about your organization. It’s also important to include the name and contact information for whom they should reach out to if they are interested in supporting you through a planned gift.

Step Five: Acknowledgements

Since planned gifts can have a long delay between notification and receipt, you want to make sure the donors are properly stewarded and engaged during that time period. Start by sending a personalized letter to the donor, letting them know how grateful you are and how your organization will benefit from their contribution.

If the donor doesn’t alert you of their planned gift before you receive the donation, then you’ll want to reach out to their family members to express gratitude. Such a time may be difficult and filled with grief for family members, so approach with as much respect as possible.

Master effective stewardship today with the help of our Moves Management Cheat Sheet.

Planned Giving Best Practices

When planning your program:

1. Form an Advisory Committee This committee should be comprised of people who have outside knowledge of planned giving programs. Some members of the advisory committee include: Lawyers, financial planners, and realtors. These members are here to help keep you organized and on track. They can also provide any guidance should issues arise throughout the entire process.

2. Work with Your Board Since your board members are notable figures in the community, they can also become planned givers. Approach them first to start your gift pyramid and then ask for testimonials to provide in any marketing materials. Donors are more likely to support your cause when they know there are other contributors to the cause, so you’ll want to establish a foundation, perhaps even collecting testimonials, before going into asks.

3. Start with Bequests Since bequests are the simplest type of planned gift, you’ll want to accept these first. This will help you establish your program and get your team more familiar with planned gifts before moving on to more complicated gifts. Once everyone has a firm grasp on the program, you can start focusing your efforts on expanding and diversifying the types of planned gifts you accept.

During program development:

1. Build a brand You’ll want to establish a catchy name for your program, one that encourages donors to lend their support. Positive words like “legacy” and “endowment” are good buzz words to use. Then, build out the benefits of this program to help encourage prospects to join. Branding boosts recognition for your program and makes donors more likely to announce their intention to join—hopefully leading to their friends joining as well!

2. Identify prospects Have your team spend this time learning how fundraising software can help your program. Loyalty and charitable giving are two of your top indicators, however, there are many other demographics you will want to consider. Since every nonprofit is unique, you’ll want to compile data and analyze what the key indicators are for your specific cause—something iWave is more than happy to do for you with our next-generation software.

3. Analyze various factors Segment your organization’s donor database by age and then evaluate other factors. Since older donors are more likely to start thinking about their legacy, those will be your top prospects. With planned giving programs, age can really be a driving factor and is therefore a great jumping-off point before getting into other factors. This will help streamline donor searches overall.

When marketing your planned gift program:

1. Educate Understanding planned gifts is essential to cultivating donors. Donors want to make a well-informed decision on the right donation path for them before committing. Host educational events to explain the specifics of planned giving. Structure these events around your organization’s mission and avoid technical jargon. If anyone is interested, they can schedule a meeting with the right members of your team to learn all about the technical aspects.

2. Encourage dialogue Consistent and open communication between your nonprofit and donor prospects helps to build trust. Let your supporters know they can come to you with any questions or concerns they may have, so that they can feel more comfortable with the entire process. All your marketing materials should have your planned gifts representative’s contact information. Send these materials as follow ups after meetings or events to let prospects know there are open lines of communications.

3. Gather testimonials Firsthand accounts are a powerful tool when it comes to marketing your planned giving program. Hearing from other supporters lets potential donors know they are making the right choice when choosing where to leave a legacy. Hearing testimonials from people that are well known in the community will also foster more trust. Ask your current planned donors why they chose your organization for their gift and then use quotes from them in your marketing materials (with their consent, of course).

How to Identify Planned Giving Donors?

As discussed in step two, it’s important you’re finding the right supporters for your planned giving program. When looking for who would be the right fit for your organization, you’ll want to consider the following factors:

Demographics

• Appreciated Property: Indicates a prospect’s wealth. Donors can choose to give their appreciated valuable property instead of a traditional cash contribution.
• Age: Most donors establish their first planned gift when they write their first will. The average age donors write their first will is at just 44 years old, at which time 91.6% of donors are working with a legal advisor. You may want to look at donors or prospects around this age.
• Relationship Status: Usually, people will leave the majority of their assets to their spouse. So, if a donor is single or widowed, there’s a greater chance they’ll plan gifts or even offer the planned gifts early. Statistically speaking, women with no children are the most frequent planned givers.
• Children: Just as with spouses, people often will their assets to their children (and even their grandchildren), so you may want to look for a potential donor without any kids. You can also look into donors who have the ability to leave a sizable portion of their assets to their children and still have funds to support your nonprofit.

Philanthropic History

• Positively Impacted by Your Organization: If someone has personally benefited from your organization, then they may feel inclined to become a major donor and even schedule planned gifts. For example, if your hospital helped save someone’s life from cancer, then that person may feel compelled to gift you funds for a new cancer wing in their will.
• Frequent Donors: Has someone given consistently to your nonprofit and other like minded charities in the past? Then your mission is probably close to their heart and they may want to create a legacy with your cause.
• Involvement with Your Cause: If someone has been a trusted volunteer, promoter, or donor, then this is another strong indicator they have a personal connection to your work. They may desire to continue their work with you after they have passed, and a planned gift is a great way to do so.
• Desire to Give Beyond Means: Often, giving officers tend to focus all their efforts on the wealthiest prospects. However, with planned giving, the donor does not have to be of substantial means. Their finances may currently only allow for small donations, but after they have passed on and life expenses are no longer an issue, they may be able to leave a sizable gift to support your nonprofit.

Don’t Always Focus on the Top of the Donor Pyramid

We’ve talked a lot about the very top of the donor pyramid, but if you really want a successful fundraising strategy, it’s crucial to drill down and open your strategy to mid and lower levels.

As our last bullet point states, some prospects may have restricted means in the present, but would be willing to give larger gifts in the future. Never underestimate your prospects.

With Kindight’s platform, you’ll have donor insights that can show you who your Hidden Gems are. These are the people you might normally overlook, but who have the ability to surprise you—potentially even when it comes to planned giving.

Appoint a Planned Giving Officer

As well as steps you want to take to establish a planned giving program, there are some extra factors you’ll want to consider to make your program as successful as it can be. For starters, you’ll want to designate a separate planned giving officer. A planned giving officer will be in charge of the day-to-day operations of your planned giving program, so it’s important you’re choosing the right person for this role.

How to Market Planned Gifts

1. Start with Donor Retention

Since your most likely prospects are those who have supported your cause in the past, reach out to your current donor pool and let them know you’ve started a planned giving program. Let your donors know how pledging to this program can further support your mission for years to come. By retaining the donors you already have, you’ll secure future success for your nonprofit.

2. Use Planned Giving in Your Existing Materials

If you utilize planned giving in your existing marketing, you’ll not only be saving on your resources budget, but you’ll be reaching a wider audience. By giving prospects many different avenues for support, you’ll increase your likelihood of receiving a gift. You’ll want to mention your program in resources like emails, websites, newsletters, and social media accounts.

3. Create a Planned Giving Page on Your Website

Ask your web designer to create a whole page on your website dedicated to your planned giving program. You’ll want to mention what the program entails, its specific role in your organization, what types of planned gifts you will accept, and who to contact if donors are interested in providing a planned gift. Having this information readily available lets major donors know of the various options available to them—increasing your chances of receiving that type of donation.

4. Design a Brochure or Flyer

In addition to a separate webpage, you’ll want to create a brochure with the same information available inside. Be sure to include testimonials as well to make the brochure as personalized as possible. You can hand out this information at meetings or galas where major gift donors are in attendance. You can also mail the brochure out to anyone your Live Profiles have identified as a top planned giving prospect along with a personalized letter.

5. Schedule Face-to-Face Meetings (In Person or Virtually)

Just as you want your brochures to be personalized, you want to forge a close relationship with potential donors. By meeting with them in person, you are helping to put a friendly face to your nonprofit. Since planned giving can also be a complicated process, this helps to reassure donors they will be supported along the way. Presently, in-person meetings may not be the safest option, but that’s okay. Face time is what’s important here, and that can be achieved with virtual meetings!

6. Write Personally

Another way to stay personal is to avoid language that is too technical on your website or in letters and brochures. Clearly state your mission and how it has helped your community, emphasizing what future donations can do to enhance these successes. You will also want to emphasize how your potential donor’s legacy will be established with your organization—enacting positive change for decades to come. Avoid using too many stats or finance numbers, as you can always go into the fine details later. You want to make sure this process is personal and appeals to them from the start. In other words, tug on the heart strings!

The Ethics of Planned Giving

With planned giving, as with all charitable donations, there may be questions surrounding ethics. While ethical dilemmas are rare with most planned giving programs, it’s important you are fully aware of potential issues should they ever arise.

To ensure you’re fully prepared, ask yourself these two important questions:

1. Are there any ethical issues surrounding tax breaks? Tax breaks often go hand in hand with planned giving and can be a major benefit to donors. However, there are some people out there who may misunderstand tax breaks as loopholes. Make sure your donor understands that your charity is the primary driving factor behind a planned gift so that you can accept their donation in good conscience.

2. Are donors offering more than they are reasonably able to donate? Sometimes donors will be so compelled to support your cause that they make a donation that is outside of their realistic means. If this occurs, gently guide your donor towards a more sensible donation. Acknowledge and thank them for their good intentions and set them up with a financial advisor to verify their donation amount.

How Do You Know How Much a Prospect Can Donate?

When using Kindsight, you’ll learn not only of a prospect’s inclination to give, but their capacity as well. Make note of this information to understand whether or not a planned donor is giving outside of their means.

How to Acknowledge Planned Gifts?

Even though planned gifts are typically made after the donor has passed away, it’s still important to recognize how their contribution has helped your organization. Placing a memorial at your facility is a great way to let their loved ones know that their gift has helped positively impact the community. This can even encourage future donors to schedule planned gifts as well.

One of the most popular ways to honor these supporters is through a donor recognition wall. Traditionally, this is done with basic metal plaques, but it has evolved into more branded and creative displays as well.

Reach out to a donor recognition wall provider to discuss how your donor wall can best represent your organization. You’ll want to recognize each supporter in a special and unique way that is also eye-catching for visitors to your facility.

Let our Fundraising Intelligence Help You Jumpstart Your Planned Giving Program

Imagine Kindsight is your Fundraising Intelligence platform, and you use it to enrich every donor in your database, so that they all receive a Planned Giving Score (a rating from 1 to 4, with 4 being the highest, which measures how likely a person is to be a planned giving prospect). This score is determined by indicators such as age, propensity score, affinity score, capacity score, insider filings, real estate holdings, and donations and charitable activity.

One day, you get notified that one of your existing donor’s planned giving score has just increased from 3 to 4. Because of this, you add the donor to your planned giving prospect list, and start the workflow of sending direct mail, a personalized email, and initiating a follow-up call to set up a meeting one week after the email. 

This is where engage steps in to do some heavy lifting. It can draft the direct mail and email pieces based on the donor’s profile and planned giving score. The draft can then be reviewed, edited, and sent by the appropriate person. Then, through engage, you create pre-call coaching notes to give to the appropriate user prior to making the follow-up call. Voila! Your new planned giving prospect is already being nurtured and engaged with! 

Want to learn more? Request a demo!

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The Kindsight Team