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Did you know that learning how to start a planned giving program can secure your nonprofit’s long-term financial stability?
It’s a fact—and it’s one successful nonprofits have been using to their advantage for decades. If you’re ready to go beyond annual giving and unlock a more sustainable future through legacy gifts, read on. In this comprehensive guide, we’ll walk you through the entire process of starting a planned giving program.
From understanding the basics to implementing best practices that favor success (like mastering planned giving conversations), we’ve covered it all. You’ll even learn how to successfully market planned gifts.
Before diving into the nitty-gritty of how to start a planned giving program, it’s crucial to understand the subject. What is planned giving? Why is planned giving so important for nonprofits?
Planned giving, also called legacy giving, refers to the process of making a charitable gift during a donor’s life or at death that is part of their financial or estate plan. These gifts are typically larger than regular donations and can provide significant benefits to both the donor and the receiving organization.
The importance of legacy giving cannot be overstated. It offers a way for donors to leave a lasting legacy while providing nonprofits with a stable source of future funding. Planned gifts can help organizations weather economic uncertainties, fund long-term projects, and ensure their mission continues for generations to come.
There are several types of planned gifts that donors can consider. Understanding these options is crucial when learning how to start a planned giving program.
A bequest is simply a term for a gift made through a will. Bequests are the simplest planned gift, and the most common form of planned giving.
A bequest can be:
General—such as a gift of property from an estate’s general assets.
Demonstrative—a gift from a specific source, such as a certain bank account.
Specific—such as cash (e.g. “I leave $20,000 to Nonprofit A”); or a collectible, such as jewelry, art, a vehicle or other property.
Residual—a gift made after all other expenses are accounted for and debts, such as taxes and bills, are paid from the estate or a specific account.
A charitable gift annuity is a contract between a donor and a charity. The donor makes a gift to the charity, and the donor or a loved one of their choosing receives fixed payments for life. After the donor’s death, the remaining funds go to the charity.
Charitable remainder trusts allow donors to transfer assets into a trust that provides income to the donor or other beneficiaries for a specified period. After this period, the remaining assets are distributed to the designated charity.
In a charitable lead trust, a charity receives income for a set period of time. The remaining assets are passed on to the donor’s heirs. This type of gift can provide tax benefits while still allowing assets to be passed down to family members.
We’ve covered the basics—let’s dive into how to start a planned giving program by laying a solid foundation.
Before launching a planned giving program, it’s essential to evaluate your organization’s readiness. Consider the following factors:
Starting a planned giving program requires buy-in from your organization’s leadership. Educate your board of directors and executive team about the benefits of planned giving and how it aligns with your organization’s long-term goals. Their support will be crucial in allocating resources and championing the program.
Create a compelling case for support that clearly articulates why donors should consider making a planned gift to your organization. This should include:
A successful planned giving program requires a dedicated team with the right skills and expertise.
When considering how to start a planned giving program, think about the following key roles:
Depending on your organization’s size and resources, you may need to hire specialized staff or train existing team members. Consider sending staff to The Planned Giving Boot Camp (spearheaded by Jonathan Gudema, JD) to build their expertise. It provides a high return on investment.
Planned giving often involves complex legal and financial considerations. Establish relationships with attorneys, accountants, and financial advisors who can provide expert guidance and support your program’s growth.
With your team in place, it’s time to design the specifics of your planned giving program.
Establish clear, measurable goals for your planned giving program. These might include:
Decide which types of planned gifts your organization will accept and promote. Start with simpler options like bequests and gradually expand as your program grows.
Establishing Policies and Procedures
Develop comprehensive policies and procedures for your planned giving program, including:
Prioritize building authentic relationships with your donors. Understand their passions, values, and connection to your cause.
Effective marketing is crucial to the success of your planned giving program.
Analyze your donor database to identify potential planned giving prospects. Look for:
Create a range of marketing materials to educate and inspire potential donors, such as:
Use a variety of channels to reach potential planned giving donors:
Building strong relationships with planned giving donors is essential for long-term success.
Take time to understand your donors’ motivations, interests, and philanthropic goals. Personalize your approach and focus on how planned giving can help them achieve their objectives.
Provide clear, easy-to-understand information about various planned giving options. Offer individual consultations to help donors explore which options might be best for their situation.
Create a legacy society or other recognition program to honor planned giving donors. Consider:
Proper management and administration of planned gifts is crucial for maintaining donor trust and ensuring compliance with legal and ethical standards.
Develop clear gift acceptance policies that outline:
Maintain accurate and detailed records of all planned gifts, including:
Establish procedures for valuing and reporting planned gifts in accordance with accounting standards and legal requirements. Consider working with a qualified accountant or financial advisor to ensure accuracy.
Regular evaluation is key to the ongoing success of your planned giving program.
Track relevant KPIs to measure your program’s success, such as:
Regularly analyze and report on your planned giving program’s performance to stakeholders, including:
Use the insights gained from your evaluations to continuously improve your planned giving program. Consider:
As you learn how to start a planned giving program, be prepared to address common challenges that may arise.
Be prepared to address common donor concerns, such as:
Provide clear, honest information and be willing to involve the donor’s family or advisors in the conversation when appropriate.
Planned giving often involves complex legal and tax considerations. Stay informed about relevant laws and regulations, and don’t hesitate to seek expert advice when needed. Encourage donors to consult with their own legal and financial advisors as well.
Planned giving programs require patience, as the financial benefits may not be realized for many years. Balance your planned giving focus with other fundraising efforts to meet immediate needs while building for the future. And don’t pull support from a slow-performing planned giving program in favor of more annual giving. Planned gifts are not only bigger than annual gifts, they inspire more annual gifts.
As you embark on your planned giving journey, keep these best practices in mind:
Begin with simpler planned giving options like bequests and gradually expand your program as you gain experience and resources. This approach allows you to build a strong foundation while minimizing risk.
Utilize technology to streamline your planned giving efforts:
The planned giving landscape is constantly evolving. Stay informed by:
Frequently Asked Questions About Starting a Planned Giving Program
Planned giving is a long-term strategy, and it may take several years to see significant financial results. However, you can measure early success through metrics like the number of new commitments and the growth of your legacy society.
Organizations of all sizes can benefit from planned giving. Even small nonprofits can start with a basic bequest program and expand as they grow.
Initial costs can vary widely depending on your organization’s size and approach. Start by allocating resources for staff training, marketing materials, and possibly legal or financial consulting. As your program grows, you may need to invest in dedicated staff and more sophisticated marketing efforts.
Yes, it’s possible to start a planned giving program with existing staff. Begin by training a current development team member in planned giving basics and gradually expand the program as resources allow.
While it’s important to have a basic understanding of the legal aspects of planned giving, always encourage donors to consult with their own legal and financial advisors. Consider partnering with local attorneys who specialize in estate planning to provide guidance and support for your program.
Start by cultivating strong relationships with your donors. Educate them about planned giving options through various channels, and when appropriate, have personal conversations about their philanthropic goals and how planned giving might help achieve them.
Starting a planned giving program can be a significant undertaking, or you can focus on a simple, bequest-only program and grow from there. Either way, with careful planning and dedication, a planned giving program can provide tremendous benefits to your organization and your donors. By following the steps and best practices outlined in this comprehensive guide to planned giving, you’ll be well on your way to creating a successful legacy giving program that secures your organization’s future — and helps donors leave a lasting legacy, too.
Remember, the key to success in planned giving is patience, persistence, and a genuine commitment to helping donors achieve their philanthropic goals. As you embark on this journey, stay focused on building strong relationships, providing value to your donors, and always keeping your organization’s mission at the forefront of your efforts.
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