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  • Debra A. Gill

Demystifying Planned Giving

Taxes, family, charities of choice … pick two!



The idea of discussing planned giving options with donors sets many development officers’ teeth on edge. Full disclosure, I am not a tax advisor and while none of us should go beyond our comfort level in these delicate conversations, we would be doing our organizations a disservice not to be well versed on the topic.


Admittedly, CRUTS and CRATS are complex concepts. The good news is that explaining these giving vehicles can be left to the attorneys or advisors who will most likely create them. All we need to do is fuel the fire.


Gift officers of any level can start the conversation by asking donors about their long-term intentions toward the organization. If there is a desire to continue to support the mission beyond their lifetime, have courage and delve into further dialogue.


For instance, consistent annual donors may wish to endow their yearly gift. Emphasize the importance of their annual support and how impactful it would be to have it in perpetuity. Typically, endowment policies allow a 5% payout. Therefore a $10,000 annual gift would be permanently endowed with a $200,000 estate gift. Relatively easy conversation.


Most planned gifts come through bequests and this is a safe zone for these discussions. Transfer on death (TOD) designations on cash accounts, insurance policies, and real estate are increasingly common, reducing the value and volume of assets to be distributed through bequests. Any of these TODs could be designated to your organization. Alternatively, percentage of remaining estate dispositions are good options to discuss.


Exploration

If the conversation goes in the direction of a deferred gift, gift officers should tactfully inquire about the donor’s financial goals. Typically, they will feel strongly about needing a tax deduction, consistent income, planning for family, or reducing the size of their estate. Each of these preferences leads to different planned giving solutions.


Understanding the gift level is important. Gifts of less than $250,000 lend themselves to current (advantage cash) or deferred (advantage tax deduction) gift annuities. These can be administered internally with appropriate software if there is a strong partnership with the accounting team. Often community foundations have this expertise, and some financial institutions are viable partners as well.


Gifts that exceed the $250,000 threshold are best suited for one of the many trust vehicles. This is the time to encourage your donor to have a conversation with their financial advisor about creating and administering such gifts. Development staff need only to ask for written documentation for recognition purposes. Trust beneficiaries can typically be changed so meaningful stewardship is essential.


Marketing

Estate planning increased significantly during the pandemic. More and more people are not only planning but many are doing so with a renewed passion for their charities of choice. Encouraging donors to consider remembering your organization in their estate can have remarkable results. This can happen verbally but can also be integrated into newsletters via testimonial stories, social media, and even branded on letterhead or other collateral materials. Think about purchasing a reputable newsletter or brochure from a national source to distribute to age-appropriate donors on a consistent basis. No need to reinvent the wheel.


Education

Education is key but doesn’t have to come from you. Establish a quarterly ‘meet the expert’ social and have trusted local financial advisors or estate attorneys provide high level information. Larger charities might want to engage national planned giving specialists for assistance. Donors are grateful for this learning experience – invite their family members.


Networking

Getting out and meeting local advisors can be particularly advantageous. Their clients may be asking for suggestions and if they are knowledgeable about your organization, they can be more responsive. The composition of your board should rotate through local advisors, both as a resource and to establish a broad base of relationships throughout the financial community. Advisors are donors too.


Recognition

A Legacy Society with specific recognition for those providing documented gift intentions is strongly recommended. Not only will this public appreciation make it more likely that you will remain a designated beneficiary, but many donors may share their gift plans and/or accelerate their contributions when warmly acknowledged. A public display encourages others to give in this manner as well. Gratitude is free.


At the end of the day, doing nothing in the planned giving arena is very expensive. Take it one bite at a time but don’t leave these prospective resources on the table for others to harvest.


Alliance Philanthropy’s philosophy is to inspire staff, volunteers, and board members for all types of not-for-profit organizations to raise funds enthusiastically and passionately - at maximum levels - in support of their missions.


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