Current donations are possibly your non-profit’s bread and butter, but you can’t afford to neglect planned, legacy, or deferred gifts. Typically made through wills and living trusts, these gifts often are much more substantial. Most of your employees don’t need to be directly involved when donors establish such gifts through their estate plans, but it is important that your development staff knows how the process works and how to encourage planned giving from prominent donors.

How The Process Works

In addition to will and trust gifts, planned donations can be made with beneficiary designations on retirement accounts, such as 401(k) plans and IRAs, and life insurance policies. However, charitable annuities and other more complex estate planning instruments, such as charitable remainder trusts, may come into play.

Donors need to indicate in a legally-binding document (such as a will) your non-profit’s full name and address. Although your organization’s tax ID number is helpful, it isn’t required. The legal document also must describe the donation and state any restrictions on its use by your non-profit.

Making Your Case

You can’t just be reactive and accept windfalls that come your way. You need to proactively pursue planned gifts. For example, feature information on planned giving in prominent locations on your website, in your newsletter, and in brochures and other promotional materials. Don’t assume that only older, long-time donors might be interested. Many people may not even consider making a planned gift unless you educate them about the option.

Recognize that sometimes even wealthy individuals fail to make proper estate plans. They may promise to leave something to your organization, but if they don’t put it in writing, state intestacy laws can lead to unintended results. Use subtle and sensitive messages to get the point across.

You also might emphasize the tax benefits of acting quickly. Unless Congress acts, the current generous estate tax exemption, $13.61 million in 2024, is scheduled to revert to an inflation-adjusted $5 million in 2026. Supporters whose estates wouldn’t be subject to estate taxes now but could be after 2025 may want to incorporate a planned gift into their estate plans before then.

It’s also helpful to show how you can put planned gifts to work. Many donors expect planned gifts to go toward special projects or programs rather than day-to-day expenses. You can help provide ideas for potential special uses, but you may want to make the case for contributing to your general operating fund.

Gaining An Edge

Donors are less likely to leave gifts to young or financially insecure organizations. So, if your non-profit already has a long track record and strong reputation, you probably have an edge. However, it’s never too soon to start building relationships with financial and legal advisors in your community who might help individuals prepare estate plans. Also, try to secure planned gifts from such committed stakeholders as board members. Contact us with questions.