by Dave Martin
Similar to major gifts, planned giving is the accumulation of long, engaging relationships between donors and nonprofits. A thoughtful and considerate planned giving program opens your nonprofit up to a significant source of funding and provides donors the chance to continue supporting a cause they believe in.
Establishing a planned giving program requires organizational forethought, strong donor relationships, and a willingness to create long-term investments. Your nonprofit may already be knowledgeable about how to manage its donors , but planned giving necessitates taking additional steps in researching, connecting with, and instilling loyalty in donors.
To help your nonprofit start creating its planned giving program, this guide will provide an overview of core components of planned giving before discussing actionable best practices your nonprofit can use to begin building a successful planned giving program. Let’s start with the basics: What is planned giving?
Planned giving is formally planning to donate at a later time. Planned gifts can be given at any time but are most commonly willed after the donor passes away.
Planned giving, also known as legacy giving, and is sometimes confused with memorial funds. Memorial funds are nonprofit donations made on behalf of an individual after their passing on by their family, while planned gifts are arranged with the donor during their lifetime.
Nonprofits often devote extensive resources to courting major gifts as the foundation of their fundraising strategy. However, planned gifts, on average, have a return on investment of more than $20 higher than the return on investment for major gifts.
Planned gifts are often significant as donors can bequeath money without fear of how it will affect their future finances. Additionally, planned gifts usually have lower investment costs, as your nonprofit should be working to build relationships with donors as part of your routine stewardship efforts. Rather than hosting large events and other donor cultivation activities in the hope that donors will part with their funding at the current moment, you can leverage your long-term relationships and encourage supporters to pledge their gifts for later.
Confirming a planned gift also provides nonprofits insight into their future financial situation. Unlike other fundraising sources, planned gifts don’t decrease during times of economic hardship. Individuals investing in their legacy aren’t impacted by fluctuating markets or changes in donation regulations.
Planned giving isn’t restricted to just your wealthiest donors, either. Fundraising often begins by creating a model that assesses your donors' ability to give. While models are still relevant to planned giving, your pool of potential donors is often larger than your nonprofit might first assume. More moderate supporters can bequeath planned gifts to their favorite nonprofits, meaning you don’t just have to ask your largest donors for these contributions.
Planned giving can seem difficult to discuss, but it’s ultimately beneficial for everyone involved to power through these challenging conversations. Relationship building is key to planned giving programs because planned gifts emerge from mutual respect, loyalty, and transparency between nonprofits and donors.
Planned gifts offer both monetary and emotional incentives for donors and nonprofits, providing a range of incentives for everyone interested in securing a legacy to receiving a tax break.
While your nonprofit benefits from all donations, the specific positives of planned giving are more impactful than many organizations might first assume.
Planned giving requires long-term investment as your nonprofit builds relationships with donors over their lifetimes. This may lead to the assumption that planned giving has a low return on investment when, in actuality, planned giving has one of the highest return rates of any donation type.
To understand why this is, here are a few key benefits your nonprofit can gain through its planned giving program:
Planned giving donors weigh different pros and cons when considering a donation than your regular donors do. However, the benefits are compelling enough that with proper marketing and well-designed planned giving programs, planned gifts can form the basis of your nonprofit’s incoming revenue.
To help you understand the motivations for your potential planned donors, here are a few of the most commonly discussed benefits of planned giving:
By building relationships with your donors, you can iron out details regarding how they want to be remembered, how their money is used, and what tax breaks they qualify for. For example, some donors who want to know how their gift is used might be curious about what parts of your nonprofit need the most help. By talking it out with them ahead of time, you can provide help that will lead to a win-win situation.
There are multiple ways for planned gift donors to contribute to your nonprofit. Most nonprofits are given money, but some receive land or other assets. The exact method of donating a planned gift also varies, giving donors various options for what terms they want to contribute.
To understand which planned giving method works best for your nonprofit and your donors, discuss your options openly to come to a choice everyone agrees with. Keep in mind that some forms of planned giving can quickly become complicated, so be sure to track every step of your planned giving process in your nonprofit CRM to stay organized
You should also be sure to thoroughly research each type of planned gift before entering into a conversation with a donor about their prospective gift. Build out your planned giving program with the types of gifts most advantageous to your organization and easiest for supporters to contribute. To help your nonprofit get started, here are three common types of planned giving.
With 90% of planned gifts being bequests , this is the most popular type of planned giving. This is likely because bequests are the most straightforward planned giving option. Bequests also give donors several options for how they want their money to be given, which generally fall into three groups:
When marketing your planned giving program, let donors know they have multiple options, but consider centering bequests as the preferred giving method. This isn’t just because bequests are easiest for your nonprofit to handle. It’s straightforward, easy to explain, and 33% of Americans have stated they would consider giving a charitable bequest.
Charitable annuities are contracts between nonprofits and individuals where the donor makes a significant contribution (usually monetary but sometimes including other assets such as land or property). In exchange, the nonprofit provides the donor a fixed income for the rest of their life.
The nonprofit invests charitable annuity funds to earn capital gains, and after the pay period ends (or in the event of the donor’s death), the remainder of the gift is then donated to the nonprofit. While smaller nonprofits can create charitable annuity plans; usually only large nonprofit organizations such as universities actively encourage charitable annuities due to the complicated nature of this investment process.
There are two major types of charitable trusts: charitable lead trusts and charitable remainder trusts. Both are trusts that provide significant tax benefits to the founder of the trust in exchange for contributing an annual portion of the money to a nonprofit. The difference lies in how the funds donated are calculated and what tax breaks are given to the founder. Here is a more detailed breakdown of their differences:
Trusts are usually established by exceptionally wealthy individuals seeking tax breaks. While your nonprofit may encounter a donor interested in establishing a trust, they are uncommon when compared to bequests.
Planned giving is deeply personal and often emotional, so once you have identified potential candidates, promote the opportunity to them with customized, personal appeals. Keep in mind who your audience is as you craft your message to inspire a deeper connection without inadvertently coming off as rude or scaring them away altogether.
However, while you should adjust your marketing strategy to accommodate planned giving’s specific requirements, you can still leverage tried-and-true marketing techniques such as multichannel outreach . Your nonprofit should have several avenues of communication at its disposal, and you can use various channels to inform donors about your planned giving program.
When making a direct ask, you can also reach out to donors directly through a phone call or in-person meetings. Ensure donors have privacy and the ability to think about the decision before making a direct ask so as not to pressure them into making a sensitive decision too quickly.
Communicating the benefits to your donors through marketing materials can effectively get the word out to a broad section of your audience. However, while some donors may approach your nonprofit to begin the planned giving process, many do need to be asked, making personal appeals necessary.
While every fundraising effort your nonprofit launches requires extensive planning beforehand, planned giving is an exceptionally delicate topic accompanied by unique legal and ethical considerations. Ensure every member of your team is on the same page about how to approach donors and planned giving candidates so as to create a sensitive but effective strategy for acquiring planned gifts.
To help give your team a sense of direction regarding how to approach donors, here are five key tips on how to start, build, and maintain relationships with your donors that can lead to planned giving:
Donors develop loyalty to your nonprofit over time. This means that the supporters who are most likely to consider becoming planned gift donors need to have been in contact with your nonprofit for several years (usually at least a decade). In turn, this means you’ll need to retain those donors for years in order to create the opportunity to ask them to consider planned giving options.
Retaining your current donors is ultimately more cost-effective than acquiring new donors, meaning this strategy is key for both your planned giving and other sustainable fundraising strategies . While you can (and should) implement strategies to attract new donors, you should never neglect your existing donor base.
You can show appreciation for your donors by continually providing opportunities for them to participate in your nonprofit through events, meet-ups, and other opportunities that are about more than just donating money. One of the key ways to continually engage donors over time is by showing them that they are part of a community and not just an ATM.
Many nonprofits create planned giving or legacy societies, creating a sense of community among your planned giving donors. These supporters can join to receive recognition, interact with other donors, and participate in entertaining stewardship activities.
What exactly goes into a planned giving society? Ultimately, these societies create a sense of community and help build the connection between your nonprofit and your planned giving donors. While every nonprofit approaches this in its unique way, a few key strategies to create a well-designed society include:
These events and opportunities shouldn’t solely focus on converting more donors. Instead, give your planned giving donors real, engaging, meaningful activities that will capture their attention and show your appreciation for their involvement with your mission.
Before creating your marketing materials, consider what is important to potential planned giving candidates. While some people are inspired to invest in planned giving due to the tax benefits, the overwhelming majority do it out of genuine personal investment in your cause. In general, technical and statistical information does very little to convince donors compared to emotional appeals. However, a healthy mix of both is ultimately ideal.
With this in mind, create materials that use stories and images to invoke sentimentality and other feelings that naturally lead people to consider becoming a planned giving donor.
Your brochures and planned giving page will be staples in getting the word out about your program details and informing supporters about their options. Therefore, address these materials first, ensuring you have all the facts on the table for supporters to conduct research before you start reaching out on a personal level.
After you’ve located prospective donors, ensure that your emails, letters, and other appeals are personalized and customized to reflect each candidate’s donor journey . Address them by name, reference how long they’ve been with your nonprofit, and mention previous engagements with your organization’s activities, such as event attendance and volunteer experience.
Donors need to know your planned giving program exists in order to participate. However, due to the sensitive nature of planned giving, you should avoid posting about it on social media like you would an event or crowdfunding campaign.
Consider your planned giving program’s primary audience. While the pool of potential planned giving donors is larger than that of major gifts, candidates still need to meet their own set of specific requirements:
Identifying these candidates takes time as donors get to know your nonprofit and you get to know your donors. Monitor each donor’s engagement history to understand where they are on their donor journey and ensure you only ask appropriate candidates to consider planned giving. Once they fit these requirements and your nonprofit has built loyalty with them, you might be ready to make the first approach.
Thanking and acknowledging your donors’ contributions is an ongoing process. Personal and direct communication makes specific donors feel seen, encouraging them to continue supporting your nonprofit. It might seem repetitive to thank your supporters over and over again. Still, deliberate and meaningful thank-you messages are an integral part of any fundraising campaign c ycle for a reason.
There are more ways to recognize your donors than automatic follow-up messages after a successful donation. Sit down and consider all of the ways your donors can participate in your organization, and then thank them when they do so. A few methods you can use to show appreciation outside of email are:
In your thank-you messages, be sure to express your gratitude for donations and relay the gift’s impact. Use statistics and anecdotes from your programs to help donors get a better sense of what your nonprofit is doing and why their donations matter.
Repeated acknowledgment and expressions of gratitude are fundamental building blocks of cultivating positive donor relationships. These opportunities can influence how long donors support your nonprofit and how receptive they will be to future donation requests, such as asking for a planned gift.
Donors participate in planned giving programs for nonprofits to which they feel a strong sense of loyalty. Building these relationships doesn’t happen by coincidence. These connections develop over the course of multiple interactions between your donors and your nonprofit.
To track, plan, and solidify these relationship-building opportunities, your nonprofit will need a dedicated software solution to manage the journey of your planned giving donors.
CharityEngine’s comprehensive CRM can equip your nonprofit with key tools to set your planned giving program up for success. Along with being an all-in-one solution for fundraising, marketing, and data organization, CharityEngine allows your nonprofit to:
Implementing new technology can be challenging and can lead to an initial slowdown in productivity as staff learn the best practices for their new software. However, in the long run, an upgrade in your software can lead to a major boost in fundraising options. During your nonprofit’s transition, remember that investing in new technology is an investment in your nonprofit’s future success. Don’t be afraid to contact your software provider for additional support to get your team up to speed.
Setting up a successful planned giving program depends on your ability to craft long-term loyalty and relationships with your donors. Your nonprofit can accomplish this by taking the time to listen to donors, engage them further in your organization, and show how they impact your mission.
This means that before starting your planned giving program, you’ll need to conduct extensive research on outreach, donor relations, and giving trends. Here are a few resources your nonprofit can use to begin its journey toward a planned giving program that’s beneficial for both you and your donors:
