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Planned Giving 101: A Guide for Small Nonprofits

Have you secured a planned gift for your nonprofit?

If this is a new form of fundraising for your organization, know that it’s not out of reach! More complex forms of giving aren’t reserved solely for large nonprofits with sprawling development departments. 

Small shops can also tap into planned giving and build thriving programs with the right knowledge and tools to simplify the job. Let’s review the essentials.

What is planned giving?

Planned giving is the process of donors committing to give donations to nonprofits as part of their financial or estate plans. 

Most often these take the form of bequests and are disbursed to the nonprofit once the donor has passed away. Other popular types of planned gifts include beneficiary designations on insurance policies, charitable gift annuities, and charitable remainder trusts. Many nonprofits include donations of stock, distributions from IRAs, and DAF gifts in their planned giving programs, as well.

Benefits of planned gifts

Planned giving brings a number of important benefits for both nonprofits and their donors. For nonprofit organizations, planned giving should be a priority because:

– It provides consistent, predictable, and often unrestricted funding to sustain your work.

– It opens untapped revenue sources—planned giving is accessible to more donors than large gifts of cash because they don’t disrupt day-to-day cash flow.

– It deepens your relationships with donors and has even been shown to increase annual giving when backed up with effective stewardship practices.

The benefits that donors can enjoy help to make planned gifts a relatively easy ask, as well. When discussing planned gifts with donors, highlight these benefits:

– Planned gifts bring a variety of tax breaks. Bequests, for instance, reduce the estate taxes owed by the donor’s heirs.

– This form of giving allows donors to leave a meaningful legacy and lasting impact on missions that have been important to them or their families.

– Donors have the flexibility to designate how their gifts will be used and can update their bequests over time.

Today’s planned giving environment

The benefits of planned giving make it a smart choice for nonprofits at any time, but today’s unique environment further increases its value as a form of fundraising to prioritize. Why?

As the large Baby Boomer generation ages, we’re set to see a historic transfer of wealth (an estimated $68 trillion) over the coming decades. Additionally, the COVID-19 pandemic spurred a massive increase in estate planning—FreeWill saw a 600% increase in bequest giving from March 2019 to 2020. Today’s shifting patterns of economic boom and turbulence will further grow donors’ interest in tax-savvy charitable giving.

These conditions make planned giving an even more valuable investment for nonprofits that will pay dividends over the long run. By building relationships with older supporters and their families to secure planned gifts, your nonprofit can see significant benefits.

Securing planned gifts

So how do you secure planned gifts? The process can be broken down like this:

1. Add a new section to your Ways to Give page promoting planned giving. Many nonprofits also create standalone microsites specifically for their planned giving programs to provide even more information and value to donors.

2. Set up an online process for donors to create bequests on a free platform like FreeWill.

3. Start promoting your new program via email, in conversations with donors, and through any other channels you’re already using. Direct donors to your Ways to Give page or Planned Giving Website to learn about the steps of creating a bequest.

4. Follow up with donors as needed to secure gifts.

5. As your program gets up and running, analyze and segment your donor base to identify ideal groups of prospects. Who is most likely to create a planned gift? Who already has? Use these insights to guide your ongoing outreach.

6. Hone your skills and learn more about how to discuss planned giving with donors.

7. Actively track your results over time, thank your donors (and fundraisers!), and take steps to keep them engaged with your nonprofit.

There’s one important logistical pitfall to keep in mind. Since bequests can be made at any time and even without your knowledge, you should aim to be more involved in the process than simply providing instructions. Otherwise, you might miss opportunities to steward your donors and update your records. This is equally important for other forms of non-cash giving, like stock donations. 

Using a dedicated platform that facilitates the bequest creation process will ensure that you have all the information you need to effectively run your giving program. And to maintain your program over time, remember that stewardship is key—legacy societies and special events for planned donors can be highly effective for keeping them engaged with your mission over time.

Planned giving represents a major opportunity for nonprofits that haven’t yet prioritized it. 

Although establishing your program and building a pipeline of prospects takes time and strategy, the stable funding and strengthened donor relationships that it generates are well worth the effort. Modern giving tools also greatly simplify the process of securing and tracking planned gifts, making it easier than ever to get started.