Taking Your Planned Giving Program From Idea to Reality
Mary Downey
Downey Associates, LLC
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Most nonprofits understand and feel competent when raising money for current needs and operating dollars. But when it comes to implementing planned giving programs, many are in the dark.
Sometimes, the reluctance to jump into planned giving is based on myths or misunderstandings. Let’s try to dispel some of that misinformation.
Common Myths, Misunderstandings, and Excuses
1. Planned giving is only for the wealthy and we do not have wealthy donors.
False. Research shows that the majority of planned giving donors are ordinary folks. In fact, your consistent, loyal donors are your best candidates. And while these donors may not be able to give you a "major" gift during their lifetimes because they need their income-producing assets while they are living, they may be interested in giving your organization these assets through an estate gift.
Other good prospects for planned gifts include:
older lapsed donors who were previously regular donors;
- current and former board members;
- people with long-term involvement with your organization, e.g. staff and volunteers;
- donors who are single women or men;
- widows or widowers;
- childless couples; and
- unmarried donors.
2. Planned giving is highly technical and we would need an expert on the staff to promote these gifts.
False … and true. Some planned gifts require more technical expertise than others. By concentrating initially on simpler gift plans, you can begin a planned giving program without having tax and legal experts on staff. In the early stages of developing their planned giving
programs, some organizations use an advisory group of board members, donors, or volunteers who have this expertise.
Establishing a successful planned giving program will take some time and effort (what doesn’t?), but by promoting simple gift plans, your program can be easily integrated into your current fundraising program without major effort or cost. The key is planning and executing a well-thought-out strategy, which reflects the needs and available resources of your nonprofit. Whether you use in-house staff or an outside consultant, developing a workable plan that incorporates budgeting, marketing, and staffing is essential.
What planned gifts should you promote to your donors in your start-up program? Simple bequests, gifts from insurance policies, and gifts from retirement accounts are easy to promote and easy for donors to understand. Bequests (gifts through wills) are by far the most common "planned gift" for all charities.
3. We must offer the full menu of planned giving options if we start a program.
False. Closely related to the second common myth, this is not true and, in many cases, is not even a good idea. See the response above, and remember that you do not have to start your program by offering every possible planned giving option to your donors. A new program that starts small and grows with your expertise and needs is often a better alternative.
4. My board just does not get it when I try to explain why we need to start talking about planned gifts with our donors.
While it is true that without proper education your board will not get it, you can start helping by educating the board (and staff) about the benefits of incorporating a planned giving program into the overall fundraising effort.
Start by educating yourself. Attend seminars and workshops about planned giving and get involved in your local planned giving council. Local councils are affiliated with the National Committee on Planned Giving and can provide education, mentoring, and support for your new program.
You also may consider bringing in an expert who can talk with your board. Someone outside the organization can often better explain why the board should consider supporting planned giving, the benefits to the nonprofit when donors have the planned giving option available, and what the board’s role will be in the success of the program.
This expert could be a board member from another nonprofit with a strong planned giving program or a consultant who specializes in planned giving. While some attorneys are able to speak effectively about planned gifts, they cannot always communicate from the nonprofit standpoint unless they have had some real world experience working with a nonprofit.
Finally, it will be extremely helpful if you can identify a current or former board member who has already made a planned gift or is who is willing to be your cheerleader for the planned giving program to the rest of the board.
5. A planned giving program will cannibalize our annual fund.
False. On the contrary, a well planned and executed planned giving program can enhance the overall fundraising program. Committing to a planned gift strengthens the relationship your donor has with your nonprofit. In fact, including a charity in an estate plan elevates the status of your organization in the eyes of the donor to that of "family." Studies have shown that annual giving may even increase from these donors as they feel a closer connection to you.
When we encourage our donors to include planned gifts as part of their charitable giving strategies, we as fundraisers must adequately make the case for both current and deferred gifts. We must explain that deferred giving is an additional way to give, not in lieu of their annual gifts.
At times, older donors find it difficult to part with current dollars or continue their annual gifts to you because they need the income. However, they may be more than willing to instead consider a deferred gift to a charity they deeply care for. This allows them to continue their relationship with you, even if they have to curtail their current gifts at some point.
Preparing for a Great Start
As you take your first steps toward starting a planned giving program, I would suggest you first identify the specific rationale for starting a planned giving program at your nonprofit. Look into the future and think about what you could do with the additional funding. Consider what new programs or projects your organization needs but cannot fund under your current operational budget. Also, pinpoint programs or services you currently offer which are vulnerable if there is a drop in the level of donor support.
Does your board understand the value of having an endowment or significantly increasing your endowment? Planned and deferred gifts can allow you to create and build an endowment fund that helps supplement critical programs and services, thereby reducing the need for current funds for those programs and services in the future.
An endowment serves as an important cushion when traditional funding sources dry up. We need only look to the impact of recent events on our normal fundraising efforts to realize that having a little money in the bank would allow us to continue our normal operations and continue providing services. Establishing a planned giving program allows you to attract new sources of funding and identify established planned gifts that donors have not as yet told you about.
Certainly, starting a planned giving program has benefits for the organization, but it also provides more flexible giving opportunities for our donors and may allow them to take advantage of significant tax benefits. Donors are becoming more sophisticated about giving, and if one charity does not offer planned giving opportunities, the donor will often find another charity that does.
When is the best time to start a planned giving program? The best time is now if your nonprofit meets some basic criteria:
- strong donor base (solid annual gift program);
- strong board commitment;
- stable infrastructure; and
- stable finances.
My best advice would be:
- start with simple steps and gradually build your program,
- don’t be afraid to ask for help,
- start now.
[Editor’s note: See page 6 of the summer 2008 issue of the Alliance for Children & Families Magazine for an article on how one Alliance for Children and Families member started an endowment program. Members of the Alliance can also contact the Severson National Information Center to request more information on endowments and planned giving.]
Alliance for Children & Families Magazine
Summer 2008, Vol. 8, No. 3