Step-By-Step Guide to Planned Giving Strategies for Nonprofits

Reviewed by:


September 27, 2023

Last Updated:

October 4, 2023

Today, we're diving into the world of planned giving, a key cog in the wheel of nonprofit fundraising. Planned giving is an impactful way to bolster your fundraising efforts, allowing you to engage more deeply with donors and ensure the longevity of your mission.

This post will cover the basics of planned giving—what it is, how to implement planned giving strategies, and how best to make use of their potential.

Introduction to Planned Giving for Nonprofits


Planned giving, also known as legacy giving, is a powerful long-term fundraising strategy that can provide a sustainable source of revenue for your organization.

Below, we will explore the different aspects of planned giving and how they can be effectively implemented in a nonprofit setting.

What Is Planned Giving?

Planned giving is the act of giving major gifts to a nonprofit, usually in the form of a bequest, trust, or annuity. Most of the time, planned giving refers to when a donor makes arrangements to contribute a significant gift to a nonprofit organization after they have passed.

Unlike spontaneous or occasional donations, planned giving involves a structured and thoughtful approach, often integrating the donor's personal, financial, and estate planning goals. We will go into all the different kinds of planned gifting later on in the article.

Why Is Planned Giving Crucial for Nonprofits?

For nonprofit organizations, planned giving plays a vital role for a multitude of reasons.

Firstly, it provides a steady and predictable stream of income, allowing the nonprofits to plan and implement long-term projects that can drive substantial impact.

Secondly, planned giving gives donors a way to demonstrate their deep commitment to an organization’s cause. Planned giving programs are often a great avenue for fostering deep relationships and connections with major supporters and stakeholders.

Finally, planned giving often exceeds the amount a donor might offer through regular contributions, making it a powerful tool for fundraising. It's a distinct form of charitable giving that holds enormous potential for nonprofits once they understand how to harness it effectively.

Understanding the Various Types of Charitable Donations


In the nonprofit world, there are many different ways a donor can support an organization financially. We have outlined and explained the most common types of charitable giving below.

One-time Gifts vs. Planned Gifts

One-time gifts and planned gifts represent two distinct facets of charitable donations.

One-time gifts are much more straightforward and immediate, often made by donors who wish to support a cause or organization instantly. These donations are usually made out of disposable income and are often influenced by a nonprofit's immediate needs or campaigns.

On the other hand, planned gifts involve a more structured approach.

They are usually integrated into the donor's financial or estate plans and are set to occur in the future, either over a long period or after the donor's lifetime. This strategy allows the donor to make a larger contribution than they might be able to from their ordinary income.

Common Forms of Planned Charitable Donations

Let's take a closer look at some of the most common forms of charitable donations within the realm of planned giving.

  • Bequests: A bequest is a gift that is made through a donor's will. It can be a specific amount, a percentage of the estate, or what remains after other bequests have been fulfilled. Bequests can also be contingent on certain conditions, such as outliving other beneficiaries.
  • Trusts: Charitable trusts are legal arrangements where assets are placed into a trust for the benefit of a charity. The trust can offer income to the charity for a set number of years or the donor's lifetime, after which the remaining assets go to the donor's heirs. It can also work in the opposite way, where the income goes to the heirs for a specified period, and then the remaining assets go to the charity.
  • Annuities: Charitable gift annuities are agreements where the donor makes a sizable gift to a nonprofit, and in return, they or a designated beneficiary receive a fixed sum of money periodically for the rest of their lives. Upon the death of the last beneficiary, the remaining funds go to the nonprofit.

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Four Examples of Planned Giving Techniques


Now that we’ve gone over the difference between one-time gifts vs. planned giving, let’s spend some time outlining some essential planned giving techniques in more detail.

The methods below can be powerful tools for attracting substantial donations from supporters who are deeply committed to your cause.

1. Incorporating Bequests Into Fundraising Strategies

Bequests can be an efficient way to engage donors in the planned giving process. By encouraging supporters to remember your organization in their will, you tap into a potential source of substantial future income.

Bequests have the advantage of allowing donors to make a substantial contribution that doesn't affect their current financial stability. For nonprofits, they can result in significant influxes of funds that can be used to advance long-term goals or fund large projects.

2. The Power of Charitable Remainder Trusts

Charitable remainder trusts (CRTs) provide a double benefit. The donor can place assets into the trust, which then provides income to the nonprofit for a pre-determined period or for the donor's lifetime.

After this, the remainder of the assets goes to the donor's chosen heirs. This allows the donor to make a generous gift, potentially receive an income tax deduction, and ensure that their heirs also benefit from the assets.

For the nonprofit, this can provide a steady income stream and a future lump sum.

3. Benefits of Charitable Gift Annuities

Charitable gift annuities (CGAs) offer a win-win situation for both parties. Donors make a sizable gift to your nonprofit and receive a fixed amount of income for the rest of their lives.

This provides donors with the security of a steady income, potentially reduces their taxable estate, and allows them to make a significant donation to your cause. When the donor or designated beneficiary passes away, the remaining funds become available to your nonprofit.

4. Leveraging Life Insurance Policies for Planned Giving

Life insurance policies can also be an effective tool for planned giving. A donor may choose to name your organization as a beneficiary of their policy, resulting in a significant donation upon their passing.

Alternatively, they may donate a policy they no longer need or take out a new policy with the nonprofit as the owner and beneficiary. This strategy offers an affordable way for donors to provide a substantial future gift without impacting their current finances.

For nonprofits, the death benefit received can be a sizable addition to your funds, helping to secure your organization's future.

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Four Steps to Organize Effective Planned Giving Strategies


Now that we've explored the types of planned gifts and how they can be incorporated into your fundraising strategies let's discuss the important steps to organize effective planned giving programs.

1. Crafting a Clear Planned Giving Policy

The first step in implementing a planned giving strategy is establishing a comprehensive policy.

A well-defined policy serves as a roadmap for both your organization and your donors, outlining the types of gifts you accept, the procedures for accepting them, and how these gifts will be used.

This not only aids in avoiding legal complications but also helps to communicate your organization's mission and long-term goals to potential donors.

Here’s a great example from Habitat for Humanity. They have an entire planned giving website dedicated to explaining legacy giving and the different ways their donors can support them.

Habitat for Humanity

2. Educating Your Donors About Planned Giving Benefits

Education is a crucial step in facilitating planned giving. Many donors may not be familiar with the concept or its benefits, such as potential tax deductions or the ability to significantly impact causes they care about.

It's important to inform your donors about these advantages and how planned giving can align with their financial and estate planning goals.

Check out this estate planning kit from Feeding America. They’ve created this kit to be a helpful resource for their supporters as they consider leaving a lasting impact to support their cause.

Feeding America

3. Collaborating With Financial and Legal Professionals

Successful planned giving strategies often require the expertise of financial and legal professionals. These professionals can be a guide on complex issues, such as tax laws and estate planning, ensuring that your organization and your donors navigate the process safely and effectively.

Collaborating with these professionals can also help you craft gift acceptance policies and properly manage received gifts.

4. Regularly Reviewing and Updating Your Strategies

The world of philanthropy is ever-evolving, and so should your planned giving strategies. Regular reviews and updates ensure that your strategies stay relevant, effective, and legally compliant.

It's important to assess the success of your ongoing strategies and to stay informed about changes in tax laws, giving trends, and donors' preferences that could influence your planned giving program.

Wrapping Up: The Next Steps

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Planned giving is a powerful fundraising tool that promises numerous advantages for both nonprofits and their donors. By understanding and implementing effective planned giving strategies, nonprofits can harness the power of substantial future donations, while donors can achieve their philanthropic goals and potentially reap financial benefits.

Remember, organizing a successful planned giving program involves thorough planning, continuous education, and collaboration with skilled professionals. Most importantly, your strategies should remain flexible and evolve with the changing philanthropic landscape.

For more insights and actionable advice on maximizing your fundraising potential, don't forget to visit Instrumentl's blog.

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Instrumentl team

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