If you want to dramatically increase your nonprofit organization’s fundraising results, there’s one simple way you can do it. You need to engage in planned giving.
Yes, you read that correctly. You need to engage in planned giving. And planned giving can be very simple.
Don’t get me wrong. Planned giving can be challenging at times. Some planned gifts, such as real estate transactions and charitable trusts, are complex. However, highly complicated gifts are rare. Most planned gifts are actually reasonably simple arrangements that virtually any fundraising professional can facilitate.
Planned Giving: Major Gifts for the Rest of Us
Think of it this way: Planned gifts are like major gifts for the middle class. While your charity’s typical supporter does not have the cash to make a current major gift, many do have the assets to do so. Research shows that the average American family holds just one to three percent of their financial assets in cash. So, if you’re only seeking cash contributions, you’re not looking for support where 97 to 99 percent of financial assets are (e.g., stocks, real estate, personal property, etc.).
Among charities studied over a five-year period, those who only sought cash gifts grew by 11 percent. By contrast, those seeking any non-cash gift during the same period grew by 50 percent. Those seeking gifts of appreciated stock saw growth of 66 percent, according to philanthropy researcher Dr. Russell James.
So, if you really want to grow your fundraising results, one of the best ways you can do that is through building a robust planned giving program.
Types of Planned Giving for Your Non-Profit
Fortunately, you don’t need to be an estate planning expert to build a successful planned giving program. Seeking the most common types of planned gifts simply requires you to make people aware that your charity welcomes such gifts, that some donors have made such gifts, and what gifts you want folks to consider.
Here are some of the most common types of simple planned gifts for your non-profit:
Gifts of appreciated stock or property (i.e.: real estate, art, collectibles, etc.):
By making a donation using appreciated stock or personal property, a donor can avoid capital gains tax even if they won’t receive a charitable gift deduction under the current tax code. Because over half of Americans own stock and because the stock markets are at or near record highs, now is a great time for donors to contribute appreciated securities.
Gifts from a Donor Advised Fund:
Many donors have established a Donor Advised Fund. The most recent analysis by the National Philanthropic Trust reveals that nearly half-a-million DAF accounts exist holding total assets of over $110 billion. Those numbers are expected to climb when a new report is issued by the end of this year.
If you know that a donor has established a DAF, ask him to recommend your charity for a grant. In your newsletter, include a story about a supporter who has given through her DAF. On your website, let supporters know that DAF gifts are appreciated and encourage people with a DAF to recommend a gift to your charity. Marketing to those who have donor advised funds can be a simple and effective way to build your planned giving program.
Gifts from an IRA Rollover:
Despite recent changes to the federal tax code, donors can still benefit from the IRA Charitable Rollover provision that remains in place. Individuals who are age 70.5 or older can donate up to $100,000 from their IRA each year without having to recognize it as income.
To help you promote the IRA Charitable Rollover, The Council on Foundations has put together an excellent free, downloadable toolkit that includes:
- Talking points, a fact sheet, and web content;
- An event presentation;
- Tools that explain which available options might best serve donors;
- Donor and professional advisor advertisements.
You can find the Council’s toolkit by clicking here.
Gifts in a Will:
The planned giving that I’ve described above will result in current giving to your organization. Now, let’s look at a different sort of planned gift, the most common deferred gift commitment: Gifts in a Will.
Another name for this type of gift is a “bequest.” However, don’t use that word. Research shows that people are less likely to make a “bequest” while more receptive to simply including a charity in their will. One reason for that is that many people simply don’t know what the term “bequest” means. Another reason is that, among those who do know what it means, they think it’s something that only the very rich do. So, if you want supporters to include your charity in their will, keep your language simple and direct.
Asking donors to remember your non-profit in their will is the simplest (and often most effective) strategy for growing your planned giving program.
Another common deferred gift comes from beneficiary designations. For example, a donor can designate your charity as a beneficiary or partial beneficiary of a life insurance policy, retirement account, or other assets. Increasingly, people are using beneficiary designations to disperse their estate upon their death rather than going to the trouble and expense of writing a will.
Every non-profit needs to include planned giving as part of its overall development strategy. Remember, planned giving doesn't need to be overly complex for your donors or stressful for your fundraising team.When you tell prospective donors that they have options in the ways they can support your organization, they’ll be more likely to give and to give more than they otherwise would with a simple cash gift. This is a win for your donors and for your organization. More importantly, it will be a big win for those your nonprofit serves.
About the Author:
Michael J. Rosen, President of ML Innovations, has been named a Top Fundraising Expert and a Top Charity Industry Influencer. He won the prestigious AFP-Skystone Prize for Research in Fundraising and Philanthropy for his bestselling book, Donor-Centered Planned Gift Marketing. Michael publishes the highly-ranked nonprofit blog Michael Rosen Says. You can reach him at firstname.lastname@example.org.
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Photo Credit: Feed My Starving Children