Planned Giving Fundraising: A Primer for Nonprofit Leaders and Boards

Our private foundation clients are gearing up for giving season and nonprofits and charities of all types and sizes are focusing on fundraising over the next few months. It’s a busy time of year, but with tech-led charitable giving solutions and experts to guide you, this could be your most effective and joyful giving season yet. From sharing tips on maximizing year-end giving to launching our new Planned Giving Series, we’re continuing to deliver on our promise of making giving easier and more impactful across the entire philanthropic ecosystem by supporting foundations, nonprofits and advisors. This giving season, we asked our experts at PG Calc, Jeff Lydenberg, Vice President of Consulting, and Craig Wruck, Senior Advisor, to share their insights on planned giving fundraising—and provide a primer for nonprofit leaders and boards.

Making the case for investment in a planned giving program can be complicated. While successful planned giving programs generate substantial new contributions, those dollars are mostly received in the future and can require sustained effort over years. Annual, major gift, and campaign fundraising usually provide more immediate returns, which can make it challenging to justify scarce budget and resources for planned giving. However, the return on investment for most planned giving programs is almost always greater than any other source of philanthropy. From a nonprofit organization’s perspective, investment in a vigorous planned giving program pays off in many ways:

• Larger Gifts: Planned gifts tend to be much larger than other contributions, providing a substantial source of gift income.
• Long-Term Sustainability: Planned gifts provide funding for years or even decades to come, enhancing financial stability.
• Cost-Effective: While planned giving requires sustained effort, the cost to raise a dollar in planned gifts is dramatically lower compared to other fundraising methods.
• Competitive Position: Prospective donors are bound to hear about planned giving opportunities. If not from a nonprofit organization, the best donors may wonder why they do not offer these options.

There are many reasons to invest in a planned giving program.

Planned giving is an essential element of a comprehensive fundraising program. Fundraising from individuals usually involves three strategies, each offering prospective donors a different way to participate and each seeking different types of assets:

Annual Giving/Events – Contributions of moderate size are made from discretionary income in response to periodic solicitations.

Major Giving/Campaigns – Contributions of significant size are made from assets or multiyear pledges and solicited opportunistically when donor interests can be matched with organizational priorities.

Planned Giving – Often the largest gifts of a lifetime, contributions from assets or estate wealth are cultivated and solicited over time via education, ongoing discussions and negotiations.

Planned giving results in more and larger gifts from donors of all ages. There’s a myth that planned giving detracts from other more urgent fundraising, that donors will be tempted to “take the easy way out” by choosing to defer giving. In reality, promoting planned gifts increases overall giving. Planned gift donors do not engage in substitution giving, instead they tend to sustain and increase all their giving. And there’s good evidence that younger donors make planned gifts early and sustain those gifts throughout their lifetimes.

Planned giving opens greater opportunities for donors. Annual and major gift fundraising tends to be ambivalent about the form of the gift, often encouraging contributions by credit card or check because they are easiest. However, 98% of personal wealth is held in non-cash assets – and more affluent donors are likely to hold even less of their personal wealth in cash. Focusing on cash contributions narrows the appeal to just 2% of personal wealth. That is a missed opportunity because planned giving techniques can introduce significant tax and financial advantages for all gifts.

Planned giving need not be complicated, but donors are unlikely to think of it on their own. Planned gifts can involve financial and tax complexities, which makes it tempting to rely on donors’ advisors to recommend a planned gift. However, according to research by Giving USA, nearly half of donors report their gift planning experience was easy and only one in five found it difficult. What is more, a majority of donors say they first learned about planned giving from a charity, not from their professional advisor or others.

Planned giving involves speaking of the unspeakable. Sometimes there can be reluctance to engage in the sensitive issues that can arise in planned giving. Conversations about financial matters, taxes, family dynamics, and the inevitability of one’s own mortality can be challenging. But research shows that planned gift donors are comfortable speaking about these issues and thinking about their own mortality.

Investing in a planned giving program pays off in many ways.

For Prospective Donors:

• Meaningful Impact: Planned gifts allow donors to make a significant contribution to the cause they care about and leave a lasting legacy.
• Tax Advantages: Donors can often receive tax benefits by making planned gifts, creating more attractive giving options and making larger gifts possible.
• Personalized Giving: Planned gifts offer flexibility, allowing donors to tailor their gift to their specific wishes and financial situation.

For Nonprofit Organizations:

• Stronger Relationships: Planned giving fosters deeper and longer-lasting relationships with donors, leading to increased loyalty and support.
• Enhanced Credibility: A well-developed planned giving program shows the charity’s professionalism and commitment to its mission.
• Diversified Income: Planned gifts provide a diversified income stream, making the charity less reliant on any one source of funding.

Planned giving programs are not one-size-fits-all. Building a successful planned giving program takes time, sustained effort and adequate resources.

• Development: A planned giving program requires dedicated staff time, expertise and resources.
• Education: Effectively communicating to donors requires continuous education and outreach efforts.
• Access to Technical Expertise: Navigating the legal and financial complexities associated with planned gifts may require engaging expert advice.

Can a nonprofit organization afford to be absent from the planned giving marketplace? Research shows that although only 5% to 8% of donors make planned gifts, one in three would consider it if asked. That’s a substantial untapped market. We think it is well worth the investment.

Want to learn more about planned giving?

Check out the PG Calc Blog.

Want to learn more about the ways we support philanthropists with private foundations?

Schedule a call with us or reach us at 800-839-0054. Together, let’s #begiving.