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Why You Should Start or Restart Your Planned Giving Program in 2021

The New Year is upon us. It will be here before you know it, and with 2021 comes uncertainty for nonprofit fundraising fueled by all of the changes over the last year. COVID-19 and social-distancing measures will continue to impact how charities reach and motivate their donors to give in the coming year. However, your organization can start the New Year off with a plan for the future that creates sustainability and the growth needed to continue your good work.

Now is the best time in years to focus on planned gifts. If nonprofits have learned anything during COVID, it is that organizations with a long-view fundraising plan and the underlying support to create sustainability are the ones that survive and thrive in times of crisis. Planned gifts are the foundation for your organization’s survival because they provide current and future streams of income that ensure the continuation of your mission and important work. If you have not focused on planned gifts, now is the time to lay the groundwork and build a solid program that will carry your organization through the pandemic and into the future.

Americans are completing and updating wills and trusts in record numbers right now. COVID-19 has added a dose of reality to all of our lives. We all need to make plans to ensure that our loved ones and the causes we care about are taken care of after we are gone. COVID-19 is the backdrop of the scene where your organization has an opportunity to step into its role and be part of the legacy planning process. You should be talking with your supporters about legacy giving right now. Amidst COVID, the intergenerational wealth transfer is taking place. You have a tremendous opportunity to reach the largest generation of wealth holders in decades and secure lasting support for your cause.

Cultivating Planned Gifts

How are planned gifts cultivated? Normally, a donor responds to one or more marketing touches (a mailer or an email, for example) and a fundraiser schedules an in-person meeting. The goal of the visit is to learn about the donor’s goals and match planned giving opportunities to those goals. 2020 has not been a normal year for cultivating planned gifts, with most organizations missing personal interactions with their donors. I do not expect that 2021 will be a complete return to normalcy. For ideas on how to cultivate donors for planned gifts in the current environment, view this recent survey report on Planned Gifts in COVID-19.

Cultivating donors for gifts and building a successful planned giving program takes time. Mature planned giving programs often provide 25–50% of a nonprofit’s annual revenue, while newer programs typically yield 10–15% after three to five years. Before the cultivation process begins, there are a number of threshold issues an organization should consider that will determine the planned giving program’s success.

Here are a few issues your nonprofit should consider in starting or restarting its planned giving program:

  1.  Assess planned giving prospects—Look at your database and assess your number of qualified donors. Some of your best categories include consistent annual givers (giving for 5–10 years or more), donors age 65+ (traditional prospects), donors age 45+ (they are creating wills for the first time), surviving spouses, supporters who are married with no children and single adults who support your cause. Use these group sorts to build your marketing list.

  2.  Analyze and relay the benefits—Relay to your board and management how planned gifts can far outweigh the costs in terms of actual dollars raised and get buy-in for your planned giving program. Use data from Dr. Russell James, CGP and ACGA to show benefits (for example, how planned gifts often far exceed the average current gifts by a single donor). No charity with a well-established program and qualified donors has ever regretted offering planned gifts.

  3.  Take advantage of education—Take advantage of all of the free and low-cost planned gifts training opportunities currently available. Crescendo and local and national planned giving groups will continue to offer virtual training in 2021 on topics that include planned gifts marketing, gifts of simple to complex assets, donor stewardship and gift administration to build your knowledge.

  4.  Create or update your gift acceptance policy—Every charity needs a written policy that includes the types of gifts your organization will accept and how to administer the gifts it receives. In the beginning, your organization’s policy should be simple and include the following gifts:

    •  Charitable bequests—These account for more than 90% of planned gifts. One of the easiest “asks” is to ask your supporters to include your organization in their wills.

    •  Beneficiary designations—These gifts make it simple for a donor to support your cause by designating your charity as a beneficiary of IRAs, 401(k)s and insurance plans.

    •  IRA charitable rollover gifts—This is an easy way for your donors age 70½ or older to make a gift up to $100,000 in 2021 from their IRA. Gifts will qualify for RMDs in 2021.

    •  Gifts of noncash assets—You should be able to accept and sell (maybe with the help of a partner) gifts of securities, real estate and other assets. The fastest-growing planned giving programs are focused on non-cash (as opposed to cash) gifts.

    •  Blended gifts—Some of the best gifts to ask your donors for right now are combination cash or outright gifts and future gifts (like a bequest) to endow or continue their giving.

Once your organization has an established program, your policy may include the following:

  1. Charitable gift annuities—Your policy should include the minimum ages, minimum gift amounts and types of property you will accept. The average age for a CGA is 79 according to ACGA. Most charities have a gift minimum of $10,000. Some charities accept real estate. Check with ACGA and Crescendo if you need help complying with gift annuity requirements in states where your donors reside.

  2.  Charitable remainder trusts—Charitable remainder trusts (CRTs) and charitable lead trusts (CLTs) may be offered to the right demographic. Most gift acceptance policies set a minimum funding amount of $100,000 for CRTs and $1 million for CLTs. You should get legal and administrative help if your organization cannot accept and manage these gifts because of their complexity.

  3.  Create a marketing plan—While some gifts fall out of the sky or come seemingly from nowhere, marketing is essential to your planned giving program. Take a look at the COVID Survey Report for ideas on how to market planned gifts in the virtual world. It’s not a surprise that email is the top way fundraisers are communicating with their donors during COVID-19. Some of the best email marketing messages have included messages of comfort and reassurance, impact messaging showing how gifts are used, thank-you messages to supporters and creative online engagement (like virtual seminars, chats, tours and more). It’s also important to have a planned giving presence on the web and social media. Print marketing/mailers continue to be an important way to introduce and reinforce planned gifts marketing messages.

  4.  Illustrate and close gifts—Once a donor responds to your marketing, it is typically time to schedule a personal visit (or a phone call, Zoom meeting or socially distanced visit right now). Once you understand a donor’s goals, it is helpful to initiate a second meeting to share ideas for how their goals match with your organization’s priorities. A planned giving illustration can be helpful here in explaining the benefits to donors. If a donor decides to move forward with a gift, they may need to make legal changes to their will, update beneficiary designations, sign a contract (gift annuity) or trust agreement (charitable remainder trust). A donor should consult his or her legal and financial advisors before making these decisions.

  5.  Steward your donors—A critical element in the planned giving process occurs after a gift is made. Donor stewardship is the relationship-building process a charity should engage in to support and retain its donors. If you do not have a legacy society, start one and invite all of your planned giving donors to join. Honor your donors, send them regular updates on your work and plan on doing a virtual event if you cannot host a live one in 2021. Make sure you have a plan for acknowledging gifts via donor calls, letters and emails. Make sure you include a statement in your planned gifts marketing encouraging donors to acknowledge their bequests and let your organization know how they want their gifts to be used.

Focus on Planned Giving in 2021

There is so much that can be said about starting and growing an effective planned giving program. The best planned giving programs begin with a plan. Think about where your organization is at in 2020 and your plans for 2021. With small steps, you can begin marketing gifts and building a planned gifts pipeline for your organization’s future. If you take the steps recommended in this article, you will see progress and growth in your program over time. As your program advances, take the time to make periodic evaluations to track what is working and improve in areas where your program may need new direction. I wish you the best of success in your planned giving efforts in the year ahead!

Kristen Schultz Jaarda

By Kristen Jaarda, JD, LLM, CAP®
Executive Vice President, Crescendo Interactive, Inc.

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