The Future of Planned Giving Is Now

Planned giving focus began in the 1600s with the Mayflower Pilgrims, and later with Harvard College being a leader with this concept, according to the National Association of Charitable Gift Planners. As the early concept of bequests continued, gift annuities joined during the 1920s. Gift planning required nonprofits to hire and train specialists. By 1968, there was a full toolbox available for gift planners.

The Great Wealth Transfer and its potential $11.9 trillion windfall should make planned giving a big priority as baby boomers transfer their wealth over the next two decades. 

What Is a Planned Gift?

Planned giving is a key piece of big picture fundraising strategies. Commonly called charitable bequests, planned gifts are donations made through a donor’s trust, will or estate plan given on one’s passing. Donors can also use life insurance or retirement assets as estate planning revenue tools. 

Planned gifts provide a stable revenue source for nonprofits, by unlocking gifts from under-the-radar sources and supporting a diverse fundraising program. Prospects must be identified, cultivated, solicited and stewarded over a long period of time by multiple institutional players to generate maximized benefits. 

What Impact Do Planned Gifts Have on Your Nonprofit?

Planned gifts provide great resources and a higher return than other forms of fundraising for your nonprofit organization. For every dollar spent on promoting bequests, nonprofits generate an average return of $56.83. 

For the nonprofit, planned gifts are meaningful and lasting. Planned gifts help secure an organization’s future through long-term advanced funding. They can diversify revenues, strengthen long-term donor relationships and lead to larger gifts. In addition, they tend to increase donors’ annual giving as donors feel a greater sense of mission investment.

On the other hand, the donor can shape their gift in a variety of restricted ways to fulfill their wishes and take advantage of special benefits, such as reduced taxes, paying lifetime incomes and protecting assets.  

What Are the Latest Planned Giving Trends

As a fundraising professional thinking about present planning to give as a tool for the future, look at “Giving USA 2023: The Annual Report on Philanthropy for the Year 2022.”  The economic conditions in 2022 introduced new challenges to giving through declines in the stock market and less disposable personal income to the persistent high level of inflation. Total estimated charitable giving in the United States reached $499.33 billion in 2022, which represented a year-over-year decline of 3.4% from 2021 and 2022. 

When adjusted for inflation, this showed a decline of 10.5% in overall growth. Of the total giving amount, giving by bequest totaled an estimated $45.6 billion in 2022, growing by 2.3% over 2021, or declining 5.3% when adjusted for inflation. The opportunity to assist baby boomers with their legacy plans continues to exist, according to this Giving USA report. Many individuals still need assistance to help them establish a vision and plan for passing along their charitable values. 

The Center for Major Gifts recently reviewed the future of planned giving through a discussion involving six experts. Here are a few of their thoughts. 

More Blended Major and Planned Gifts

Donors are being more mindful about their giving, combining cash pledges, appreciated stocks, bequests and more to create the biggest impact for their charity of choice, Stuart Sullivan, senior vice president of Graham-Pelton, said. 

“There’s more wealth in the U.S. than there has ever been, and people are looking at their giving in terms of being an investment, not just a gift,” he said. “They’re looking beyond naming a room in a building or supporting a scholarship, and thinking more in terms of a long-term relationship that leaves a legacy.

Donors Giving to Causes, Not Institutions

Donors are changing and becoming more unlikely to transfer wealth through a will or trust, Camilyn K. Leone, who teaches at the Nonprofit Clinic at University of Virginia School of Law, said. Baby boomers and Gen Xers are also dealing with issues, such as unemployment, a childcare crisis, greater distrust in government and institutions, a growing wealth gap and a healthcare crisis.

“All of these issues have a negative impact on one’s prosperity outlook. When people are worried about themselves and their loved ones, giving to nonprofits is a lesser priority. This is a trend that will have an adverse impact on major and planned giving. Younger donors are more interested in giving to causes and through social networks rather than institutions.”

Need for Planned Giving Referrals

Just like every physician doesn’t know how to perform heart surgery, not every fundraiser will know how to cultivate a planned gift,” Anne McClintock, executive director of University Planned Giving at Harvard University, said. They should be able to pick up on the cues and clues to make the referral to a planned giving officer though.

“I think it would be tough to have one completely joint planned giving/major giving team, where everybody had some responsibility for everything, because of the amount of knowledge and specialization involved with planned giving,” she said. “Rather than have everyone learn all the ins and outs of planned giving, I think the model of the planned giving officer providing services to fellow fundraisers as well as to donors can work well.”

The future of planned giving is now for nonprofits. Organizations must have a component of gift planning/planned to give in their toolbox. Every donor officer needs to be multi-trained to understand that each prospect is an annual fund, major gift and planned gift prospect rolled into one. Understanding planned giving takes time and understanding.

Realize that donor possibilities through planned gifts are endless and fundraisers should match a donor’s value and dreams with the expansion of the organizational mission. View your prospect and donor as a life-long investor and you will gain greater time, talent, and treasure along the way!

The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.