When it comes to planned giving, you know more than you think you know. This message is especially important if you are a fundraiser who doesn’t have a planned giving program but are wondering how to start one.
For example, everyone knows about wills. You know what retirement plans are and about life insurance. You know what banks do and the basic financial products they offer.
With a layperson’s familiarity with these financial and estate planning tools, you know enough to start a simple planned giving program. Think of it this way: Bequests — or gifts made through a will — provide at least two-thirds of the deferred gifts at most charities. Bequests are easy to set up in a will, often with only one or two sentences. Donors understand the concept and they enable virtually anyone to make a deferred gift. Even a handful of your donors arranging bequests could make an enormous financial impact on your charity.
It is the fortunate nonprofit that employs a planned giving officer who is trained in the alphabet soup of gift planning tools — CRUTS, CRATS, CLUTs and CLATs. And certainly, you should not promote, execute or talk to your donors about these techniques unless you are familiar with them. Unfortunately, these sophisticated gift plans might be so intimidating to you and other fundraisers that you are reluctant to try even the most basic of planned giving techniques.
Add to that the fact you’re probably focused on raising annual operating funds and perhaps capital or major gifts here and there. Raising funds for the future just doesn’t fit into your priorities.
Putting a few simple concepts in front of your donors shouldn’t require you to veer from your main focus at work: Inspiring and motivating your donors to support your mission, whether through the annual fund, capital campaign or even a planned gift. Don’t be put off by the array of complex gifts and your lack of technical expertise. Focus on the simple. Focus on what you know. Focus on the concepts that nearly all of your donors know about. Encourage donors to remember your charity through your newsletters, website and other communications with messages as brief as “Have you remembered us in your estate plans?”
For a start, these are tools you can use now to launch a scaled down planned giving initiative:
- Planned giving recognition society – You probably don’t consider a planned giving recognition society a gift-planning tool. You should. It is much like having giving levels for annual, capital and major gifts. A planned giving society provides the vehicle to recognize those who have arranged deferred gifts. It’s also a way to remind others that they can make a deferred gift. If you don’t have a recognition level, you have an opportunity: Announce its formation to your donors and provide a way they can inform you if they’ve already arranged a gift. You might be surprised at the number of individuals who have already included you in their plans.
- Bequests – Bequests are the cornerstone of most estate plans and among the easiest ways for donors to arrange a gift. Donors set up a bequest when they work with their attorneys or legal advisors to draft their wills and without requiring any technical expertise on your part. Your function is to encourage donors to remember you in their plans and perhaps answer questions about how a potential bequest might be used.
- Life Insurance – Life insurance is a wonderful yet often overlooked tool for making a gift. A gift can be set up by a donor, selecting your charity as a beneficiary of all or a portion of the policy’s proceeds. Or, a donor could give you a policy and your charity could either cash it in or hold it until a later date. A donor could even give your charity the policy, make annual gifts equivalent to the premium and let you take over the payments.
- Retirement Plans – Individuals with a retirement plan, whether through their employer or their own Individual Retirement Account (IRA) or 401(k)s, 403(b)s and pension plans, can ordinarily select your charity as a beneficiary of the remaining balance. These gifts are arranged by donors contacting the administrator of their plans.
- Financial Service Products – Your donors likely have certificates of deposit or other accounts at a bank or financial institution. Donors can select your charity as the beneficiary of these accounts through a payable-on-death provision. Your charity would only receive the remaining balance of the funds upon the donor’s death.
These basic concepts show that you don’t have to be a technical expert to promote a few planned giving concepts that are arranged by donors and their advisors or administrators, and often offer them tax and estate planning benefits. They are budget-friendly for your charity, take minimal amount of your time and attention and are effective tools for you to tell your donors: Remember us in your plans.
Oh yeah, the answers to the earlier alphabet soup are: CRUTs (charitable remainder unitrust), CRATs (charitable remainder annuity trust) CLUTs (charitable lead unitrust) and CLATs (Charitable Lead Annuity Trust).
Mike Patterson is a San Antonio, Texas-based freelance writer and retired planned giving officer.