Getting started

Nonprofits can take simple steps to launch planned-giving programs.

By Todd Cohen

Planned giving has emerged as a sophisticated field to help wealthy donors create complex charitable gifts that can provide them with steady income and yield big returns for charities over many years.

But less wealthy donors and smaller charities can take a more modest approach to planned giving, using simple tools and techniques to work together to create a combination of deferred gifts and outright gifts using assets other than cash to address mutual needs.

“I think there’s a readiness for planning giving at smaller organizations that maybe is re-emerging with the marketplace,” says Eileen Heisman, president and CEO of the National Philanthropic Trust in Jenkintown, Pa. “There’s been so much buzz in the marketplace, they feel like they’re missing the boat.”

Smaller charities can begin planned-giving programs, but they must “have an appetite and an operating budget that can withstand a five-to-seven-year waiting period before you actually see a real gift,” she says.

To start a planned-giving program, she says, a charity typically should have been in business for 10 to 15 years, and enjoy a solid operating budget, board and donor base, and possibly even a reserve fund.

But planned-giving is not a smart move for a nonprofit with a lean budget, a weak or uncommitted board, a pattern of rotating through development officers, or too much reliance on government support.

An easy first step, Heisman says, is to begin a basic bequest program, creating a bequest society that is named for a major benefactor and is seeded with gifts from board members and possibly senior staff who make provisions for the organization in their wills.

The organization also can develop a brochure inviting people to make bequests, and including similar messages in all communications, including direct-mail, email, newsletters, annual reports and messages to annual donors.

“You can do it simply and effectively, but you can’t do it for six months and stop,” she says. “You have to continually remind people.”

Once it has a bequest program up and running, she says, a nonprofit might create life-income programs, such as gift annuities or pooled-income funds, using vehicles donors create that typically pay them on a monthly or quarterly basis.

Life-income programs involve a lot of hands-on planning, tax and legal issues, board involvement and work with living donors, she says.

“So you need people in the charity who can actually deal with those questions, and make sure checks go out on time, and for the right amount, and can deal with donors. You have to be ready to take calls and know how to answer the questions.”

Nonprofits now can turn to a broad range of planned-giving resources available from consultants, financial-services firms and software vendors.

Software is available, for example, that charities can use to illustrate to donors how different types of planned gifts would work based on various assumptions about the donor’s age and the size of the gift.

Websites for colleges, universities, community foundations and larger charities typically feature explanations of different kinds of planned-giving techniques, as well as gift calculators.

Academic and nonprofit programs offer planned-giving training, while financial-services firms and other vendors offer services to charities that range from marketing planned-giving programs to handling investments, payments to donors, and fund administration.

Because engaging donors is critical, charities also are working to move beyond technical jargon that focused on laws and regulation, and instead take a “plain-talk approach,” says Mike Page, director of planned giving at the University of North Carolina at Chapel Hill.

“Gift officers must be able to communicate planned gifts in an understandable way for their prospects and donors,” he says. “The challenge is to match our donors’ passions to our charity’s programs.”

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