Planned giving: Getting started

By Todd Cohen

When the Randolph Hospital Community Health Foundation in Asheboro, N.C., launched a planned giving program in late 2005, it began modestly.

A lawyer on its board drafted language donors can use to make bequests, and the foundation began by marketing annuities with a brochure developed by a marketing firm, and a calculation tool developed by a -software firm.

The foundation promotes the program in the hospital’s newsletter and with the advice of a volunteer planned-giving committee.

And its board recognizes the payoff on its investment in planned giving will not begin for several years at the earliest.

“There is not a great deal of pressure to get fast results,” says Doug Aitken, president. “With planned gifts, it does take a while.”

Ed John, vice president of planned giving for United Way of America in Alexandria, Va., agrees.

After investing resources in a planned-giving program for a year or so, and not seeing any results, he says, some charities “walk away from it,” only to receive a bequest in the mail several years later that grew from the seeds planted several years earlier.

“Part of the challenge is overcoming the tyranny of the present,” he says. “It’s a marathon, not a sprint, and they have to measure it that way.”
Planting seeds

Because it can provide a long-term source of support, and help cushion the ups and downs of the economy, experts say, charities should be clear about what planned giving is, and how it fits in with their overall fundraising.

“To have an effective planned-giving program, an organization needs to look inward,” says Annette Lynch, vice president for donor services at the Winston-Salem Foundation in North Carolina.

John of United Way of America, which provides planned-giving consulting, training and products to local United Ways, says many donors and even volunteers and staff members “confuse the mission of an organization with their methods for raising money.”
At United Way, for example, “many people have thought their mission is to conduct an annual campaign,” he says. “That’s been the method we’ve used, but it’s not our mission.”

Planned giving “expands and diversifies resources to impact more lives, and it also helps donors multiply their ability to give,” he says. “Through a planned gift, they can give a lot more than they can through payroll-deduction” contributions during the annual workplace-giving campaign.

Lynch says that, before actually setting up a planned-giving program, nonprofits should take stock of their operations and fundraising.

“They need a clearly defined mission,” she says. “They need a track record of achievement. They need a history of fundraising, even if it’s just a modest annual campaign.”

Equally critical are the tasks of securing a long-term board commitment to a planned-giving program, and setting goals and metrics to track its performance, Lynch says.

“There need to be committed resources,” she says. “Will they support staff, mailings, marketing?”

And because the board will want to know the results of the planned-giving program, she says, “you need to have some measurable objectives, and a way of measuring how you’ve done.”

First steps

Nonprofits considering a planned-giving program can take some simple steps to get started, experts say.

A first step, John says, is to create a volunteer “goals-and-vision” committee of past board presidents, campaign chairs, donors and community leaders to find out how key prospective donors feel about the nonprofit getting involved in planned giving, what they see as possible obstacles and whether they would consider making a planned gift.

Nonprofits also need to “immediately open the door to let people know they’re in the business of accepting bequests.”

A simple way to do that would be to send a “bequest identification letter” to donors, encouraging them to consider the charity in their wills or estate plans or, if the donors already had done so, thanking them for the bequest.

The letter could include a response care donors could fill out and return to the charity.

“It gets out to the constituency in a low-key way to let them know they can give in that way,” John says. “And it also lets the charity know what commitments are out there.”

A second step, he says, would be to create a list of top planned-giving prospects, and then develop a plan for meeting with them individually to let them know about the new program and invite them to consider making a planned gift.

“These aren’t necessarily your largest donors,” he says, “but these are people who have been giving to you the longest period of time.”

Lynch agrees, suggesting that a planned-giving program “start with insiders, not the person on the street or the wealthiest person in the community.”

And a charity can create a recognition society for planned-giving donors, and feature them and their gifts in the organization’s publications.

Charities also need to set up policies and procedures for accepting gifts, John says, and can contact organizations like United Way and local chapters of the National Committee for Planned Giving for advice or templates for gift-acceptance policies and procedures.

Debra Ashton of Quincy, Mass., author of “The Complete Guide to Planned Giving”, says the nonprofit can create a “gift acceptance committee” to spell out the kinds of planned gifts and assets the organization will accept, and to make rules for how to accept, administer and dispose of the gifts.

The committee might include the director of development, the chair of the development committee of the board of trustees, the trustees’ treasurer and the chair of the trustees’ finance committee.

Nonprofits also can outsource the administration of life-income plans to a bank or trust company that will perform required tasks such as making payments to beneficiaries, filing federal tax forms, tracking incoming gifts, and distributing the principal to the charity on the death of the beneficiary.

What cannot be outsourced, she says, is the expertise required “to be able to work with each individual donor, know the rules and not get yourself into trouble.”

Lynch says community foundations often can provide resources a nonprofit might not be able to afford on its own, such as serving as trustee for a charitable trust with lower minimum assets than a financial institution might require, or providing other life-income strategies such as charitable gift annuities.

Still, John says, a charity should ask professional advisers and legal counsel to make sure its policies and procedures comply with local law.

Finally, he says, a nonprofit should develop materials to market its planned-giving program.

While many organizations begin by developing planned-giving materials and policies, he says, he prefers to talk to donors first to find out “what they like and don’t like”, and then shape the materials to match those donor preferences.

“Typically, charities start by developing marketing materials and policies before they know what they want to accomplish, what their case is, where they’re going,” John says. “And their vision should drive everything, not their marketing materials or policies.”

Planned giving “is about helping donors and your organization make a real difference in people’s lives,” he says. “It’s not about the technical aspects of the planned-giving vehicles. And if you don’t focus on the former, you’ll become a prisoner of the latter.”


To begin offering a planned-giving program, Ashton says, a nonprofit needs to work with a lawyer to address questions about estate planning and charitable-giving tax law that arise in discussions with d

The simplest and least expensive way to start a planned-giving program, she says, is to create a bequest program.

The simplest planned gift is an outright gift, including a gift of securities, although some nonprofits may not initially have a mechanism for accepting gifts of stock, says Ashton.

Research shows 75 percent of people who put a charity in their will never tell the charity, she says, so it is critical to promote the bequest program and, through mailings and newsletters, to continually encourage donors to tell the organization if they have included it in their will.

To accept charitable remainder trusts, Ashton says, a charity needs someone knowledgeable enough to discuss the strategy with donors, as well as calculation software to show donors the general tax consequences of the plan.

And if a charity has a full-time planned-giving officer, she says, it can consider accepting gift annuities because they require hand-on, internal supervision.

Lynch says donors make planned gifts when they are working with their professional advisers, so smaller nonprofits that do not have an attorney must “rely on partners and allies” such as board members, constituents, a planned-giving committee or a community foundation.

“You’ve got to be prepared to respond if their advisers come to you,” she says.

And because “timing is everything in planned giving,” she says, nonprofits looking for planned gifts must gear themselves to “really meet people where they are in their lives, at the point they’re thinking about their legacy.”

A great way to plant the seeds for a planned gift, she says, is to suggest to a donor who contributes a set amount like $1,000 or $5,000 to a nonprofit each year that it would be easy to ensure that the nonprofit continue to receive that amount after the donor dies by creating an endowment or naming the organization in their will.

“Have the donor consider what happens when their gift goes away,” Lynch says. “The organization has to work twice as hard to replace that level of support and commitment with other donors.”

Ultimately, she says, planned giving requires patience.

“Continue to work at it, but just have patience, because it is a long-term goal, it is not a short-term goal.”

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