Planned giving, bequests, deferred giving, legacy gifts. They are all terms to describe the mode of donating through estate-planning vehicles such as trusts and wills. And during the current economic slowdown when a non-profit organization's donors may be reluctant to submit regular donations, instead of closing shop a charitable organization may want to establish a planned giving program to allow donors to leave a legacy of supporting a cause.
Here are some things your non-profit organization should know about planned giving:
1. Planned gifts can offer tax benefits to donors. Estate planning tools such as bequests, IRA asset allocation, Charitable Gift Annuities (CGA), and Charitable Remainder Trusts offer significant tax incentives to donors. For example a bequest is 100% deductible from a donor's estate and can reduce potential estate taxes. A CGA offers the donor a tax deduction and can potentially sidestep capital gains taxes. Certain planned giving vehicles also enable the donor to ensure that his or her heirs will be financially provided for, alongside supporting a charitable cause.
2. Planned gifts offer donors a say in how the funds will be used. Whether a donor is publicly memorialized by a bequest or remains anonymous is something that can be pre-decided by the non-profit and the donor. The donor can also specify how he or she wishes the funds to be used--i.e. by supporting specific programs organized by the non-profit, creating a scholarship, or establishing an endowment. Also, certain planned giving tools allow broad flexibility to the donor to make changes to the planned giving arrangement.
3. Planned gifts allow donors to support a cause without affecting the donor's current financial situation. Since most planned giving can be structured to take effect after the life of the donor, the donor would not have to accommodate any changes in their daily lifestyle.
4. Planned gifts give non-profits additional fundraising options. The flexibility and relative simplicity of establishing a planned gift provides an innovative tool non-profits can pass on to their loyal members.
5. Planned gifts are often larger than annual or capital gifts. Because of the built-in tax benefits and sentimental nature of giving the "ultimate" gift, planned giving amounts tend to be larger than annual donations or donations made from capital earned on existing bank accounts.
Planned giving provides donors and non-profit organizations a unique connection that can honor the wishes and life of the donor and also provide vital sustenance to the organization and cause. If your non-profit organization is ready to set up a planned giving program, there are a multitude of online resources and how-to books that cover the topic.
However, you may prefer to engage an attorney who is knowledgeable about estate planning and also has a good working knowledge about tax implications for the non-profit as well as for the donor.