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What is Planned Giving?

What Is Planned Giving?

Planned giving is also referred to as gift planning or legacy giving. It enables philanthropic individuals to make larger gifts to charitable organizations than they could make from ordinary income.

Some planned gifts provide life-long income to donor. Other gift plans use estate and tax planning to provide for charity and heirs in ways that maximize the gift and/or minimize its impact on the donor’s estate.

Thus, by definition, a planned gift is any major gift, made in lifetime or at death as part of a donor’s overall financial and/or estate planning. These include gifts of equity, life insurance, real estate, personal property, or cash.

By contrast, gifts to the annual fund or for membership dues are made from a donor’s discretionary income, and while they may be budgeted for, they are not planned.

Whether a donor uses cash, appreciated securities/stock, real estate, artwork, partnership interests, personal property, life insurance, a retirement plan, etc., the benefits of funding a planned gift can make this type of charitable giving very attractive to both donor and charity. See our Q&A pages for technical information on these gift plans.

What are the 3 types of planned gifts?

  • First, outright gifts that use appreciated assets as a substitute for cash;
  • Second, gifts that return income or other financial benefits to the donor in return for the contribution;
  • Third, gifts payable upon the donor’s death.

It is prudent to explain these giving vehicles on your “giving” or “donation” pages. It can easily be done with simple planned giving pages.

What gift plans “pay” income for life to donors?

Charitable gift annuities make fixed payments, starting either when the gift is made (an immediate-payment gift annuity) or at a later date (a deferred or flexible gift annuity). Some organizations maintain pooled income funds, which commingle donations, pay beneficiaries variable depending on the earnings of the fund, and generally operate like a charitable mutual fund. Charitable remainder unitrusts and annuity trusts are individually managed trusts that pay the beneficiaries either a fixed percentage of trust income or a fixed dollar amount.

What are the tax benefits of planned gifts?

  • Donors can contribute appreciated property, like securities or real estate, receive a charitable deduction for the full market value of the asset, and pay no capital gains tax on the transfer.
  • Donors who establish a life-income gift receive a tax deduction for the full, fair market value of the assets contributed, minus the present value of the income interest retained; if they fund their gift with appreciated property they pay no upfront capital gains tax on the transfer.
  • Gifts payable to charity upon the donor’s death, like a bequest or a beneficiary designation in a life insurance policy or retirement account, do not generate a lifetime income tax deduction for the donor, but they are exempt from estate tax.

Free Audio Files and Resources

Download these free audio files for your online giving or donation pages to explain what planned giving is to your constituency. They are in simple, plain English.

For specific, commonly asked questions on planned gifts, or gift planning in general, refer to our Answers pages. To see more specific videos on gift planning vehicles such as Bequests, Annuities, Trusts, Gifts of Real Estate, etc., visit PlannedGiving.Net (an online planned giving resource and educational website full of more materials you can handle).

Finally, read some of the challenges your peers are facing to market planned gifts. These are results from a survey after calling 2000 fundraisers across the nation. You should also be familiar with these 10 planned giving marketing strategies.

Need more detailed information?

The Ultimate Quick Reference Planned Giving Pocket Guide covers all of the planned gifts in an easy-to-understand language. Board Member and Beginners and Staff versions available, too.

If you strictly need planned giving materials and content, visit PlannedGiving.Net.

Planned Giving Pocket Guide Includes Gift Comparison Chart (see layout)

Slip this handy booklet into your pocket before your next round of prospect calls. It's not another ways-of-giving brochure — it's a "why's of giving" that helps you better understand the upside and downside of different giving options for both you and your prospects.