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Planned Giving 101

What Is Planned Giving?

Planned giving, also known as gift planning or legacy giving is a donor’s desire to contribute a major gift to an organization, beyond their lifetime. Unlike an annual gift, a planned gift is for the future. In short, a potential donor makes arrangements for a planned gift in the present, but they are only given at a later date – such as when the donor perishes. These major gifts from a donor can be made as part of their financial or estate plans. The most common gift donations include bequeathed gifts in a will/trust, life insurance, annuities, or donor advised funds. 

The good news, planned giving is not limited by a donors’ current wealth. Instead, planned giving provides donors’ the ability to contribute gifts they wouldn’t ordinarily be able to make on a yearly or recurring basis. As a result, planned giving donations end up being substantially larger and typically aren’t dependent on the donors’ regular income. That’s why you’ll see most planned gifts contributed by donors are in the form of life insurance, equity, real estate holdings, artwork and many other forms.

Planned Giving is critical to nonprofits longevity and livelihood as planned gifts tend to be the biggest donation the organization receives. Planned giving greatly aids nonprofits while nurturing the donors’ everlasting legacy.

How Can I Give A Planned Gift?

Planned giving ‘gifts’ can take many shapes and forms; however, some of the most common ways donors contribute are through wills, trusts, life insurance, donor advised funds, annuities and many other forms. That way, it’s not restricted to your income or current wealth.

Don’t forget, if you intend to create a planned gift, name the nonprofit as your beneficiary or one of the beneficiaries of your gift. As a best practice, inform the nonprofit of the terms and policy too! If you plan on gifting real estate, equity or other forms of property, be sure to have it documented in your will. 

We also have resources to help structure more complex gifts. If you’d like to speak to a philanthropic consultant please schedule a time on our calendar!

The Fastest Way To Do It

At Life Legacy, we offer life insurance, annuities, wills and more for your legacy. Our mission driven channel allows you to gift a policy, fund or will towards a cause that you’re passionate about. We’re here to help you protect your legacy while making the world a better place.

In under 15-minutes, you can solidify your legacy and make a large impact for generations to come!

Why Planned Giving Is Important

Planned giving, also known as legacy giving, is vital to nonprofits’ longevity and ability to carry out their mission in the future. Life Legacy’s legacy giving policies are among the largest gifts a nonprofit will receive, often 200 to 300 times the size of annual gifts. We’re committed to providing nonprofits with additional income to help sustain and support fundraising results, better-allowing organizations to weather the fluctuations in charitable giving. After all, we’re here to help make the world a better place!

Benefits of Planned Giving

Besides making a big difference in the world and leaving a lasting legacy, planned gifts also have tax benefits. These gifts may benefit you, your family, and the nonprofit(s) of your choice today or in the future. You can take advantage of a variety of gifts that can provide immediate tax breaks, or gifts that can benefit you and your family upon your passing.

Donor Benefits

Nonprofit Benefits

Sizable Tax Break:  From a financial perspective, the tax breaks are a huge advantage to making a planned giving arrangement. The specifics will vary on a case-by-case basis, but the tax breaks are significant for most.

Determine When Funds Are Used:  When donors donate money to an annual fund they have little say or control on how their money is spent within the organization. Planned giving puts the power entirely into the donors hands. The donor specifies how the gift will be used.

Capitalize on Donor Loyalty: Many donors want to give a major gift in their lifetime, but don’t have the financial means to do so. Planned giving allows donors to give large gifts after they’ve passed away, when life expenses won’t interfere.

Largest Annual Gifts: Planned giving contributions are among the largest gifts a nonprofit will receive (each year), often 200 to 300 times the size of annual gifts.

Benefits of Planned Giving

Donor Benefits

Sizable Tax Break:  From a financial perspective, the tax breaks are a huge advantage to making a planned giving arrangement. The specifics will vary on a case-by-case basis, but the tax breaks are significant for most.

Determine When Funds Are Used: When donors donate money to an annual fund they have little say or control on how their money is spent within the organization. Planned giving puts the power entirely into the donors hands. The donor specifies how the gift will be used.

Nonprofit Benefits

Capitalize on Donor Loyalty: Many donors want to give a major gift in their lifetime, but don’t have the financial means to do so. Planned giving allows donors to give large gifts after they’ve passed away, when life expenses won’t interfere.

Largest Annual Gifts: Planned giving contributions are among the largest gifts a nonprofit will receive (each year), often 200 to 300 times the size of annual gifts.

Planned Giving Tax Break

We leave the tax advice to the professionals. Many planned gifts have tax incentives. Every donor’s tax situation is different so it is important to consult with a tax advisor if the intent of your gift is tax related.

Types of Gifts

Bequests – Gifts from Your Will or Estate

These integral gifts are typically made through a will, a legal document that specifies how an individual’s property is to be distributed after death. Some people also use a revocable, or “living” trust instead of a will. A bequest made through either a will or a revocable trust works the same way and can provide tax benefits to the donor and their heirs as well as providing needed resources for a nonprofit. It is important to consult with your tax advisor for more information on how a bequest may benefit you and your family. For more info about Bequest Gifts click here!

Gifts of Life Insurance

Life Insurance is a powerful tool for planned giving. Individuals can make a gift of life insurance by leaving a nonprofit as a partial or full beneficiary. You can also have the nonprofit as an irrevocable owner and beneficiary of a life insurance policy that has cash value and is no longer needed. Individual donors, in many cases, may claim a charitable deduction when gifting a life insurance policy with cash value. You should contact your tax advisor to determine the deduction amount. Learn more about the power of life insurance for social good here!

Donor Advised Funds

Commonly referred to as “DAF’s”, this vehicle is becoming much more popular with today’s givers. You can use Donor Advised Funds to optimize your tax situation while still supporting their favorite charities. These funds are set up with financial institutions or community foundations who act as the charitable sponsor. Donors can direct gifts from these types of funds and have options for the disbursement of any remaining funds upon their passing. We have partnered with CharityVest to provide the easiest way to get a donor advised fund set up for givers of all sizes. Click here to watch a video on how it works!

Annuities

These types of gifts are also known as “life-income” gifts. They are investment vehicles that provide the donor with a fixed income for life, based on the initial value of the investment, and after the passing of the donor the remaining amount becomes the gift to a nonprofit of your choice. Click here to understand how Annuities work!

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