Planned giving is the most misunderstood and most underutilized fundraising channel in nonprofit development. Most organizations view planned giving as sophisticated strategy for large institutions with estate planning attorneys and dedicated gift officers. Yet planned giving serves organizations of every size. A small nonprofit with limited infrastructure can implement planned giving programs that generate meaningful revenue with minimal ongoing cost. The barrier is not complexity or capacity; it's mindset. Organizations must shift from asking donors "Will you give during your lifetime?" to "Will you include us in your legacy?"
The opportunity is enormous. Approximately $46 trillion in wealth will transfer from one generation to the next over the next two decades. Nonprofit organizations positioned to capture even a fraction of this intergenerational wealth transfer can secure stable, significant revenue streams. Organizations with planned giving programs typically see planned gifts represent 10-25% of annual revenue within 10 years. Organizations without planned giving programs capture none of this wealth.
Understanding Planned Giving Fundamentals
Planned giving is giving that takes effect during a donor's lifetime or after death through legal instruments like wills, trusts, life insurance, and retirement accounts. The common thread: donors make their commitment to your organization but actual transfer of assets happens later. This creates psychological and financial advantages. A donor might commit $50,000 through a bequest when they only have $5,000 to give outright this year. The commitment is made; the asset transfer happens at death.
Planned giving comes in two basic flavors: simple planned gifts and complex planned gifts. Simple planned gifts (bequests through wills, designating your organization as life insurance beneficiary, naming your organization in a retirement account) require no attorney involvement and cost donors nothing to establish. A donor simply includes language in their existing will. These simple gifts represent 80-90% of planned giving at most nonprofits and should be your entry point.
Complex planned gifts (charitable trusts, charitable remainder trusts, donor-advised funds) involve more sophisticated financial planning and attorney involvement. They offer tax advantages or income streams to donors. These gifts are valuable but require more cultivation, explanation, and often professional intermediaries (financial advisors, estate attorneys). They're worth understanding but not your primary focus as you launch planned giving.
The fundamental planned giving message is simple: "Remember us in your will." This single sentence opens conversations that lead to substantial gifts. Most donors who make planned gifts have already made lifetime gifts to your organization. You're not asking strangers to change their wills; you're inviting long-term supporters to make final gift after death.
Building Your Bequest Program
Bequest programs are the entry point to planned giving. A bequest is a gift designated in someone's will. It requires no action from your organization beyond asking. A donor meets with their attorney, updates their will, and names your organization as beneficiary for a specific amount or percentage of estate. Done. No ongoing involvement from you until death when the estate executes the gift.
Identify bequest prospects from your existing donor base. Who has been giving for 5+ years? Who are over age 50 (peak age for planning estates)? Who have attended your events and expressed passion? Who've volunteered time and treasure? These donors already love your work; they're candidates for bequest gifts. Start with your 50 most loyal donors and ask a simple question: "Have you considered including [organization] in your will?"
Make the ask simple and remove friction. Don't require meetings or complicated conversations. Send a letter: "If you've ever considered a planned gift to [organization], now is a great time to discuss options. Bequests allow you to make a significant gift without affecting your lifetime finances. If you're interested, we'd love to discuss this further." Follow up with those who express interest. Many donors who've wanted to make larger gifts finally have permission through bequest giving.
Create bequest society with clear recognitions. Name it meaningfully: Legacy Builders, Heritage Circle, Founders Society. Invite donors who commit to planned gifts to join the society. Offer recognition: listing in annual report, newsletter feature, or special event invitation. Recognition costs nothing but dramatically increases bequest program participation. Donors enjoy being recognized as long-term visionaries planning for organizational future.
Provide simple language donors can use in wills. "I bequeath $25,000 to [nonprofit legal name], located at [address], with federal tax ID [number]." Donors can bring this language to their attorney, who includes it in the will. This removes complexity. Donors don't need to figure out legal language; you provide it.
Update bequest society members annually. Thank them, share impact, celebrate other members' legacies. Provide estate planning tips (no financial advice, general information). When bequest members die and their gifts arrive, publicly celebrate their legacy generously. This strengthens the bequest community and encourages other donors to join.
Leveraging Beneficiary Designations and Retirement Account Giving
The easiest planned gift doesn't require a will change at all. Life insurance policies, retirement accounts (401k, IRA), and some investment accounts allow beneficiary designations. A donor can name your organization as beneficiary or partial beneficiary with no legal action beyond a form. This is low-friction giving that generates substantial gifts when account values are significant.
Life insurance beneficiary designation is the simplest. A donor with a $100,000 life insurance policy can name your organization as beneficiary for $25,000 or the full amount. When they die, the insurance company pays your organization directly. No estate involvement, no tax complications, no attorney needed. Just a form change. Many donors have old life insurance policies they no longer need for their original purpose; redirecting the death benefit to your organization is a meaningful gift at zero cost to the donor.
Retirement account beneficiary designation is even more powerful due to tax implications. When a donor leaves an IRA or 401k to heirs, heirs pay income taxes on the full amount. When a donor names a tax-exempt organization as beneficiary, no income tax is owed. This makes retirement accounts uniquely valuable gifts to nonprofits. A donor with $200,000 in an IRA might name your organization as beneficiary, saving their heirs $50,000+ in taxes while making a major gift to your organization.
Educate donors about beneficiary designations through educational material, not solicitation. Create a simple one-page guide: "Did You Know? You Can Leave a Tax-Free Gift to [Organization] Through Your Life Insurance." Distribute at events, mail to major donors, feature in newsletter. Education precedes solicitation. Once donors understand the mechanism and advantages, many make the designation themselves.
Train staff and board to mention these options in stewardship conversations. When speaking with long-term donors, naturally mention: "Many of our supporters have included [organization] as beneficiary on a life insurance policy. It's simple, costs nothing, and creates a meaningful legacy." Don't hard-sell; just inform. Interested donors will ask questions.
Charitable Trusts and Donor Income Strategies
Charitable remainder trusts (CRTs) are more complex planned giving vehicles that benefit both donor and organization. A donor funds a trust with appreciated assets. The trust pays the donor income during their lifetime. When the donor dies, remaining assets go to your organization. This strategy is particularly valuable for donors with low-income investments they'd like to liquidate without capital gains tax.
Example: A donor owns stock worth $100,000 but purchased it for $20,000. If they sell, they owe capital gains tax on the $80,000 gain. If they transfer the stock to a CRT instead, they get a tax deduction for the remainder value, they receive income from the trust, capital gains are avoided, and at death, remaining assets go to your organization. This requires an attorney and a professional trustee to manage, but for donors with significant appreciated assets, it's valuable gift strategy.
Charitable lead trusts work opposite. A trust is funded; your organization receives income stream for a period of years; then remaining assets go back to donor's heirs. This is valuable for high-net-worth donors wanting to benefit both charity and heirs while minimizing estate taxes.
These trusts are not your primary focus as you launch planned giving. Most organizations don't promote trusts directly. Instead, they mention them when sophisticated donors ask about options. Work with a planned giving consultant or attorney to understand these vehicles well enough to describe them and know when to refer a prospect to professional advisor.
Building Planned Giving Infrastructure and Messaging
Planned giving requires minimal infrastructure to launch. You need clarity on messaging, legal accuracy, and staff capability. You don't need dedicated staff, attorney on retainer, or complex systems.
Create planned giving materials. One-page guide explaining bequests. One-page guide on beneficiary designations. Sample language donors can use in wills. FAQs addressing common questions. These materials position planned giving as accessible and normal, not exotic or complex. Most organizations can create these in-house using simple templates.
Establish legal accuracy. Work with your attorney to ensure your organization's name, legal status, and tax ID are correctly stated. Donors who name your organization in wills must use exact legal name. Any variation can create confusion or delay. Have your attorney review all planned giving materials before distribution.
Create a planned giving page on your website. Include benefits of planned giving, explanation of vehicles, sample will language, and a contact form for donor inquiry. Many donors research planned giving online; make sure information is readily available. The website page is your 24/7 salesperson for planned gifts.
Identify planned giving champion internally. This person doesn't need to be an expert; they need to champion the program and ensure it's not forgotten. This person tracks all planned gift commitments, sends thank-yous and recognition, provides education, and manages relationships with committed donors. Even a part-time role is sufficient for organizations under $5 million budget.
Asking for Planned Gifts and Donor Engagement
Asking for planned gifts feels awkward to many fundraisers because it involves discussing death. Yet donors expect it. Older donors know they will die; it's not morbid to discuss. They appreciate organizations taking seriously their desire to leave legacy.
Ask at right time in donor relationship. Don't ask first-time donors or casual supporters. Ask donors who've given multiple years, attended events, volunteered, or expressed deep passion. Timing matters. Age 50+ is typical, but some younger donors who've accumulated wealth are ready earlier. Use judgment and data to identify right prospects.
Ask with confidence and clarity. "One question for you: have you ever considered including [organization] in your will or estate plan?" If they say no, that's fine; you've planted seed and they can ask later. If they say yes, listen. Many will want to discuss more; some are ready to move forward immediately. Follow their pace.
Provide education and resources, not pressure. Once a donor expresses interest, send materials, offer to answer questions, and provide resources. Consider arranging conversation with planned giving consultant at no cost to donor. Remove barriers to action. Interested donors often need permission and support, not persuasion.
Create planned giving societies that provide ongoing engagement. Annual letters, thank-yous, updates on impact, celebration of legacy. Some organizations host annual events for planned giving donors. This recognition and ongoing relationship deepens commitment and encourages referrals from planned giving donors to their peers.
Frequently Asked Questions
Do we need an attorney on staff to run planned giving? No. Most organizations use outside attorneys for periodic review of materials and complex donor situations. You can start planned giving with volunteer board member or development staff person as champion. As program grows, you might contract with planned giving consultant or attorney, but not required to start.
How long does it take to see results from planned giving? Planned gifts may take years to arrive (donors don't die immediately after committing). But commitments should arrive within first year of program launch. You'll likely receive $10,000-$50,000 in first-year planned gift commitments if you ask your 50 most loyal donors. Assets arrive later, but commitments are meaningful indicators of program success.
How many donors need to make planned gifts for the program to be worthwhile? Very few. Ten donors making average $30,000 bequest commitments represents $300,000 in future revenue. Even if only five of ten bequests materialize, that's $150,000. Compare that to annual fundraising cost and the ROI is extraordinary. Planned giving needs just a handful of donors to be worthwhile.
What if a donor dies before making their planned gift? If they've already named you in their will or as beneficiary, the estate will honor that commitment. If they've only expressed interest but haven't yet formalized it, the organization typically doesn't receive the gift. This is why following up on expressed interest is important. A donor who says "yes, I'll put you in my will" should actually do so within 12 months. If they don't, remind them gently.