Planned Gifts: Combining Philanthropy with Smart Financial Strategies

Planned gifts are a powerful way for donors to combine philanthropic goals with smart financial strategies. These gifts allow individuals to make a lasting impact on the causes they care about, often while also benefiting from tax advantages and financial planning opportunities.

In recent years, estate planning has grown in popularity, with more donors recognizing the potential of planned gifts. In 2024 alone, bequests accounted for 8% of all charitable giving, totaling an impressive $42.68 billion. 

This marks a major shift in donor behavior and presents a unique opportunity for nonprofits to develop strong planned giving programs that can secure long-term funding.

So, why does Planned Giving matter so much?

Long Term Stability

Planned gifts offer one of the highest returns on investment among all types of fundraising. Unlike traditional fundraising campaigns that can be resource-intensive, planned gifts are often larger and cost relatively little to secure. In fact, the average bequest left to a charitable organization is $82,000 (plannedgiving.com).

Organizational Legacy

While major donors can make substantial contributions during their lifetimes, planned gifts like bequests allow donors of all means to make a significant impact, often achieving recognition similar to that of major gift donors.

But the benefits of planned giving go beyond just the numbers. Establishing a comprehensive planned giving program opens doors to lasting relationships with donors, ensuring they feel connected to your organization’s mission not just today, but for years to come.

Financial Benefits to the Donor (and Organization)

Beyond emotional rewards, planned gifts can provide significant financial advantages for donors. Depending on the structure of the gift, donors may receive tax benefits, income streams during their lifetimes, and the peace of mind that comes with having a well-structured financial plan.

There are many ways donors can engage in planned giving, allowing flexibility based on their financial situations and philanthropic goals. Here are two of the most common types:

• Bequests & Beneficiary Designations:
  • Donors can name a nonprofit as a beneficiary in their will, living trust, retirement account, or life insurance policy.
  • This option is one of the simplest forms of planned giving and doesn’t require donors to part with assets during their lifetimes.

• Income-Generating Giving Strategies:
  • Charitable Gift Annuities (CGAs): Donors make a gift to an organization and, in return, receive fixed income payments for life.
  • Charitable Remainder Trusts (CRTs): These trusts provide income to the donor or beneficiaries for a set period, after which the remainder goes to the charity.

Tailoring Your Planned Giving Approach

Only 26% of Americans aged 18-54 currently have estate planning documents in place. This presents a significant opportunity for nonprofits to educate donors about the benefits of planned giving and encourage them to take action.

To maximize engagement, nonprofits must recognize that every donor is unique, with different motivations for giving. Tailoring your planned giving strategies to different donor segments can help broaden participation and strengthen long-term support.

Younger Donors (Millennials & Gen Z)

Younger donors are deeply motivated by social causes and want to see the impact of their contributions. Offering planned giving options that align with their values can encourage early engagement.

• Gen Z’s Rising Influence: Younger donors (ages 18-24) are increasingly considering planned gifts such as bequests. In 2023, their average gift amount rose to $34,798 (FreeWill), indicating a promising trend for the future of planned giving.

• Millennials and Giving: Over half of Millennial donors (54%) included charitable giving in their 2023 annual budgets, a 10% increase from the previous year (GivingUSA). This generation is making philanthropy a regular part of their financial planning.

Mid-Level Donors

Mid-level donors are often overlooked, yet they represent a valuable segment for planned giving cultivation. These donors may not have the wealth of major donors but are deeply committed to your mission. They may be interested in bequests or naming your nonprofit as a life insurance beneficiary.

Major Donors

While major donors tend to focus on immediate giving, planned giving vehicles like CGAs and CRTs offer additional ways for them to support your organization while enjoying financial benefits.

Why Now Is the Time to Focus on Planned Giving

As more donors consider estate planning, there’s never been a better time to emphasize planned giving in your fundraising strategy. Whether it’s helping a donor name your organization as a beneficiary on a retirement account or guiding them through the process of setting up a charitable gift annuity, nonprofits have the opportunity to forge lasting relationships that benefit both the donor and the organization.

As donors update their financial plans and wills, their impact on charity can evolve too. By establishing a strong planned giving program, your organization can secure its future while helping donors leave meaningful legacies.