Planned Giving: 4 Key Benefits Nonprofits Should Understand

The Keela Team • Jan 24, 2023
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As nonprofits grow, planned giving often becomes a key piece of their big-picture fundraising strategies. It’s an effective way to secure your organization’s future and build stable revenue streams that allow you to continue scaling up your work over time. It’s also a sign of an engaged donor base with deep emotional attachments to your mission and work.

But for small and growing nonprofits, getting into planned giving (or any new form of fundraising) for the first time can be a challenge. 

How do you get started? What resources will you need? How do you begin promoting planned giving to donors? All very important questions!

However, before your organization can move forward with creating a planned giving program, you’ll need to actually make the case to leadership that investing in one should be a priority. To do this, you’ll need a solid understanding of this form of giving and the various benefits that it brings. Let’s take a look.

What is Planned Giving?

Planned giving (sometimes referred to as legacy giving) is any process by which donors give charitable contributions to nonprofits through their financial or estate plan. They’re most commonly given to charitable organizations after a donor’s death, but planned gifts are a diverse category and work in a variety of ways.

The most common form of planned gifts are charitable bequests, which are charitable donations made to a nonprofit through the donor’s trust, will, or estate plan to be given upon their passing. Donors can similarly name a nonprofit as a beneficiary of a life insurance policy or unused retirement assets. 

Other types of planned gifts include charitable gift annuities, remainder annuity trusts, pooled income funds, and more. For more information, FreeWill’s full guide to the types of planned gifts covers all the basics.

Tony Martignetti hosting a planned giving podcast.

Learn how to implement a successful Planned Giving program from start to finish

Watch this on-demand webinar hosted by Tony Martignetti to learn how your nonprofit can start and grow a successful Planned Giving program. 

Why is now an ideal time to get started with planned giving?

Planned and legacy giving are smart priorities for nonprofits for many reasons. But right now is also a particularly good time to strengthen your nonprofit’s planned giving efforts because of current demographic trends. The aging Baby Boomer generation is set to pass on an estimated $68 trillion over the next few decades, a phenomenon that’s already being called the great wealth transfer

The COVID-19 pandemic has also spurred an increased interest in having an estate plan. Together, these trends mean that nonprofits have more opportunities than ever to receive bequests from donors who want to create lasting legacies for their favorite causes.

The Benefits of Planned Giving for Nonprofits

So what are the main financial benefits that nonprofits can enjoy from having robust planned giving programs? Here are four key takeaways to consider:

1. It serves as a stable revenue source

Unless they arrive completely by surprise (which isn’t uncommon), a planned gift can be counted on at a future date. This allows nonprofits to budget ahead and build a buffer against potential economic turbulence year-to-year. 

In fact, some organizations generate more than a quarter of their annual revenue through planned gifts and a planned gift can often increase by nearly 5% each year. This represents a valuable and less volatile giving channel that can help nonprofits grow sustainably despite external crises or decreases in other channels. 

One important note: To tap into this benefit, you must actively develop and steward your relationships with planned donors so that they choose to create a planned gift in the first place and choose your organization as the beneficiary.

3 people discussing a donor stewardship plan for their planned giving program.

Build Your Nonprofit’s Donor Stewardship Plan

Stewardship activities are touchpoints for nurturing your donor relationships and helping to increase your donor retention rate. With this FREE template, you can map out your donor stewardship plan. 

2. It’s a highly efficient form of fundraising

Planned gifts offer among the highest ROI of all forms of fundraising, meaning it often costs fairly little to secure a large planned gift. Studies have found an average return of $56.83 per dollar spent on planned giving. Compare this to regular individual gifts ($8.41) and even other efficient forms of high-value fundraising like major gifts ($33.33). This is because planned gifts typically have great value and can create more value for your organization over time.

But not only does investing in planned giving give you greater bang for your buck but it’s also been shown to increase annual giving from potential donors who create a planned gift to your nonprofit—by more than $3,000

Additionally, planned giving donors often show a high level of engagement and donor loyalty, making them more likely to give in ways other than a planned gift, serve as ambassadors for the organization in their personal and professional networks or become reliable and hard-working volunteers.

However, the key to success is again stewardship. In order to first secure these efficient gifts and then encourage larger annual gifts, you need to actively work to deepen your relationships with these potential donors.

3. It unlocks gifts from under-the-radar sources

The process for planned giving is often thought of similarly to that of securing a major gift (ie. focusing on the top of a donor pyramid). These high-value donors are individually identified, cultivated, solicited, and stewarded as part of an ongoing, labor-intensive cycle.

However, planned giving actually flips this model on its head. Since charitable bequests don’t affect a donor’s day-to-day income, they’re accessible to anyone who wants to create a legacy and positively impact your mission. Many nonprofits secure the bulk of their planned gifts from those who aren’t among their top 10% of donors, the group that you’d typically focus on. 

By building a planned giving program, promoting planned giving as an option for donors, and setting up easy ways for them to create bequests for your charitable organization, you can secure gifts from across your entire donor base, not just the top. You may even be surprised by large bequests from lifelong savers who previously haven’t been on your radar as major gift prospects.

4. It supports a diverse holistic fundraising program

Planned giving can help diversify your organization’s revenue streams by providing a steady source of income that is not dependent on annual appeals or grant funding. This is an important consideration to make when looking at all areas of funding that your nonprofit receives. 

Diversifying fundraising revenue streams is important for a number of reasons. Having multiple revenue sources helps to mitigate risk by spreading out your fundraising revenue across multiple channels, so that if one source falls short, the others can make up the difference, meaning that your revenue goals will still be attainable. 

Additionally, diversifying revenue streams can also help to demonstrate to funders, donors, and the public that the organization is well-managed, responsible, and innovative. Adding a planned giving revenue stream to your fundraising portfolio means that you could be capturing a whole new audience of donors that were less interested in your other fundraising opportunities

How to Get Started

Let’s say your charitable organization has never intentionally pursued planned gifts before and is interested in implementing them as a new revenue stream. How do you get started?  How can you ensure that your efforts are not going to waste?

Here are the essential first steps to consider:

  1. Get your team organized. First, use the benefits explained above to secure buy-in from your team on the value of planned giving. Getting internal buy-in is critical to the success of your program and will ensure that your team is fully committed to the launch. Once you’ve decided to move forward, outline a few logistics—Which department or team will your planned giving program fall under? Who will run it? What resources will you need?
  1. Gather the right tools. To run any fundraising program effectively, you need the right tools. Ensure your CRM or database is ready to support your planned giving initiative by tracking and storing relevant data, developing marketing and stewardship collateral about planned giving, and finding donor-facing tools that make it easy for donors to create bequests.

Identify Planned Giving Prospects with Keela

Get a glimpse of how Keela’s software helps nonprofits identify planned giving prospects, track fundraising progress, and measure success over time.

  1. Outline a marketing strategy. You’ll need to promote your new planned giving options, so begin putting together a coherent marketing plan. Feature planned to give on your website with a dedicated page or section on your Ways to Give page. Insert mentions of planned giving into other marketing campaigns, and outline a calendar of email and/or direct mail messages to promote it on its own.

Back it up with ongoing stewardship. As mentioned above, actively stewarding your planned gift donors is essential for fully reaping the benefits of this kind of fundraising. When an individual or specific team owns the planned giving program, it’s easier to cycle planned donors into a normal stewardship cadence. Stay in touch with them, keep your mission on their minds, ask them to get more involved in other ways, and more.

Planned giving is an invaluable opportunity for nonprofits of all sizes to create stable revenue streams, fundraise more efficiently, and ultimately secure more gifts from wider segments of donors. If you’re not actively promoting it, chances are you’re losing out on potential gifts from donors who’d be interested in creating them. 

To kickstart your efforts, FreeWill’s list of planned giving benefits walks through these points and more in greater detail. Use them to make a compelling case to your nonprofit that planned giving should be a priority in 2023 and beyond. Best of luck!