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Simple Plan to Start Planned Giving Program

Nonprofit organizations that have been around for a bit (number out of a hat: five years) should consider implementing a planned giving program.  Revenue from wills, trusts, insurance policies from your donors can be a good boost to income for the mission.  From the start, I recommend that your finance committee prepare a policy on how planned gifts will be used by your public benefit organization.  Bequests and trusts of $1,000 and more can go to a board designated fund for your nonprofit’s long-term purposes.  This money can build a reserve for you that can earn interest income as well as growth of principle value.  Over time, this fund can generate revenue that can be used to help underwrite operations.  Some nonprofits set a policy allocating 5% of principle value each year for these operations costs.  Discuss your plan with the experienced accounting firm that conducts your annual audit and prepares your audited financial statements under AICPA standards.  You want to be sure you’re in compliance with local, State, federal law.

If you’re going down this path, I also recommend that your development committee recruit an experienced Estate Planner: an attorney who writes wills and trusts for clients, has significant experience in this area, and who has a passion for your mission.  And will join you as a volunteer with the clear understanding that s/he will not earn income from your nonprofit.

At the same time, creating a Gift Acceptance Policy that indicates how donated income comes in to your organization and gets properly allocated will be very helpful to you down the road.  Over time, you might receive real estate or common stock and there should be predetermined procedures on how these gifts will be handled.  Also, some donors may want the executive director or development director to serve as a trustee or executor of their estate.  This is a conflict of interest and should be avoided.  A competent attorney in these matters will advise you properly and help keep you out of wickets that can become rather sticky.

Once the development committee and Board of Directors are in agreement on how to proceed, you want to let your donors know of this new program.  Writing appropriate announcements for your newsletter, noting your program in your annual fund appeal can help get the ball rolling. And working with local funeral homes to have memorial envelopes available so families looking to direct memorial gifts to a “charity” that they know was important to the deceased person can consider you.

These simple steps can lead to a well thought out plan that can bring great benefit to your nonprofit.  Starting in a thoughtful, conservative way can get you on the right track.

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