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Introducing Donors to Legacy Giving

Wills and Trusts (Planned Gifts) can be significant sources of revenue for your nonprofit organizations. It all starts with the right approach to your donors. How do you broach the subject: “Please remember us in your will.”
One place to start is in your newsletter. I recommend that you have a short paragraph or two in an easy-to-find place that lets your supporters know they can approach a designated person on your team who, at their request, will advise them on how to go about identifying your nonprofit as a beneficiary in their will or trust.
Who is the right person associated with your nonprofit to provide this service?
If you have a qualified, full-service development director who has experience in this area you are all set.
But not all nonprofits are so blessed.
My suggestion is that your nominating committee recruit an estate planner to become a member of your board. And if not a board member, then perhaps a member of your development committee. This is a person who will talk with your donors on a pro bono basis, advising them on language they should ask their attorney to insert in their will or trust.
Further, you might have the name of three to five attorneys at local law firms who are qualified estate planners who will welcome referrals if a donor contacts your office seeing an attorney to help them write a will. I strongly advise that no one associated with your nonprofit prepare the document for your donor. This is (in my view) a conflict of interest.
I also recommend that you take a look at my post of January 23, 2012 “Simple Plan to Start a Planned Giving Program” for more tips on getting this revenue stream going for your organization.

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Legacy Giving: How to Inform Your Donors

At some point, each nonprofit organization should introduce a Planned Giving Program. The question is, when is the right time?

I think Planned Giving logically builds out from the annual fund. As your annual fund grows, maybe by the fifth year, and you have a newsletter in place, it’s the right time to ask donors to consider your nonprofit as a beneficiary in their will.

It helps to have an estate planner on your board. A person with expertise in writing wills or working with financial institutions in creating trust documents that can protect assets from probate. It’s very important to identify an experienced attorney in this area. Some States have Estate Planning Councils, and some States have persons certified to prepare such documents.

If your donor requests some help in this regard, you can provide some language to recommend for inclusion in the person’s will. I do not recommend that the nonprofit get involved in recommending specific attorneys to write wills. there should be an “arm’s length” relationship between the donor and the nonprofit so there is no conflict of interest that can call the ethics or even the legality of a document into question. Contact your State’s Bar Association and learn how they refer inquiries to competent estate planners. If it’s clear that only qualified, experienced planners make the list, you can feel reasonably confident that referring donors to the Bar Association can be beneficial.

When you look at newsletters of universities, hospitals, and voluntary health organizations you will see ads or articles on this subject with recommendations that the individual follow up with a person in the development office for advice on how to proceed. Your nonprofit may not have a development office. But you can have a volunteer attorney with estate planning experience who can assist you properly and help guide donors in a proper and ethical way.

There are other options to investigate, like charitable remainder trusts or charitable gift annuities that can be beneficial to the donor. Recruit competent volunteers to help you get organized. It might take a year of three to get this properly organized. But it’s worth the effort.

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Building a Planned Giving Program from Ground Up

At some point, each nonprofit organization should have a Planned Giving Program. The question is, when is the right time to get started in asking donors to consider naming your nonprofit in their will or trust?

I think Planned Giving logically follows the annual fund. As your annual fund grows, maybe by the fifth year, and you have a newsletter in place, it’s the right time to make your nonprofit a beneficiary. It helps, too, to have an estate planner on your board. A person with expertise in writing wills or working with financial institutions in creating trust documents that can protect assets from probate. It’s very important to identify an experienced attorney in this area. Some States have Estate Planning Councils, and some States have persons certified to prepare such documents.

If your donor requests some help in this regard, you can provide some language to recommend for inclusion in the person’s will. I do not recommend that the nonprofit get involved in recommending specific attorneys to write wills. there should be an “arm’s length” relationship between the donor and the nonprofit so there is no conflict of interest that can call the ethics or even the legality of a document into question.

But if you look at newsletters of universities, hospitals, and voluntary health organizations you will see ads or articles on this subject with recommendations that the individual follow up with a person in the development office for advice on how to proceed. Your nonprofit may not have a development office. But you can have a volunteer attorney with estate planning experience who can assist you properly and help guide donors in a proper and ethical way.

There are other kinds of options to investigate, like charitable remainder trusts that can be beneficial to the donor and to the nonprofit. There are specialists in this area who can advise you on how to implement a program. My suggestion is, as your fundraising/development effort matures you should install a Planned Giving program. Recruiting the proper advice will help to you avoid pitfalls that can sour a relationship with an important donor.

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Talking With Donors About Planned Gifts

Wills and Trusts (Planned Gifts) can be significant sources of revenue for your nonprofit organizations. It all starts with the right approach with your donors. How do you broach the subject: “Please remember us in your will.”
One place to start is in your newsletter. I recommend that you have a short paragraph or two in an easy-to-find place that lets your supporters know they can approach a designated person on your team who can advise them on how to go about identifying your nonprofit as a beneficiary in their will or trust.
Who is the right person associated with your nonprofit to provide this service?
If you have a qualified, full-service development director who has experience in this area you are all set.
But not all nonprofits are so blessed.
My suggestion is that your nominating committee recruit an estate planner to become a member of your board. And if not a board member, then perhaps a member of your development committee. This is a person who will talk with your donors on a pro bono basis, advising them on language they should ask their attorney to insert in their will or trust.
Further, you might have the name of three to five attorneys at local law firms who are qualified estate planners who will welcome referrals if a donor contacts your office seeing an attorney to help them write a will. I strongly advise that no one associated with your nonprofit prepare the document for your donor. This is (in my view) a conflict of interest.
I also recommend that you take a look at my post of January 23, 2012 “Simple Plan to Start a Planned Giving Program” for more tips on getting this revenue stream going for your organization.

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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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