This article was originally published on The Fundraising Coach blog. You can read the full article here.
While every donation is impactful for your nonprofit, it takes more than small gifts to fund your work. Specifically, your organization needs sustainable, long-term funding sources to make a lasting difference for your cause. Legacy gifts provide plenty of opportunities to earn long-term funding, but many nonprofits hesitate to promote planned gifts and other legacy giving options because they require a more delicate approach.
However, donors can be more receptive than you might think! You can tap into this impactful fundraising avenue by explaining the mutual benefits of legacy giving and making it easy for donors to give. To help your organization earn more legacy gifts, we’ll cover the following:
- What is Legacy Giving?
- Benefits for Nonprofits
- Benefits for Donors
- How to Tap Into Legacy Giving
Understanding these benefits is the first step to cultivating substantial legacy gifts for your nonprofit. Let’s explore how you can pave the way for earning more sustainable funding with legacy giving.
What is Legacy Giving?
Legacy giving, also known as planned giving, is a type of donation that’s meant to support a nonprofit, university, or other organization beyond the donor’s lifetime.
This is completed either by setting aside a donation to be given after the donor passes away or by giving a gift during their lifetime that continues to grow following the donor’s passing. Legacy giving can take a variety of forms, including:
- Bequests: NXUnite defines bequests as “a legacy gift where the donor includes a nonprofit in their will, leaving a portion of their estate to it.” Depending on the donor’s wishes, your nonprofit may receive funds, stocks, or a percentage of the estate itself.
- Life insurance: Donors can list your organization as a beneficiary on their life insurance policy. They can also donate any unused retirement assets to your nonprofit.
- Endowments: If a donor wants to give both during and after their lifetime, they can gift a named endowment fund to your organization. Donors can add to the fund, watch it grow throughout their lifetimes, and rest assured that it will continue to grow and leave a charitable legacy after they pass away.
While not commonly considered legacy gifts, donor-advised funds (DAFs) also provide donors with the potential to create a lasting legacy of giving throughout their lifetimes. These funds are similar to endowments, except they’re managed by the donor and their DAF provider instead of gifted to a specific nonprofit. This way, DAF-holding donors can give to multiple nonprofits throughout their lives instead of just one.
Benefits for Nonprofits
First and foremost, legacy gifts provide more financial resources for your nonprofit to use to further your mission. Not only are legacy donations typically larger, but they also help you plan for the future of your nonprofit’s fundraising. Bequests act as future revenue you can project, and endowments provide sustainable, predictable funding that grows over time.
Plus, soliciting legacy gifts allows your organization to engage donors and deepen important relationships. The work you put into cultivating relationships with prospective legacy donors will benefit your organization now and in the future.
Benefits for Donors
The biggest benefit of giving a legacy gift is the ability for donors to make a substantial, lasting impact on your nonprofit’s cause. Infinite Giving’s nonprofit endowment guide explains that legacy gifts enable donors to extend their personal impact beyond their lifetimes and financially support your organization for generations. Every donor wants to make a personal difference, and legacy giving is one of the best ways to do so.
Additionally, legacy gifts offer donors:
- An easier way to give a major gift. Some supporters may want to make a major donation but don’t have the means to do so due to other financial responsibilities. Since most planned gifts don’t affect the donor’s current finances, this presents an easier way to give a large donation without hurting their budget.
- Tax benefits. Just like any other donation, legacy gifts offer tax benefits like charitable tax deductions. For instance, any time a donor adds funds to their endowment or donor-advised fund, they receive immediate tax deductions.
- Family legacies. Even though the donor may not see their gift’s impact themselves, their family members will. Planned gifts and named endowments help the donor’s children and grandchildren remember them fondly and celebrate their life.
With legacy giving options like endowments and bequests, donors also have the ability to restrict their donation—meaning they can decide how they want the gift to be used. While this isn’t a requirement (and it’s often better for your organization if the gift is unrestricted), having the freedom to choose how their funds are used can be an incentive for donors. Donors can also leave their gifts unrestricted but still note preferences for your nonprofit to honor.
How to Tap Into Legacy Giving
Now that you understand the benefits for both you and your donors, you’re ready to start promoting legacy giving and tapping into the opportunity.
To earn any legacy donations, you first need to develop a marketing strategy that makes donors aware of the option. Create a page on your website that explains what legacy giving is, the associated benefits, and how they can learn more about donating. Then, reach out to individual supporters who may be interested and communicate the advantages to them.
Along with promoting the option, you can better tap into legacy gifts by investing in software that makes donating easier. For example, you might invest in nonprofit endowment software so you can easily:
- Create a branded donation page or widget that lets donors give endowments and other non-cash gifts like DAF grants, stocks, and cryptocurrency.
- Simplify the giving process for donors by letting them give a legacy gift right from your donation page. They input their financial information, then the software notifies you of the donor’s intent and starts the endowment creation process for you.
- Track everything in a comprehensive dashboard where you can monitor the growth of endowment gifts and let donors see their impact.
Finally, consider doing prospect research to determine which of your existing supporters may be the most interested in giving a legacy gift. Look for markers in your database that indicate individual donors have demonstrated a passion for your cause and a commitment to give over time. This research will help you focus your outreach efforts and increase your chances of success.
Legacy giving may seem like a difficult avenue to pursue, but these impactful benefits make it worthwhile. When you explain the major difference a legacy gift can make for both your nonprofit and the donor, you may be surprised by how many supporters are interested.