Lately I’ve been hearing a lot of conversation among small to medium sized nonprofits about legacy giving (sometimes called “planned giving” or “deferred giving”). Besides the fact that it can be tough to raise current dollars these days, why are we talking more about legacy giving now?

It may be that we sense a window of opportunity demographically and economically. As Greg Chaillè of The Oregon Community Foundation predicted several years ago, “In the future, it will be harder for people to accumulate wealth.” It may be a long time before we see the broad economic conditions again that we saw in the post-World War II period, when so many people were able to buy homes, put their children through college and still have enough for health care and retirement.

Today, Americans with accumulated wealth are still energetically involved in the community and many are highly engaged with our nonprofit organizations. However, collectively as the nonprofit community, we have not been effective in inviting them to leave bequests or establish other legacy gifts. In fact, according to the Partnership for Philanthropic Planning*, although 42 percent of Americans have wills, only about nine percent have included charities as recipients in their wills. But once charities are included in the will, they stay there: in the PPP survey, 97 percent said they had not revoked a charitable provision.

In addition to the 9 percent who’ve planned a charitable bequest, 14 percent of those surveyed said they had considered including a charitable bequest in their wills — even though no nonprofit has asked them to do so. This leaves a largely untapped market, especially for organizations that can focus on legacy giving and developing endowments – both services that help donors feel more confident that gifts through their estates will make a long-term difference. IRS data show that charitable bequests of recent years average more than $32,000 in value, which qualifies as a major gift in the view of most nonprofits. The amount of a bequest may be 50 or more times the value of the donor’s annual gift. What a return on investment! In fact, planned giving as a development function is one of the most cost-effective programs organizations can offer.

So yes, there is opportunity. However, is your group a good candidate to start a planned giving program?

Here are some of the characteristics that donors look for in an organization when they are thinking about leaving a charitable bequest or other planned gift:

Age of the organization
Will the organization be in existence for the long term? Has it proven it has staying power? Has it grown in its ability to perform its mission over the years?

Fiscal stability and good management
Will the donor’s gift be well applied to the needs of the organization, over time? One donor recently told me, “I want to make sure my entire bequest is not needed in the first year.” In other words – no hole plugging in this year’s budget.

The capacity to administer and invest endowment funds, or partners that can do so
Administering endowment or planned gifts – two different but equally complex activities – requires significant legal and financial expertise, up-to-date at all times. Chances are very good this is not your group’s strong suit, even if you have lawyers or financial professionals on your Board or Staff. You need to form outside partnerships – with a community foundation, a planned giving services firm and/or a trust company, and you must keep up with legal requirements for these funds. Even if you restrict your program to inviting bequests, you will still need to understand endowment and long-term financial management.

The donor’s ability to have an ongoing relationship with your organization that builds their confidence and sense of satisfaction over time I have developed a planned giving program for small to medium sized groups that I call “The Donor Engagement Model for Planned Giving” (presented at the Northwest Planned Giving Roundtable Annual Conference). If you think your nonprofit group should be exploring legacy giving or doing a better job at the program you have, please get in touch with me.

If you’re ready, the timing couldn’t be better for legacy giving.

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* “Planned Giving in the United States 2000: A Survey of Donors”, conducted by the National Committee on Planned Giving, now called the Partnership for Philanthropic Planning.