It’s time for small shops to start a planned giving program

The global pandemic, recession, and racial reckoning have challenged nonprofits—particularly smaller institutions—in myriad ways. Ironically, many are struggling for survival when the need for the services they offer is skyrocketing.

Given those challenges it may seem counterintuitive for small nonprofits to launch a new program. But developing a planned giving program can help nonprofits weather this storm and future ones. That’s not always an easy sell. If you’re running a small development shop, you may believe that your focus—first and foremost—should be on generating annual budget resources to carry out your nonprofit’s mission-based work. You might believe planned giving is complicated and expensive in that it requires in-house legal knowledge. Or you might think that a planned giving program will detract from your annual fundraising initiatives. But those potential pitfalls can all be easily overcome.

Planned gifts have unique advantages for both the organization and the donor. Planned gifts are often among the largest gifts an organization receives and the process of securing those gifts often cements a donor’s relationship with the organization for life. In fact, some planned giving donors may even become better annual donors; 7% of planned giving donors say their annual gifts to the organizations they support increased after making a planned gift, according to Giving USA’s 2019 survey. Planned gifts are also an effective way to build an endowment—without diminishing annual budgets—to provide for long-term sustainability. In other words, a planned giving program can lessen the effect of future economic downturns and otherwise challenging times. And they can offer a very high return for low investment.

At the same time, planned giving enables donors who want to help, but don’t have cash on hand to make a significant gift, the ability to help with little or no immediate outlay. They can secure future support for the organization’s mission, perpetuate their values, and leave a legacy. Planned gifts may also offer significant tax advantages for donors and their heirs.

While many organizations have experience passively receiving planned gifts, any organization—no matter how small or lean—can start a proactive planned giving program without sacrificing anything that needs to happen now by putting in place foundational building blocks that are scalable and sustainable over time. These building blocks can be organized into a 10-step year-one work plan.

Step 1: Draft gift acceptance policies

Your gift acceptance policies should describe the types of gifts your organization will accept and how you will handle them. Developing gift acceptance policies requires your organization to consider the liquidity of the many types of planned gifts you may receive, your capacity to administer them, the risk involved with accepting them, as well as the additional assistance that you may need to do so. Gift acceptance policies should also include the decision-making criteria, lines of authority, and when the organization may need to seek outside counsel.

Step 2: Conceptualize a donor stewardship program

Before your organization solicits a gift it should have a plan for how it will thank and recognize its donors that’s based on the donors’ preferences and needs. Effective stewardship meets a donor’s expectations, is aligned with gift type and size, involves many partners, and shows the impact of the donor’s future support now.

When planning stewardship activities, consider those that expand and strengthen relationships, create meaningful memories, and involve family members. For revocable planned gifts, effective stewardship is imperative to cement that commitment.

Step 3: Document known expectancies

Ensure you have adequate documentation for planned gifts already committed to the organization. That documentation allows you to properly thank and steward each donor and to ensure that the donor’s intent can, and will, be fulfilled long after you and the donor are gone.

While documentation is important, it can be a sensitive matter and should not be required for you to recognize and steward the donor. You also want to ensure that the donor understands that sharing information with you in no way prevents the donor from making changes to the commitment or doing away with it altogether. It simply helps the organization prepare to do exactly what the donor intends and fulfill the trust the donor has placed in you.

Step 4: Review donor database

Evaluate whether your existing donor database is capable of keeping donor and planned gift information in a logical, secure and retrievable way and whether it can accommodate the specifics of different planned gift instruments. Financial or accounting systems do not work particularly well for planned gifts and donor relationship management. Although old-fashioned, secure paper files can also work.

Regardless of how your information is recorded and maintained, it’s essential to have a process document that describes in detail what happens once the organization is notified of a planned gift commitment, along with every step until the gift is realized or terminated by the donor. Given the time likely between a gift commitment and its realization, a process document is critical to maintain accurate information over time.

Step 5: Recruit a planned giving committee

A planned giving committee can help your organization boost engagement, increase advocacy and expand your reach and skill set. The committee should help identify new prospective donors, provide access and promote planned gifts to its members’ circles of influence, and lend additional professional expertise–such as marketing, estate planning, or financial services–to your efforts.

Start with a job description for committee members that defines the committee’s purpose, composition, authority and responsibilities. Recruit to the job description and provide the committee members with the tools to fulfill their role.

Step 6: Draft case statement

Your case statement is the compelling story of your organization’s impact. It articulates what the future will look like when your mission is fulfilled in partnership with your donors. A compelling case highlights your organization’s strengths and shows how it is prepared to act to realize its purpose. In fact, the top two motivations donors cited for making a planned gift were the belief in the cause and that the nonprofit makes a significant impact, according to a recent Giving USA report.

Start by thinking about the giving opportunities that are particularly suitable for planned gifts. These are timeless, mission-central opportunities and general support, rather than current projects or immediate needs. Your case statement will be source material for fundraising messaging and collateral. Most importantly, it should help its audience imagine the better future, outline the opportunities to achieve it and invite donors to be essential partners.

Step 7: Develop messaging

Before you develop your planned giving messaging, you should first identify your likely planned giving donors. Likely planned giving donors are your loyal, longtime annual donors. More than 50% of donors surveyed had been donors to the organization for longer than 20 years, the Giving USA survey found. They’re generally older, perhaps single or widowed, with no children and more likely women. Women generally outlive men and, according to research by the Women’s Philanthropy Institute at the Indiana University Lilly Family School of Philanthropy, women are more likely to give than their male counterparts across generations. Women are also significantly more likely to make bequests than men, according to the Internal Revenue Service. Prospective planned giving donors may own appreciated property, have a need for a stream of income, or have life insurance or retirement plan assets in excess of what they need. They are connected deeply to your mission.

Your pool of prospects can be segmented into four groups with each group aligned with corresponding messaging purpose, content and tactics.

• For your broad base of potential donors, the purpose of your messaging is to raise awareness of planned giving to your organization. Your messaging can be simple such as, “Did you know you can make a planned gift to our organization?” and your tactics may include program ads or language on your website.
• For your longtime annual donors, participants or volunteers, the purpose of your messaging is to get them to indicate interest in learning more. Your messages may be about program sustainability or an introduction of planned giving advantages and mechanisms. Your tactics will be more focused, such as targeted mailings or seminars.
• For those who have self-identified as being interested in pursuing a planned gift, the purpose of your messaging is to inspire investment. Your messages are individualized and delivered through personal conversations and individual illustrations.
• For those who share that they have made a planned gift to your organization, the purpose of your messaging is stewardship. Your messages are those of gratitude, impact and value, and tactics may include recognition society courtesies, reports and individual interactions.

Step 8: Proactively communicate

With your prospective donor segments identified and aligned with messaging purpose, content and tactics get your message out there to be heard. Consider the available resources, your organization’s calendar,  significant milestones during your year, and channels already in use. When all is aligned, you’ll see increased awareness, leads, planned giving conversations and commitments. That said, remember these are lifetime, often ultimate, gifts and it’s perfectly normal and expected for the progression to take time.  Depending on the individual, it may anywhere from a few months to a few years.

Don’t forget about allied professionals. These professional advisors include estate-planning attorneys, insurance agents, financial advisors and others. Include them on your mailing list and get to know them personally. These professionals are incredibly important given that 60% of donors get assistance from their legal advisors and more than 25% seek assistance from their financial advisors when making legacy gifts, according to the recent Giving USA report.

Step 9: Train the team

Enable your internal and external partners to support planned giving to your organization.

That requires you to provide your planned giving committee members, board members, and organization leaders with the basic knowledge and tools to recognize potential donors, talk with them about giving to your organization and to refer them to someone who can facilitate a planned gift. Share and discuss the case statement, messaging examples and the stewardship plan with your board and planned giving committee so they can understand giving opportunities, effectively participate and consider making a planned gift themselves.

Step 10: Transition to year two

An important part of scaling and making your program sustainable is evaluating your efforts, appreciating how much you’ve accomplished and moving forward. Here are some questions to get started:

• Do your gift acceptance policies need updating?
• Does your stewardship create memories and help you retain your donors?
• Do you have enough information about your planned gifts to ensure donor intent?
• Are you keeping accurate records in a manner that ensures confidentiality and enables analysis?
• Are your planned giving committee members participating and is their participation effective?
• Is your messaging generating inquiries, leads and more conversations?
• Do your internal and external partners have information and tools to support your work?
• Are you seeing results in the form of more prospects, interest, and donors?

For year two, consider right-sizing and refining strategies and tactics. Think about expanding market reach, acceptable gift types and personal interactions with allied professionals and potential donors. Consider the continuing education of your planned giving committee. Make sure all of your activities support identifying, communicating with, engaging and securing gifts from prospective donors. If any don’t support these purposes, discontinue them.

It’s important to take baby steps. That means doing a few things superbly rather than many things just acceptably to ensure your program gains traction and is sustainable over time. With a strategic approach, putting in place foundational elements first and building upon them thoughtfully, any organization can start a solid and lasting planned giving program with an impressive return for modest investment. You can’t afford not to.

Would you like help thinking about how you can start a planned giving program in a small shop? You can reach Laura at lsimic@grenzglier.com.