One form of charitable giving that many people have likely not thought about is the legacy gift—that is, leaving a donation in one’s will.
In the U.S., legacy giving provides about $19 billion per year in charitable donations. In the UK, £2.044 billion is raised through planned gifts, while in Canada, the total is about $1 billion per year.
Often referred to as a bequest, there are many benefits to leaving a legacy gift. First and foremost is the good feeling donors get from knowing they will be remembered for making a difference to a nonprofit that means a lot to them. Planned giving can also allow a donor to make a gift that will be larger than they might have thought possible.
On a more practical level, there are numerous tax benefits. In the U.S. and many other nations, naming a nonprofit as a beneficiary of a will allows donors to pass other assets on to their family at reduced tax costs. The family will also save a lot of money on gift and estate taxes, and the donor may be able to reduce or avoid capital gains taxes.
There are many forms of planned giving. A good financial planner, working with a nonprofit’s development officer, can do a lot to help potential donors understand the benefits and implications of everything from legacy gifts to charitable remainder trusts.
If a donor is planning to leave a bequest for their favorite charity, the will needs to be very carefully written in order to avoid challenges from heirs. The organization needs to be very clearly identified, with its proper legal name and tax ID number. An attorney can be a big help in ensuring that a will is written in a way that avoids potential challenges and ensures that the nonprofit of the donor’s choice will receive their legacy gift.
Some may believe it’s morbid to ask donors to leave money to a charity in their will, but most people of means have already considered bequests and other ways to donate to their favorite charities while gaining the tax benefits of doing so.
For making people outside a nonprofit’s immediate donor circle aware of the importance of legacy gifts and other forms of planned giving, nonprofits should include information about planned giving on their websites, with simple explanations of why it’s important to do so. Many people may not know it’s possible to leave a charitable gift in their will, but having that information publicly available can do a lot to raise awareness.
How does your nonprofit go about publicizing the possibility of making legacy gifts? Are you a donor who has made a legacy gift? Please share your thoughts about planned giving in the comments.