Should You Start a Legacy Giving Program?

Are you ready to Launch a Legacy Giving Program?

Let’s start with what legacy giving is not – it is not scary, it is not fraught with technical tax issues and it is not only for former practicing lawyers and financial and tax advisors. It is a fundraising option that should be used by any nonprofit professional that has a responsibility to raise money for an organization.  Think of it as an additional revenue resource for your organization, and another way for your donor to show support.  I like options and I bet you do as well.

What is a Legacy Giving Program and why is it helpful?

Why is legacy giving important as a revenue source, like the annual fund, corporate and foundation giving, and events?  It is because:

·      It adds another element to individual giving;

·      It adds an additional revenue source for organizations to secure their fiscal stability;

·      It builds an endowment to provide an ongoing source of income each year in perpetuity;

·      It augments the other “asks” and deepens the connection with donors, and

·      It provides an opportunity for impactful gifts.

Convinced yet? 

There are so many reasons to add legacy giving as an option for your donors. 

Why limit it to current gifts of cash and securities? 

Many donors don’t have the capacity to give major gifts on an annual basis but they can make a major gift by using other types of assets, like art and life insurance policies, and more thoughtful planning through estate gifts and endowments. By promoting legacy gifts you are broadening your base of donors that can give to you in ways other than cash or securities.  You are providing your donors with a way to make an impactful gift to the best of their ability.  You are creating a system that allows them to attach their values to their gift.  Honestly, I think it is a disservice to your donors to not provide legacy giving options.

Which organizations should use legacy giving?

If legacy giving is so fantastic, then should every organization create a legacy giving program?  Not necessarily.  Legacy giving is a great option to offer to donors, but to create a successful program it does need some resources assigned to it.  In order to get the best bang for the buck, if your organization has the following items then it will be well situated to consider starting a planned giving program:

1. Engaged board – are your board member really engaged?  Do they provide resources, support, and advice?  Do they even come to meetings?  I bet we have all worked with both engaged and not-so-engaged boards.  Boy, is there a difference.  Approach your board chair and then the executive committee about a possible legacy giving program and gauge their interest.  Do they want to allocate your time and budget to it?  Do they understand the need to support the future of the organization through legacy giving?  Do they intend on creating a legacy gift themselves? (bonus points if they agree to talk to other board members about it.)

The most successful planned giving programs have an involved board.  Period.  There is no substitute for a board fully supporting the concept of legacy and willing to give you both the resources and the time to develop it.  A staff driven legacy program is better than none, but will never get to the levels of what a board-driven (or at least board-encouraged) program will do. 

2. Senior management – This one is usually overlooked but bears being addressed.  If you have a board that is interested in legacy (good for you!) but your senior management is blocking it in any way – not allocating a budget for marketing, not allowing some administrative staff time, discouraging you from making any progress, or perhaps avoiding any movement in the program – you are not going to get anywhere.  There needs to be cooperation within the various departments of an organization in order for planned giving to take off.  If the executive director doesn’t tell the marketing department it is a priority to fit in a dedicated legacy marketing initiative to an already tight communications calendar, well – you know it is just not going to happen.  Senior management tends to examine a program and development schedule and determine which efforts have the best return on investment.  Big mistake.  We know that legacy gifts have a long horizon and that an organization may not see the results of their efforts far into the future.  However, if we don’t put in the work now, the potential for gifts gets pushed further and further into the future.  Or it may never happen. 

3. Aging donors - Anyone can make a legacy gift.  Yet the greatest amount of donors considering this type of gift tend to be older donors, e.g., 65+ years and up.  That number tends to be an industry standard but can certainly vary depending on the sector and organization.  Also look at whether these are your donors or constituents.  For example, if you are an assisted living facility your constituents may be the elderly and your donors may be their children and grandchildren who are grateful for the excellent care you provide to their loved one.

4. The organization is established for at least 10 years – in order to have a large enough base of engaged donors to work with, you need to have been in business for a while.  This will help donors determine that your organization is stable and has a future to support via a legacy gift, has the necessary systems and staff to administer the gifts and can demonstrate a real need for its existence.  Think about it – would you create an endowment to support the future of an organization in perpetuity that has only been in business a few years, or has trouble reaching their annual goals?  I might think they have financial troubles and prefer to make an investment with another organization.

  Your donors want to support an organization that has surpassed its startup phase, has developed a vision for its sustainable growth for the future, has strong leadership –both staff and board members – and is ready to move to the next step.  While some people may have different opinions about the necessary length of time an organization has to be in business before seeking legacy gifts, I suggest 10 years as a minimum starting point, and 15-20 is a good time to start creating a sustainable program.  Past 30 years – what are you waiting for?  And 50+ years (yes, I have worked with a few to get them up to speed), you likely have missed opportunities of potential impactful gifts that would have made a real difference in your current program.  But no judgments here! The best time to create a legacy program was 20 years ago.  The second best time is today.  Hop to it!

5. The desire to support future programs – it sounds pretty obvious; of course, we would ask for legacy gifts for future programs.  However, if you don’t know what you need in the future it will be very difficult to ask for a legacy gift.  A legacy ask is different from an annual ask for current operations.  Legacy giving is an emotional gift.  In order to have the most effective conversations with your donors, you will need to create a legacy case statement that expresses your uniqueness and why a donor should invest in your organization.  Do this before you start to ask for these gifts.  It is not enough to ask for a legacy gift based on that your donors that give on an annual basis.  Remember, it’s the same donor but two different intents behind the gifts.  

Types of legacy Programs you can launch 

Congratulations- you decided your organization meets the criteria for starting a legacy giving program and you are ready to get started.  Before you rush into it is best to think about what your organization wants to accomplish and what you can reasonably launch successfully.  Believe it or not, there are many types of planned giving programs depending on factors such as budget, staff, size of an organization, vision and strategic planning, and on and on.  Below are descriptions of a few types of programs that may suit your needs.

·      Simple bequest program – this program involves promoting bequest gifts to your organization.  Bequests are the most common planned giving vehicle used by donors to create a legacy gift – in fact, they make up 80% of the gifts out there.  By focusing on only bequests, you can limit your marketing budget since you are only focusing on one type of gift and your staff training is much more focused (trust me, you would rather train your staff on bequests than lead trusts).  Bequests are also easier to speak with donors about, since most people understand the concept of a will, whether they have one or not, and easier to administer.   Make sure you track the intents and steward your donors.  If possible, find out more about the gift amount – it will help you plan for the organization’s future.

·      Endowment campaign – Ideally your organization already has an endowment set up and you are building the financial security of the future through it.  You can have a separate endowment campaign, perhaps around an organizational anniversary, the retirement of a longtime staff member, or other benchmark or event and raise restricted gifts toward that endowment fund.  To raise money even more quickly is to also accept legacy gifts into that campaign.  Of course, gifts that transfer when someone passes, such as a bequest, may not be received for many years.  However, people like to give around social norms and be a part of a community.  Campaigns successfully use those concepts to raise more gifts.  If your organization’s gift policy allocates legacy gifts to endowment already then you are one step ahead.

·      “Self-service” program – this is the reactive program.  This is when no one, in particular, is assigned to planned giving or has been trained or has the professional skills to speak with donors and advisors about these types of gift.  There is little, or no marketing involved and when gifts do come in, it is more by chance then deliberate.  When paperwork for a gift is received, everyone goes into reactive mode, tries to figure out what this gift is and where to put it (unfortunately, it usually is placed in the operating expenses account and is spent down).

·      Full Service – this is the mature program that you see at large organizations like medical centers and universities.  A program set up like this is not necessary for organizations just starting out.  These programs involve multiple dedicated staff (planned giving professionals, administrative staff and sometimes a dedicated marketing staff), as well as a large marketing budget for communications and legacy events, and they offer a full menu of planned giving vehicle options.  All of this is unnecessary when a program first starts, but it should be aspired to.  Every program starts with one ask that leads to one gift, and so on.  Start there and watch your program grow.

Who do you need to help with a legacy program?

A legacy program doesn’t happen on its own, and as I discussed above, the more people are behind it the more successful it will become. The following folks will contribute to your success:

·      Development department (to have the legacy conversations with donors)

·      Finance department (to process the gifts and keep financial records)

·      Lay leadership (to support the overall program and create legacy gifts)

·      Marketing and communications (to develop marketing materials to communicate the need for legacy giving)

·      IT department (to set up systems, pull donor lists and segment your database)

·      Legacy advisory consultant (to help plan the program, set up systems, help develop marketing and segmentation so that you invest your time and resources wisely)

However, the most important person is you.  I assume if you are reading this article you understand the need to have a legacy program and you are motivated to learn how to do it.  Once you are on board, it will be helpful to build your tribe.