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Planned-Giving Programs & the Small Nonprofit: Getting Started - Part Four

NOTE: This is Part Four of a four-part cover story from the September/October 2002 issue of Advancing Philanthropy.

Parts 1 | 2 | 3 | 4 | Full Version

Defining Planned-Gift Terms

When is a planned gift deferred? Can a major gift also be a planned gift? Planned giving has its own lexicon. It's not rocket science, says Richard D. Barrett, coauthor of Planned Giving Essentials, but fundraisers need to learn the concepts behind the terminology. Here are a few basics:

Planned giving: A systematic effort to identify and cultivate a person, for the purpose of generating a major gift, that is structured and that integrates sound personal, financial, and estate-planning concepts with the prospect's plan for lifetime or testamentary giving. A planned gift has tax implications and is often transmitted through a legal instrument, such as a will or trust.

Deferred giving: The process or act of arranging a deferred gift. A deferred gift is a gift that is committed to a charitable organization but is not available for use until some future time, usually upon the death of the donor.

Charitable remainder trust: A trust that provides income to donors and beneficiaries until their death or the termination of the trust term, at which time the remainder of the trust--the corpus--is transferred to one or more nonprofits.

Gift annuity agreement: An agreement in which a donor makes a gift to a charity that stipulates the charity will make annual payments for life to a specified person(s).

Pooled income fund: A trust funded by a number of donors, each retaining an income interest in the trust for life. Each donor is paid a pro rata share of the trust earnings. Each donor's portion of the principal becomes the property of the charity upon the death of the donor.

Sources: AFP Fundraising Dictionary; Planned Giving: Management, Marketing, and Law by Jordan and Quynn; and Planned Giving Essentials: A Step-by-Step Guide to Success by Jordan and Quynn.

Case in Point - Annual Gifts Work, Too

Cindy Amos, development officer for the nonprofit TROA (The Retired Officers of America, for active-duty and retired members of the military services) Scholarship Fund, knows that some marketing experts would recommend that TROA send out marketing materials to prospective donors two or three times annually.

But Amos' board has passed a directive that members receive only one direct-mail piece with a fundraising appeal yearly.

"We have an advantage in that we are not a start-up and are well-known with prospective donors," Amos says. "So, for us, once a year works." The Scholarship Fund provides interest-free loans and grants to military children for school.

Instead of making direct fundraising appeals, Amos focuses on "keeping the program out in front of the donors." And it's working. In the 18 months that she has been with TROA six donors have contributed gift annuities and about three dozen are interested in seeing an example of how a gift annuity might work for them.

Case in Point - Making the Commitment to Planned Gifts

Here are two examples of development professionals who already wear multiple fundraising hats, yet they are both taking the time to build up their nonprofits' planned giving programs for the future:

* Beech Acres, a child-focused family services nonprofit in Cincinnati, received its first planned gift in the early 1860s, when it was the German Protestant Orphanage. "From the start, the board of our predecessor organization said that any bequest would go to an endowment," says Shari Fox, president of the Beech Acres Foundation, which raises funds for Beech Acres. "So they encouraged planned giving from the earliest years."

* UCJS, the Union of Councils for Jews in the former Soviet Union has had a planned-giving program for just a little over a year. "When I came, I analyzed everything in the department and realized we needed a planned giving component to perpetuate a stream of income for the organization," says Linda Gordon Kuzmack, director of development. UCJS is a small advocacy nonprofit that aids threatened minorities in Russia by monitoring and reporting on antisemitic propaganda, ethnic hate crimes, and violations of human rights.

"We are evaluating how we can make our planned giving more systematic," says Fox. That includes updating gift policies and making sure Beech Acres has a good system to identify, categorize, and cultivate the best prospects. Fox's advice to others: "Your best prospects are your most loyal donors, not necessarily the largest." She also recommends that nonprofits publicly recognize donors to the extent the donors will permit.

"There wasn't much response, but I didn't expect there to be," Kuzmack says of UCSJ's first-ever piece of direct mail about planned giving, sent out earlier in 2002. "I planted a seed." As part of her strategy, she waited to approach major gift donors until after she had made a full presentation about planned giving to members of the board, several of whom are now following up with her for their personal planning. "Now I will be able to tell the major givers about the personal commitment of members of the board," she says. "That will make a big difference."

Resources for Learning More

Here are just a few of the many resources available for researching planned-giving programs that are most promising for your own nonprofit's circumstances:

Resources from AFP

  • AFP Audioconference Audiotape (KRM Code: FRE5996-0). "There Are More Planned Gifts Than Ever--How Can You Get Your Share?" Available for purchase from KRM Information Services, Inc., 800-775-7654.
  • AFP Resource Center. Contains a large variety of material on planned giving, and staff can answer specific questions or perform a bibliographic search to develop a list of potential resources.
  • AFP International Conference on Fundraising. The 2003 Conference in Toronto will feature an entire track on planned giving, including sessions that cover estate planning, managing an integrated planned giving program, annuities, bequests, and legacy marketing.
  • AFP Marketplace. Numerous volumes about planned giving are available online from AFP.

Books and Periodicals

An asterisk indicates books available at AFP Marketplace.

  • * Planned Giving Essentials: A Step by Step Guide to Success by Richard D. Barrett and Molly E. Ware (2nd edition, 2001, Aspen). This book provides the basic information that the general fundraiser would need to get started.
  • Planned Giving for Canadians by Frank Minton and Lorna Somers (2nd edition, 2000, Somersmith).
  • Planned Giving for Small Nonprofits by Ronald R. Jordan and Katelyn L. Quynn (2002, Wiley). The authors have also written a much larger book, Planned Giving: Management, Marketing, and Law (2nd edition, 2000, Wiley). Quynn says she and Jordan wrote this book focusing on small nonprofits because those were the questions they got when they made presentations and talked to fundraisers around the country.
  • Planned Giving: Making It Happen by Edward Pearce and Sheree Rodney Kushner (Strategic Ink Communication).
  • Planned Giving Today, monthly newsletter with U.S. and Canadian versions (

Websites of Planned-Giving Organizations

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