What is a Planned Giving Program and Why Should You Have One?

Photo credit: philanthropy.com

Photo credit: philanthropy.com

No organization is too small to start a Planned Giving program.

Setting up a Planned Giving program to create an endowment fund for your organization is a good way to keep your programs sustainable for years to come.

Essentially an endowment fund is managed as an investment and a small percentage is disbursed from the interest earned on the principal to your operations every year.

The principal of the fund is never touched, therefore it continues to build interest in perpetuity. The larger your endowment fund, the larger your yearly disbursements; providing a sustainable income for your organization.

Although planned gifts usually come through bequests in Wills, they can also come through life insurance policies, gifts of securities and stocks, annuities, or large donations from major donors, etc.

Potential prospects for Planned Giving include:

  • Board of Directors, leadership staff, front-line staff
  • monthly and long-term donors
  • alumni, past beneficiaries of programs and their families

Invite prospects to participate by:

  • launching a planned giving program in-house
  • providing planned giving information on your website
  • including planned giving articles in your newsletter
  • inviting top prospects to discuss options in person
  • including a check box that says, ‘I would like more information about planned giving’ on your response devices

As with all donors, be sure to say thank you often, provide status reports and invite them to appropriate events. A Planned Giving program gives your donors the option to create an enduring legacy for themselves and their families that continues to support the organization they have grown to care about long after they’ve passed on.

What are some of the ways you have successfully implemented a Planned Giving program?

The purpose of The Other Bottom Line is to facilitate discussions that will help us all to better engage with our communities. Your participation and feedback are most welcomed and valued. Please join the discussion below.



  1. Kerwyn Hodge

    Planned giving is a great way to create sustainable income! It also lets people take control of their gifts by deciding ahead of time on what they want to offer and how often. Some may chose to give a small amount consistently, thus making the donation a part of their household budget (I’m referring to more of a monthly donor program, but it bears features of planned giving).

    Another thing you may consider is a conditional donation arrangement. This is where a donor offers the organization a sum of money to use as the organization sees fit. They can invest it in ways that generate interest, providing that sustainable income you mention. However, if the donor so chooses, they can ask for those funds back from the organization. Sure, that will reduce the interest earning potential of the managed fund. But many would offer money for a period of time that otherwise would never be available to the organization. So it’s a win-win prospect!

      • Kerwyn Hodge

        No, they don’t. They’re simply donating the principal, and have the right to receive that back at a future time if they so desire. Any interest earned belongs to the organization. So they’re lending without asking for any interest (which is why it’s a donation). Not a bad deal, eh?!

      • Kerwyn Hodge

        Oh sure, they’d get a receipt, but only for the amount they donate (the principal), not the interest. At least that’s the way I understand it. However, let me confirm by checking on how some are already using the arrangement, and then I’ll get back to you.

      • theotherbottomline

        That would be awesome! Although tax laws are different between the US and Canada, there are some similarities…

        Logically, I cannot concieve that someone could recieve a tax benefit from the principal if they can take it back at anytime. It would be interesting if the organization could calculate the amount of interest earned on the conditional principal and provide a reciept for that however. If there is no tax benefit for this kind of arrangement, I would be very in awe of and grateful to anyone who provide this type of arrangement.

      • Kerwyn Hodge

        I suspect you’re right, and for those who do this type of giving are those invested in the philosophy of the organization. They don’t mind putting some money aside and foregoing any interest income because of their belief in the cause. They do exist, and may form a portion of an organization’s growth (even if only a small part). I’ll have the information, including some feedback on the tax aspects of the arrangement, by close-of-business Wednesday.

      • Kerwyn Hodge

        Here’s the scoop: With a conditional donation arrangement, the donor places funds in trust with the charitable organization under a conditional trust arrangement. Upon request, the organization returns the funds. If the donor dies with the funds still in trust, then those funds become the property of the organization.

        * Donor can request return of the funds
        * Organization has immediate access to the funds
        * At death, the gift becomes deductible for estate and inheritance tax purposes

        * No charitable income tax deductions

        Laws may vary from the US to Canada, but those are the basic features of the conditional donation arrangement.

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