resources glossary

What is Planned Giving?

Planned giving is a fundraising term, and is also called gift planning or legacy giving. It is any major gift, made in lifetime or at death as part of a donor’s overall financial and/or estate planning.

Planned giving allows donors to support nonprofits with larger gifts than could usually be made from ordinary income. These include gifts of equity, life insurance, real estate, personal property, or cash.

Some planned gifts provide life-long income to donor. Other gift plans use estate and tax planning to provide for charity and heirs in ways that maximize the gift and/or minimize its impact on the donor’s estate. Some are simple cash gifts, called bequests, that are specified in a donor’s will.

How do I market planned gifts?

The best way to market planned gifts is by using a combination of print and online materials to increase awareness about your planned giving program and your mission. Planned giving marketing is a core component of a program’s success.

Add planned giving to your existing materials. Mention it in an email signature, create planned giving ads to go in your print materials, talk about it in your exiting outreach.
Create a planned giving website
Initiate a print/direct mail campaign that utilizes postcards, brochures, letters and Newslets™ to deliver your message.
Create a powerful e-marketing campaign.

What is a charitable gift annuity?

A charitable gift annuity, or CGA, is a simple gift contract that provides one or two beneficiaries with fixed income for life in exchange for a donation to a nonprofit.

The gift can be made with cash, securities or assets, depending on the nonprofit’s policies. Each nonprofit has its own gift acceptance policies on age minimums and gift minimums for a charitable gift annuity.

What is a charitable remainder trust?

A charitable remainder trust, or CRT, is a tax-exempt, irrevocable trust that pays income to a donor or other beneficiaries for a set term — either life, or a designated number of years. At the end of the term, the remainder of the trust is donated to the designated charity.

What is a charitable lead trust?

A charitable lead trust is an irrevocable trust that pays income to a charity or charities for a set period of time. At the end of that time, the remaining assets are distributed to the donor or other beneficiaries.

What is a bequest?

A bequest is any gift — including personal property, stocks, bonds, jewelry, cash and real estate — given to an individual or organization through an estate plan, or will. Bequests are the most popular type of planned gift given to nonprofits.

Here’s a planned giving glossary with easy-to-understand definitions and examples of common (and uncommon) planned giving terms — it’s an A to (almost) Z guide for advisors, marketers and donors, too. Consider the Gift Comparison Chart to compare giving vehicles side-by-side.

A – D E- F G – P R – T

A – D

ACTUARIAL: AS USED IN PLANNED GIVING, REFERS TO THE FACTORS USED TO CALCULATE THE VALUE OF LIFETIME PAYMENTS BASED ON THE LIFE EXPECTANCIES OF INCOME BENEFICIARIES OR THE TERM OF YEARS FOR A TRUST.

ADJUSTED GROSS INCOME (AGI): YOUR TOTAL GROSS INCOME ADJUSTED DOWNWARD BY SPECIFIC DEDUCTIONS ALLOWED BY THE TAX CODE, BEFORE TAKING YOUR STANDARD OR ITEMIZED DEDUCTIONS. AGI IS THE NUMBER YOU WRITE AT THE BOTTOM OF PAGE 1 OF YOUR 1040. INDIVIDUALS MAY DEDUCT CHARITABLE CASH CONTRIBUTIONS UP TO 50% OF AGI IN ANY GIVEN TAX YEAR. FOR GIFTS OF APPRECIATED PROPERTY THE DEDUCTIBLE LIMIT IS 30% OF AGI IN ANY GIVEN TAX YEAR.
ANNUITY: A CONTRACTUAL ARRANGEMENT TO PAY A FIXED SUM OF MONEY TO AN INDIVIDUAL AT REGULAR INTERVALS. THE CHARITABLE GIFT ANNUITY IS A GIFT THAT SECURES FIXED LIFETIME PAYMENTS TO THE BENEFACTOR AND/OR ANOTHER INDIVIDUAL.
APPRAISAL: A PROFESSIONAL ASSESSMENT OF THE VALUE OF A PIECE OF PROPERTY. GENERALLY, BENEFACTORS CONTRIBUTING REAL OR TANGIBLE PERSONAL PROPERTY (BOOKS, COLLECTIBLES, ETC.) WORTH $5,000 OR MORE MUST SECURE AN INDEPENDENT APPRAISAL OF THE PROPERTY TO SUBSTANTIATE THE VALUE THEY CLAIM AS A CHARITABLE DEDUCTION.
APPRECIATED PROPERTY: SECURITIES, REAL ESTATE, OR ANY OTHER PROPERTY THAT HAS RISEN IN VALUE SINCE THE BENEFACTOR ACQUIRED IT. GENERALLY, APPRECIATED PROPERTY HELD BY THE DONOR FOR MORE THAN A YEAR MAY BE DONATED AT FULL FAIR MARKET VALUE WITH NO CAPITAL GAINS COST.
BASIS: THE BENEFACTOR’S PURCHASE PRICE FOR AN ASSET, POSSIBLY ADJUSTED TO REFLECT SUBSEQUENT COSTS OR DEPRECIATION. IF MRS. QUINN BOUGHT STOCK FOR $100 PER SHARE AND SOLD IT FOR $175, HER COST BASIS IN THE STOCK IS $100 PER SHARE.
BENEFICIARY: THE RECIPIENT OF A BEQUEST FROM A WILL OR A DISTRIBUTION FROM A TRUST, RETIREMENT PLAN, OR LIFE INSURANCE POLICY.
BEQUEST: A TRANSFER OF PROPERTY OR CASH TO AN INDIVIDUAL OR ORGANIZATION UNDER A WILL.
CAPITAL GAINS TAX: A FEDERAL TAX ON THE APPRECIATION IN AN ASSET BETWEEN ITS PURCHASE AND SALE PRICES.
CODICIL: A DOCUMENT THAT AMENDS, RATHER THAN REPLACES, A PREVIOUSLY EXECUTED WILL. AMENDMENTS MADE BY A CODICIL MAY ADD OR REVOKE A FEW SMALL PROVISIONS (E.G., CHANGING EXECUTORS), OR MAY COMPLETELY CHANGE THE MAJORITY OR ALL OF THE GIFTS UNDER THE WILL. EACH CODICIL MUST CONFORM TO THE SAME LEGAL REQUIREMENTS AS THE ORIGINAL WILL, SUCH AS THE SIGNATURES OF THE TESTATOR AND, TYPICALLY, TWO OR THREE (DEPENDING ON JURISDICTION) DISINTERESTED WITNESSES.
COST BASIS: SEE BASIS, ABOVE.

E – F

ENDOWMENT FUND AN INVESTED FUND OWNED BY A CHARITY FROM WHICH THE CAPITAL APPRECIATION AND/OR INCOME IS USED TO SUPPORT THE GENERAL OR SPECIFIC OBJECTIVES OF THAT CHARITY’S MISSION. ESTATE TAX A FEDERAL TAX ON THE VALUE OF THE PROPERTY HELD BY AN INDIVIDUAL AT HIS OR HER DEATH (PAID BY THE INDIVIDUAL ESTATE, NOT THE HEIRS OR RECIPIENTS OF BEQUESTS). IN CONTRAST, STATE INHERITANCE TAX IS APPLIED TO THE VALUE OF BEQUESTS PASSING TO BENEFICIARIES; IT IS ALSO PAID BY THE ESTATE BEFORE THE DISTRIBUTIONS ARE MADE. EXECUTOR THE PERSON NAMED IN A WILL TO ADMINISTER THE ESTATE (KNOWN IN SOME STATES AS THE “PERSONAL REPRESENTATIVE”). FAIR MARKET VALUE THE PRICE THAT AN ASSET WOULD BRING ON THE OPEN MARKET.

G – P

GRANTOR THE INDIVIDUAL TRANSFERRING PROPERTY INTO A TRUST. INCOME INTEREST IN A TRUST, THE RIGHT TO RECEIVE PAYMENTS FROM THE TRUST FOR THE RECIPIENTS LIFETIME OR A TERM OF YEARS. INTER VIVOS TRUST A TRUST THAT IS CREATED BY AN INDIVIDUAL WHILE HE OR SHE IS STILL LIVING AS OPPOSED TO A TESTAMENTARY TRUST WHICH IS CREATED BY A WILL AFTER SOMEONE’S PASSING. INTESTATE DYING WITHOUT A LEGAL CURRENT WILL OR LIVING TRUST. K-1 (ALSO 1099-R) THE IRS FORMS SENT TO LIFE-INCOME GIFT PARTICIPANTS DETAILING HOW PAYMENTS THEY RECEIVED FROM THEIR GIFTS DURING THE YEAR WILL BE TAXED. LIFE EXPECTANCY A STATISTICAL MEASURE OF THE AVERAGE LENGTH OF AN INDIVIDUAL’S LIFE. LIFE INCOME GIFT A PLANNED GIFT THAT MAKES PAYMENTS TO THE BENEFACTOR AND/OR OTHER BENEFICIARIES FOR LIFE OR A TERM OF YEARS, THEN DISTRIBUTES THE REMAINDER TO CHARITY. PERSONAL PROPERTY SECURITIES, ARTWORK, BUSINESS INTERESTS, AND ITEMS OF TANGIBLE PROPERTY AS OPPOSED TO “REAL PROPERTY,” USED IN PLANNED GIVING TO REFER TO LAND AND THE STRUCTURES BUILT ON IT. PERSONAL REPRESENTATIVE SEE EXECUTOR, ABOVE. PLANNED GIVING A METHOD OF SUPPORTING CHARITIES THAT ENABLES GENEROUS INDIVIDUALS TO MAKE LARGER GIFTS THAN THEY COULD MAKE FROM THEIR INCOME. WHILE SOME PLANNED GIFTS PROVIDE A LIFELONG INCOME TO THE DONOR, OTHERS USE ESTATE AND TAX PLANNING TECHNIQUES TO PROVIDE FOR CHARITY AND OTHER HEIRS IN WAYS THAT MAXIMIZE THE GIFT AND/OR MINIMIZE ITS IMPACT ON THE DONOR’S ESTATE. PRESENT VALUE THE VALUE ON A GIVEN DATE OF A FUTURE PAYMENT OR A SERIES OF FUTURE PAYMENTS, DISCOUNTED TO REFLECT THE TIME VALUE OF MONEY BASED ON VARIOUS FACTORS SUCH AS INVESTMENT RISK AND INFLATION. PROBATE THE REVIEW OR TESTING OF A WILL BEFORE A COURT (THE PROBATE COURT) TO ENSURE THAT THE WILL IS AUTHENTIC AND THE ESTATE IS DISTRIBUTED PROPERLY.

R – T

REMAINDER INTEREST IN A TRUST, THE PORTION OF THE PRINCIPAL LEFT AFTER THE INCOME INTEREST HAS BEEN PAID TO THE BENEFICIARY(IES). A CHARITABLE REMAINDER TRUST PAYS INCOME TO THE BENEFACTOR OR OTHER INDIVIDUALS AND THEN PASSES ITS REMAINDER TO CHARITY. REMAINDERMAN A LEGAL TERM FOR THE INDIVIDUAL OR ORGANIZATION WHO RECEIVES THE TRUST PRINCIPAL AFTER THE INCOME INTEREST HAS BEEN SATISFIED. TESTAMENTARY TRUST REFERS TO A TRUST THAT IS CREATED IN A WILL AFTER SOMEONE’S PASSING AS OPPOSED TO A LIVING OR INTER VIVOS TRUST, WHICH IS CREATED BY A LIVING GRANTOR. TESTATOR THE INDIVIDUAL MAKING THE WILL. TRUST A LEGAL ENTITY CREATED BY A WRITTEN AGREEMENT BY A GRANTOR TO HOLD AND INVEST PROPERTY FOR THE BENEFIT OF THE GRANTOR AND/OR OTHER BENEFICIARIES. TRUSTEE AN INDIVIDUAL OR ORGANIZATION CARRYING OUT THE WISHES OF THE PERSON WHO ESTABLISHED THE TRUST (THE “GRANTOR”), PAYING INCOME TO THE BENEFICIARIES AND PRESERVING THE PRINCIPAL FOR ULTIMATE DISTRIBUTION.