Why Planned Giving?

What would you change about the world if you could? Even just one area you would like to see differently, to make a better place for you, for your loved ones, and for others?

Charities Will Help You Make a Difference — and Change the World

Making a difference can seem daunting. The good news is you are not alone in being the change. There are more than 1.8 million nonprofits registered in the US working toward your same dreams. Your estate planning and other heavily taxed assets can be your greatest tools (and your greatest savings) in partnering with nonprofits to make the change you want to see.

Planned Giving is for You — Yes, You

When you think of nonprofits, you think of large donors — names on buildings, hefty scholarships — and believe that type of transformative gift is far from what you can give.

But the truth is, you have the same capacity for impact as the largest of donors because you have the same tools. Those large gifts are possible because they utilize planned giving.

What is Planned Giving?

Planned giving is any major gift, made in a lifetime or at death as part of a donor’s overall financial and/or estate planning. These include gifts of equity, life insurance, real estate, personal property, or cash. With planned giving, you may be astounded by what you can accomplish in the causes close to your heart, and in a tax-saving manner! You are the change-maker. All you need to do is utilize tools you did not know you had.

Planned giving comes in many forms, and it serves you to consult a fundraising professional at your favorite nonprofit or community foundation, as well as a trusted attorney or financial planner, to be partners in your impact. 

Examples of transformative gifts include an endowed fund, which is a gift that is often named in your honor and invested by the nonprofit or financial institution. It makes distributions to the charity of your choice virtually forever. These funds can often be made with gifts of appreciated assets. Another example is a bequest — which can be as simple as informing your financial institution through a designation form that you would like all or a portion of your estate left to your favorite charity. This gift costs nothing during your lifetime!

The real question before deciding to pursue a planned gift is not, “What can I afford?” because these strategic gifts are for everyone. No income level or group is excluded from the chance to make a change.

Consider: John wants to set up a scholarship fund at his alma mater, but his income is only large enough to support his own needs. What can John do?

John makes a planned gift. He informs his financial institution to leave 50% of his life insurance to his kids, and 50% to his old university. He will have plenty of money to pay his bills; his kids will be provided for; and hundreds of students will receive financial support because of his simple estate planning.

Planned Giving Is About Who You Are

The real question is, “What do I want my legacy to be?” What is most important to you? What values have you lived by during your life? What have you learned that you want others to emulate?

A planned gift is not just a donation now or in your estate. It is a statement of who you are. You are showing what you have worked to gain, and now, what in this world you choose to invest yourself in, to be a force for good. So, why planned giving? Because you can shape your own legacy. 

Consider: Susie did not have the chance to be close with Mary, her great-grandmother. What Susie will know will be the occasional stories she may hear about Mary, about holidays and careers, most likely. But what did her great-grandmother stand for? What would Mary have wanted this child to know, and to believe? What values and missions are Susie’s birthright? 

If Mary had made a planned gift, either during her lifetime or payable at her passing, Susie would know: her predecessors chose to invest in a nonprofit. Her great-grandmother believed in a more just society. She believed in caring for others and the world. She believed in the importance of education. She believed in the better future that their great-grandchild, Susie, will help create. That is the donor’s legacy, with a planned gift.

Planned Giving Benefits You Through Tax-Efficient Generosity

Planned charitable giving is not just about the intangible, though significant, benefit of legacy. A planned gift can provide you with previously unimaginable tax benefits in your lifetime, while still supporting the charity you love! Income tax deductions can be gained through the gift of different assets beyond cash (or, if you make a qualified charitable distribution through your IRA, you get to avoid income tax on your required minimum distribution).

 Hefty capital gains tax can be avoided by donating all or part of appreciated assets, including property, stocks, securities, and more. Be charitable, but be strategic as well — you have much to gain! You can also inquire about charitable gift annuities and some forms of charitable trusts that grant you income during your lifetime, and the remainder goes to charity. A win-win situation!

Consider: Jorge bought stock many years ago, and luckily, it has increased in value! Unluckily, he learned that should he sell it, he would be subject to the maximum capital gains tax of 20%. He partners with his accountant and a charitable gift officer and decides to donate some of the stock directly to a nonprofit he loves, the American Red Cross. Now he saves money by being taxed at a lower rate, and thousands of individuals receive needed care because of his smart charitable planning. Another option Jorge may have utilized is a charitable gift annuity. Jorge would transfer his stock tax-free to the charity of his choice, and they will grant him payments for the rest of his life! Then, when he passes at a nice and fulfilling old age, the charity will get the remainder. What could be better?

Planned Giving Can Set Up Your Heirs for Success

Planned giving can have returns for your heirs, as well. Some financial accounts, such as IRAs, may be tempting to leave outright to your heirs, but did you know the recipients must pay income tax on those distributions? Consider leaving accounts to a charity instead. Or maybe you have a property that, frankly, no one in your family wants or plans to use. Make a life-changing impact by donating to a charity instead and save your heirs thousands in the taxes and expenses associated with selling that real estate. Ask about trusts, too!

Consider: Derek and Bianca have a beach house they use about two weeks out of the year. Their kids prefer vacations elsewhere and have no interest in keeping this house maintained when their parents pass. Derek and Bianca use smart estate and charitable gift planning and leave the house to their favorite charity in their will. The result? Derek and Bianca feed thousands with their gift, and their kids save thousands by not paying fees and taxes upon the inheritance of the unwanted house. They also could have used the house to fund a charitable trust for their kids.

How to Get Started?

Getting started is easy. Visit the website of your favorite nonprofit, or a local community foundation, and let them know you would like to learn more about what giving options would be best for you. Fundraisers never charge for their donor meetings! You can also discuss with a trusted attorney or financial professional, especially if you would like specific information about tax savings from charitable giving. 

Finally, here is an idea of what your  planned giving legacy can create: planned gifts make up 80% of needed income for charities, but only 20% of people consider them! You can lead the charge in changing the world through your planned gift. All you need to do is take the first step.