Insight

Encouraging charitable donors to include you in their estate plans

Encouraging charitable donors to include you in their estate plans | quickbooks consultant in washington dc | Weyrich, Cronin, & Sorra

Even if current donations are your not-for-profit’s bread and butter, you can’t afford to neglect planned, legacy or deferred gifts. These gifts, generally made through wills and living trusts, often are much larger. Your employees don’t need to be directly involved when donors establish gifts through their estate plans. But your development staff should know how the process works and how to encourage such contributions.

How the process works

In addition to will and trust gifts, planned donations can be made with beneficiary designations on retirement accounts, such as 401(k) plans and IRAs, and life insurance policies. However, charitable annuities and other more complex estate planning instruments, such as charitable remainder trusts, may come into play.

Donors need to indicate in a legally binding document (such as a will) your nonprofit’s full name and address. Although your organization’s tax ID number is helpful, it isn’t required. The legal document also must describe the donation and state any restrictions on its use by your nonprofit.

Making your case

You can’t just be reactive and accept windfalls that come your way. You need to proactively pursue planned gifts. For example, feature information on planned giving in prominent locations on your website, in your newsletter and in brochures and other promotional materials. Don’t assume that only older, long-time donors might be interested. Many people may not even consider making a planned gift unless you educate them about the option.

Recognize that sometimes even wealthy individuals fail to make proper estate plans. They may promise to leave something to your organization, but if they don’t put it in writing, state intestacy laws can lead to unintended results. Use subtle and sensitive messages to get the point across.

You might also emphasize the tax benefits of acting quickly. Unless Congress acts, the current generous estate tax exemption, $13.61 million in 2024, is scheduled to revert to an inflation-adjusted $5 million in 2026. Supporters whose estates wouldn’t be subject to estate taxes now but could be after 2025 may want to incorporate a planned gift into their estate plans before then.

It’s also helpful to show how you can put planned gifts to work. Many donors expect planned gifts to go toward special projects or programs rather than day-to-day expenses. You can help provide ideas for potential special uses, but you may want to make the case for contributing to your general operating fund.

Gaining an edge

Donors are less likely to leave gifts to young or financially insecure organizations. So if your nonprofit already has a long track record and strong reputation, you probably have an edge. However, it’s never too soon to start building relationships with financial and legal advisors in your community who might help individuals prepare estate plans. Also, try to secure planned gifts from such committed stakeholders as board members. Contact us with questions.

© 2024

 

Related Insights

Planning an event? Don’t neglect sponsorships - business consulting and accounting services in bel air md - weyrich, cronin and sorra

Non-Profits

Planning an event? Don’t neglect sponsorships

There are many ways to evaluate the success of a not-for-profit event. But for most nonprofit leaders, financial success — how much did we…
Update on a possible universal charitable deduction - business consulting and accounting services in harford county - Weyrich, Cronin and Sorra

Non-Profits

Update on a possible universal charitable deduction

During the COVID-19 pandemic, Congress temporarily enabled individual charitable donors who didn’t itemize federal income tax deductions to…
Gather information from clients without triggering survey fatigue - CPA in Harford County MD - Weyrich, Cronin & Sorra

Non-Profits

Gather information from clients without triggering survey fatigue

To administer productive programs worthy of your not-for-profit’s budget, you need to determine whether they’re meeting clients’ needs.…

Connect with us

Use the form below to send us an email. WCS responds directly to all inquiries and general questions within 24 hours of posting.

This contact form is deactivated because you refused to accept Google reCaptcha service which is necessary to validate any messages sent by the form.