A Simple Guide to Complex Gifts

The #1 barrier I see holding fundraisers back from getting started in Planned Giving is overcomplicating it.

Yes, there’s bequests, assets, and other complex giving vehicles - but you don’t need to know a lot about these gifts to be a successful Planned Giving fundraiser.

Remember - your job is to form relationships with your donors and inspire them to give. 

The ways of giving are simply methods for donors to give their best gifts!

All you need to know is these types of gifts exist and the basics of how they work. This allows you to point the donor in the right direction, and they will plan their gift with their advisors. 

You might be wondering - sounds great! But what are “the basics”? 

Well - I was once a fundraiser stressing about learning everything there is to know about life insurance. To help you avoid my mistakes, I’ve compiled this list of what you actually need to know as a fundraiser.

Now, you can bookmark this page and spend 15 minutes learning about Planned Gifts instead of wasting hours like I did early in my career!

Here’s your simple guide to complex gifts for fundraisers - not financial advisors.

• Gifts in Wills
  This is the most common type of Planned Gift. Donors leave a bequest to your charity similar to the way they leave a bequest to a family member. This may be a specific gift of cash or assets like stocks, or a residual gift, which is a percentage of the estate’s “leftovers” after all specific bequests are paid out.
  
  Gifts may also be contingent - meaning you only get the gift if someone else dies. For example, spouses without children may give everything in their estate to their partner, but designate a charity as a contingent if that partner dies first.
  
  If your gift is residual you will have to double-check the accounting of the estate when the gift is realized. (Most Executors do a great job, but estate funds can be mismanaged or misdirected.)  If you’re just starting out with Planned Giving don’t stress about this - you can call in external support when needed.
  
  

• Gifts of securities/ stocks
  Gifts of stock should be part of every major giving program. The donor transfers stock directly to you, which you then sell and issue a tax receipt for. Your bank can set this up easily for you (they’ll give you a form for your donors to make their gifts). If you’re a Canadian charity, Canada Helps has this built into their platform!
  
  There are massive tax savings for your donor because they avoid capital gains taxes - in some cases the actual “cost” of the gift to the donor can be as little as 10%.
  
  Typically, donors are inclined to give stock when the market is performing well - but you don’t have to wait to start adding gifts of securities as a “way to give” on your proposals.
  
  

• DAFs (Donor Advised Funds)
  Similar to the above, it’s essential to include DAFs as part of your major gifts strategy! And it’s simple to do so - just mention “we accept gifts from private giving funds and foundations” on every fundraising ask!

• Beneficiary designation of registered accounts or life insurance policies.
  Do you remember setting up a registered account or life insurance and being asked who the money should go to when you pass? Well, you can list a charity!
  
  

• For Americans: Charitable IRA Rollover
  Individuals over 70.5 years can roll over up to $100,000 per year from their IRA to a public charity - resulting in significant tax savings.
  
  

• Gifts of life insurance
  Besides listing a charity as a beneficiary of a life insurance policy, donors can give their life insurance policies directly to your charity, which takes ownership of the policy. You issue a tax receipt for the fair market value of the policy.
  
  Either the donor will continue to pay for the premiums (and you issue a tax receipt to them every year) or the charity will pay the premiums. Keep in mind that you have to stay in contact with the donor and their family for the rest of their life. If the donor dies, you will need a copy of their death certificate to redeem the policy.
  
  If this type of giving occurs at your charity, I recommend seeking a financial advisor to map out the costs and benefits to your charity before you accept the policy.
  
  

• Assets such as cars, art, houses, etc.
  Generally, a charity will want to immediately liquidate these assets, so have an open conversation with your donor about their intentions in giving you their gift.
  
  Look up your local tax receipting laws for each asset gift. For example, in Canada art needs an appraisal to determine a fair market value for the tax receipt. You can speak with your donor to see if they would be willing to pay for the appraisal, or if it’s worthwhile for your charity to cover the expense.
  
  
  

• Charitable Lead Trust
  A donor creates a trust and that trust pays out annual income to a charity for a set period of time. After, the remaining assets get transferred to a beneficiary - usually the donor’s family. There’s lots of tax benefits to donors, but they vary. If your donor sets this up, contact an advisor to ensure you’re issuing tax receipts properly.
  
  

• Charitable Remainder Trust (CRT)
  A donor puts assets (such as stock that’s increased in value) into the CRT - avoiding capital gains tax. The donor gets a tax receipt immediately for the value of the trust, and it’s irrevocable (meaning they are not able to change their minds about the gift).
  
  The investments grow tax-free in the trust, and the donor gets regular payouts. The amount remaining in the trust after a period of time (usually 20 years or at death) goes to the charity.
  
  This type of gift is ideal for a donor aged 70+ who has a high net worth and a high income.
  
  

• Charitable Annuity
  A donor gives a large gift to a charity, gets a tax receipt for part of it, and the charity purchases an annuity that pays a consistent amount to a donor for life. The charity gets the leftover funds when the donor passes.
  
  This is ideal for donors aged 70+ who want a set income for life. It allows a donor to make a significant gift in their lifetime while maintaining an income.
  
  
  Note: The last 3 types of gifts aren’t very common, and if it comes up, you and your donor can enlist the help of financial advisors to set it up.
  

  
  You’ll notice that I mentioned “enlist the help of experts when you receive this gift” several times. You don’t need to be set up with perfect systems for Charitable Annuities to start having Planned Giving conversations with your donors! 

  Trust that you can get help if a complex or unusual gift occurs. With the information in this guide, you know enough about the technical side of Planned Gifts to start your program. (Now focus on inspiring your donors with a Planned Giving Case for Support.)

  Also, if you’re a small to medium sized charity, it’s okay to ignore all types of Planned Gifts except Wills, beneficiary designations, DAFs, and securities. You can create a 7-figure stream of revenue from these gifts alone! They are much more common among donors at a variety of income levels.

  
  Disclaimer: I’m not a financial advisor, and this is not financial advice for donors nor charities. Look up your local tax laws to ensure you can accept and appropriately receipt gifts.
  

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