Planned Giving—An Immediate Impact Today
By James Gold
“If not now, when?”
In my daily work with health care organizations, I frequently hear the following statements from philanthropy officers and their teams:
“I want to learn more about planned giving.” “I wish we had the time to build a planned giving program.” “Our donors are young and have a short giving history.”
Although I applaud the desire to learn and grow professionally, planned giving is no longer a “nice to know” area of philanthropy. In order to best serve donors and the charities they support, planned giving is a necessity, a requirement and a must in today’s fund development environment. We must, however, look beyond our stereotypes and assumptions of traditional planned giving—tough to do since this concept comes to fruition well into the future. Planned giving is a powerful tool that all philanthropy officers need to exercise, recognizing opportunity for gifts today, as well as gifts into the future.
When donors abandon check books and look at alternative ways to give from “wealth,” they enter a new realm of possibilities, often unlocking their full philanthropic potential.
In the last two decades, we have witnessed more tax reform than over the course of our country’s history. When the Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law, it significantly changed the way people give and opened up a necessary seat at the table for professional advisors to understand and overcome the impact of the TCJA legislation. What was this impact? Only 10% of taxpayers can now itemize as opposed to nearly one-third of overall taxpayers pre-legislation. In a historical, short period of time, we have seen the emergence of Donor Advised Funds (DAF), the utilization of Qualified Charitable Distributions (QCDs) from individual retirement accounts and popular appreciated assets such as securities “stock.” Why the significant uptick? These types of gifts provide donors with significant tax benefits whether they itemize or not. When donors abandon check books and look at alternative ways to give from “wealth,” they enter a new realm of possibilities, often unlocking their full philanthropic potential. With the current rise in inflation, holding on to one’s cash is a motivating factor to explore a more advantageous way to give.
In a study conducted by Dr. Russell James, author of Cash is not King in Fundraising, organizations that receive gifts of stocks or bonds grew their contributions six times faster than organizations that only received cash gifts over a five-year period. This is why outright planned gifts now elevate all relationship-based philanthropy programs and provide a powerful strategy that all front-line philanthropy officers should not only understand but also recognize and encourage these opportunities with donors.
Philanthropy officers who have not yet grasped the most popular non-cash giving options, like those mentioned above, are missing tremendous opportunities by leaving true philanthropic capacity on the table. It is well-known that the average individual holds just 1–3% of their total assets in cash, leaving a remaining 97% of assets with a potential tax burden at some point in their lives. So how can you, as philanthropy leaders and team members, get these initiatives started and unlock a donor’s true philanthropic potential? Consider these three simple steps:
Develop a working knowledge of the most popular tax-wise giving strategies for assets other than cash and encourage opportunities with donors. a. Bundling Technique: Giving more in one year than in others in order to itemize and receive a charitable tax deduction. b. Qualified Charitable Distribution: Making a gift from one’s individual retirement account (IRA) directly to charity. c. Appreciated Securities: Giving from accounts that are most commonly stocks and mutual funds. d. Donor Advised Funds: Giving from a charitable investment account for the purpose of making charitable grants rather than writing a personal check directly to charity.
Rehearse and incorporate questions and stories on ways donors can give into your donor conversations. Anticipate the “softball” questions that most donors ask so you are ready and able to direct the conversation in an organic and natural flow that plants the seeds on alternative tax-wise giving. For example, know how to respond to the following questions or statements such as: “How is fundraising going at the foundation?” “Is inflation impacting your fundraising efforts?” “Things are going to be a little tight this year because of inflation.” “I have to help with my grandchildren’s tuition this year.” “I’m planning on retiring next year so I’m not sure I can continue at my current level of giving.”
Practice repetition and build experience. Start socializing these giving strategies with your current donors. Many philanthropy officers hold back on these conversations thinking they have to master the concepts before entering into dialogue about non-cash giving. Get started now. The only way to learn is through repetition and ultimately gaining a stronger intuition to sense donor opportunities for more sizeable and impactful giving.
Stay humble, do your research and always ask for additional training when needed. As philanthropy leaders, you must now ensure your team has the proper training and education to raise the bar for all relationship-based fundraising programs, especially planned giving.