From time to time, a story appears in the media about someone with a modest income (a janitor, teacher, bus driver) leaving a million‐dollar estate gift to a nonprofit. Although the size of the donation may be relatively rare, the fact of the contribution isn’t. Historically, estate gifts make up about 8–10% of private‐sector revenue for US nonprofits.

The word “estate” may conjure images of a mansion with extensive gardens, but for our purposes, “estate” means the property or assets someone owns at their death. Even if you don’t own a house, stocks, or bonds, you most likely have a savings or checking account. Your estate plan may consist simply of a beneficiary form naming the person or organization that will receive the money in your bank account after you pass away. In the coming decades, as baby boomers die, trillions of dollars will be transferred from their estates to subsequent generations and to nonprofits. Why not encourage your supporters to leave some of their assets to your organization?

Legacy gifts—also called planned gifts or estate gifts—are donation intentions individuals make during their lifetimes through an estate plan. The donor states their intention for one or more nonprofits to receive a contribution after the donor dies. The most common type of legacy gift is a bequest through a donor’s will or trust.

Even a small, leanly staffed organization can successfully promote legacy gifts. Your organization’s chances of receiving legacy gifts will increase if you inform supporters of legacy giving options and make it easy for them to remember your group in their estate plans. This chapter covers how to encourage donors to leave a legacy gift to your nonprofit.

UNDERSTANDING BASIC LEGACY GIFTS

Two factors intimidate many nonprofit staff members and volunteers from bringing up legacy giving with donors. The first is that legacy gifts, by definition, deal with topics Americans avoid discussing: death and money. The second is the assumption that you must become an expert about every kind of legacy gift in order to discuss them with donors.

Let’s briefly discuss the first of these hurdles. In Chapter Eight we outline cultural barriers hindering people from talking about and asking for money. Here we will address the taboo about discussing death. The following framework to think about legacy gifts may be helpful: Donors’ annual contributions are ways for them to manifest their values. If they believe in racial justice, they can donate to groups fighting racism and white supremacy. If donors want to curb global warming, they can support nonprofits working for renewable energy sources. Just as they’ve demonstrated their values through their annual gifts, donors can express their deepest beliefs through legacy gifts to organizations that exemplify their principles. A thoughtful estate plan is a vehicle for individuals to perpetuate the values of justice, equity, and sustainability that meant so much to them during their lifetimes. Rather than being a distasteful topic, legacy giving is a way to discuss with donors their strongest values and how those values can continue to be expressed after they’re gone.

Now, let’s turn to the second hurdle, the perception that promoting estate gifts requires special expertise. The vast majority of legacy gifts are bequests (donations made through wills and living trusts), or are contributions of assets such as bank accounts, retirement accounts, or life insurance policy proceeds, for which donors complete beneficiary designation forms. You don’t have to be an estate planning attorney to understand these simple ways to pass on assets to heirs. You just need to be able to let donors know how they can remember your organization in their wills or trusts and explain how they can name your group as a beneficiary of other assets. We’ll elaborate on how to do that later in this chapter.

More complicated legacy gifts are relatively rare. Don’t fret if a donor wants to discuss a complex arrangement that you don’t understand. Just secure professional advisers (an estate planning attorney and an accountant familiar with taxation) that you can call on (pro bono, if possible) for advice. (See more about that later in the chapter.)

These are the main types of legacy gifts:

• Bequests: Gifts Through Wills and Living Trusts: Most legacy gifts are made through wills and living trusts. More than half of Americans die without a will or trust. For these people, the government will decide who receives their assets. By encouraging your donors to remember your organization in their estate plans, you may be doing them a service; they may not be aware of why they should have a will or trust.

  Most adults have a basic understanding that a will is a legal document through which individuals designate who will receive their assets after they die. More and more people also have a working understanding of living trusts. These are legal entities through which individuals can control assets for their benefit or for the benefit of others. Living trusts are also legal vehicles indicating how a person’s assets should be distributed after death. For purposes of legacy giving, wills and living trusts are means for donors to leave cash and/or other assets to nonprofits.

• Beneficiary Designations: The disposition of some assets (such as life insurance policies, retirement accounts, and savings and checking accounts) after someone passes away is determined by whom that person named on a beneficiary designation form to receive those assets. Selecting a nonprofit as a beneficiary of these assets is a simple way for donors to make a legacy gift. They don’t need to see an estate planning attorney to create or revise a will or trust. They simply complete and submit a beneficiary designation form provided by the financial institution holding the asset.
• Life Income Gifts: Life income gifts are more complicated. This type of legacy gift provides a donor (or another beneficiary) payments for life (or a set number of years), then distributes the remainder to one or more nonprofits. The most popular life income gifts are charitable remainder trusts and charitable gift annuities.

  A charitable remainder trust (CRT) is a kind of trust into which a donor transfers assets (cash, stock, real estate) and from which the donor or a designee receives income (set at a specific percentage of the trust’s value) for life or a set number of years. The trust is managed by a trustee, which could be the donor, a family member, or a financial institution. After the income recipient passes away or the set number of years ends, the trust’s assets go to one or more nonprofit organizations.

  A charitable gift annuity is similar to a CRT. But rather than the donor setting up a trust, the donor and a nonprofit enter into a contract. According to the contract terms, the donor agrees to contribute to the nonprofit an amount above a specific threshold (usually $10,000). The nonprofit, in turn, agrees to pay the donor income for life. The amount of the income is based on a rate agreed to in the contract. After the donor dies, whatever is left goes to the nonprofit.

  Many large nonprofit organizations, such as universities and hospitals, offer charitable gift annuities. It is impractical, however, for a small nonprofit to establish its own gift annuity program, as smaller nonprofits don’t have the staff capacity to set up and manage such a program. You can, however, ask your local community foundation if it issues gift annuities on behalf of nonprofits in your geographic area.

SHOULD YOUR ORGANIZATION PROMOTE LEGACY GIFTS?

Although all nonprofits can benefit from legacy giving income, not all organizations should devote time and resources to promoting estate gifts. An organization that anticipates realizing its mission within 10 years, for example, should focus on raising annual operating support, not legacy gifts, because the majority of legacy gifts will not be realized for at least a decade, if not longer.

Similarly, a nonprofit that doesn’t have a base of loyal donors who have given a gift of any size for at least three consecutive years is not ready to promote legacy gifts. That’s because most legacy giving donors are loyal supporters who have demonstrated their commitment to an organization by giving at least one gift annually for a number of years. Loyalty and longevity of giving are the best indicators of who might make a legacy gift.

Organizations with evergreen missions (arts and education groups) or that are tackling deeply rooted problems (such as racism, homophobia, and sexism) and that have a base of individual donors should consider promoting legacy gifts.

Before doing so, however, it would be wise to have a number of things in place, including policies and materials to explain and promote your legacy giving program.

FOUNDATIONS OF A LEGACY GIVING PROGRAM

ENCOURAGING YOUR DONORS TO MAKE A LEGACY GIFT

When thinking about which of your donors to encourage to make legacy gifts, envision concentric circles. Start with your inner circle: board members, staff members, founders, and other “insiders.” When launching a legacy giving effort, first ask these people, including yourself, to make a legacy gift. Just as organizational leaders should set an example for the community by making annual gifts that are meaningful to them, so too should they make a legacy gift. Going through the process of setting up an estate plan and making a legacy gift will surface psychological, emotional, and practical barriers that other donors may face. Estate planning forces us to confront the inevitability of our death, something most people don’t want to focus on. So, even though a supporter may want to leave your organization an estate gift, not wanting to contemplate their own death may cause them to procrastinate completing the necessary paperwork. Estate planning may also surface family tensions. Going through the process of deciding on your own legacy gift will make you and other leaders empathetic to what other donors may experience, and will enable you to share how you dealt with your own challenges in creating your estate plan. Securing legacy gifts from your organization’s inner circle will provide you with inaugural members of your legacy society. When reaching out to your organization’s larger community, it will be helpful to list organizational leaders as founding members of the legacy society.

The next concentric circle will be loyal donors. Legacy giving donors are most likely those who have been giving consistently for years, not necessarily those who make large annual contributions. As mentioned, loyalty and longevity of giving are stronger indicators of legacy giving potential than size of donations. Consider sending a special communication focused on legacy giving (by snail mail or email) to the segment of your donors that has contributed any amount for three to five consecutive years. If yours is a membership organization, such a communication could go to people who have been members for at least three to five consecutive years.

If representatives from your organization meet regularly with major donors, consider integrating a legacy giving request in your conversations with them, bearing in mind that you’re not likely to receive an immediate positive response. Estate planning decisions should be thoughtful, and donors will need time to think about whether and how they might include your group in their plans. They may also need to confer with a spouse or partner. But by raising the subject, you can encourage your donors to begin thinking about making a legacy gift to your group. If a donor indicates that they’ll consider that option, you can follow up in subsequent conversations over the ensuing months or years.

Eventually, everyone in your organization’s orbit (board, staff, donors, volunteers, program participants, members, activists, people who receive your action alerts or your newsletter), regardless of whether they make financial contributions, should be encouraged to make a legacy gift. Do a quick inventory of all of the ways that your organization communicates with constituents, donors, volunteers, and the general public. Then consider how to integrate legacy giving messages into your organization’s existing communications. Here are some ideas for ways to bring up estate gifts with your organization’s larger universe:

• Website: As mentioned, add a legacy giving webpage to your organization’s website.
• Newsletters: If your organization issues printed or electronic newsletters, include stories about legacy giving once or twice a year. You can profile a legacy society member or a deceased supporter who left a legacy gift. Or you could include a short article about how donors can remember your organization in their estate plans.
• Reply Devices: Reply devices are the cards, tear‐off forms, or inside flaps of return envelopes that organizations include with solicitation mailings for donors to complete when mailing a donation. Add to your reply devices options for donors to check if they’d like information on how to include your organization in their estate plans, and if they’ve already done so.
• Annual Reports: If your organization publishes an annual report, include a list of current legacy society members, as well as a list of supporters who passed away during the past year and left an estate gift. These acknowledgments not only honor your legacy giving donors, but they also encourage others to consider supporting your group through their estate plans.
• Thank‐You Letters: As we explained in Chapter Seven, sending donors letters acknowledging their gifts is an essential component of solidifying and deepening relationships with them. Thank‐you letters are also opportunities to raise the subject of legacy gifts. A P.S. in a thank‐you letter, for example, can read, “Your gift will help us meet immediate needs. Have you considered investing in our long‐term viability through your estate plan? Learn more here (link to legacy giving webpage).”
• Email Signature: You may already have an automatic email signature that includes your name, phone number, and organization’s logo, perhaps with a link to your group’s website. Consider adding to that signature a short line or phrase (“Make an estate gift to [name of your organization])” with a link to your group’s legacy giving webpage.

Estate planning is not usually in the front of most people’s minds. Specific life events, such as marriage, divorce, birth of a child, or death of a sibling or parent, may trigger someone to consider creating or revising an estate plan. Because these events don’t take place regularly in most people’s lives, you’ll want to have steady reminders about legacy giving in your organization’s various communications to increase the chance that your donors will consider your group when they create or revise their estate plans.

WHEN SOMEONE INFORMS YOU OF A LEGACY GIFT INTENTION

With ongoing promotion of legacy gifts, you’ll hear from supporters who have included your organization in their estate plans, especially if you encourage people to let you know about their legacy gifts. When you learn from donors of their intended estate gifts, you will want to do all you can to deepen your relationships with these very special supporters. Here are some ideas for how to do that.

• Special Thank‐You Letter: Naming your organization as a beneficiary in an estate plan is a significant decision. In doing so, donors are telegraphing that they consider your group on the same level as family or other individuals of great importance to them. You’ll want to recognize this decision with, at the very least, a thank‐you letter expressing your organization’s gratitude for the donor’s long‐term investment in your group. The letter can also welcome these donors to your legacy society.
• Visits: If your organization provides a certificate or memento to legacy society members, see if you can pay the legacy giving donor a visit to deliver the item and thank them in person for their thoughtfulness. Representatives of your organization may never have met legacy giving donors who are not major gift contributors—and many may not be. This is a good opportunity to get to know them and find out what motivated them to make a legacy gift.
• Events: When your legacy society reaches a critical mass, consider hosting an annual gathering for society members. It can be a simple luncheon in your office with sandwiches and salads from a local restaurant, and a staff member telling legacy society members about an interesting current development in your organization’s work. If your group already invites major donors to special gatherings, invite legacy society members to those gatherings, too. If your organization sends special updates or mailings to major donors, integrate legacy society members to receive those communications.

WHEN A GIFT MATURES

Over the course of time, legacy contributions will “mature,” meaning that legacy giving donors will pass away and your organization will receive their gifts. You’ll usually learn about a legacy giving donor’s death through a mailing from a representative of the donor’s estate or trust. Upon receiving this news, do the following:

• Contact the estate or trust’s representative (executor of a will, trustee of a trust, or the estate or trust’s attorney) to express condolences, convey your organization’s gratitude that the donor remembered your group in their estate plan, and request a copy of the will or trust. If the representative is not a relative of the deceased donor, ask for the name and address of the donor’s next of kin so you can send that person a condolence letter. You can also ask the representative when they anticipate making distributions from the estate to beneficiaries.
• Set a tickler to communicate with the estate or trust’s representative if you haven’t heard back from them by the time they anticipated making distributions from the estate.
• Send a letter of condolence and gratitude to the donor’s next of kin, if different from the estate’s representative.
• After you receive a copy of the will or trust, check for your organization’s interest in the estate and whether there are any restrictions on the gift.
• Remove the donor from your organization’s mailing lists and mark in your database that the donor has died.
• Consider including a profile of the donor in a newsletter as a way to honor their life and recognize their estate gift.

Unlike annual fundraising campaigns or capital campaigns, which are time sensitive, creating the infrastructure to promote legacy gifts can take place over time. You can start by adding a legacy gift page to your organization’s website, or including a legacy gift check‐off box on your remittance envelopes. You can begin asking board members and others close to your group to consider making a legacy gift, and then move to other donors.

If your group has a solid base of individual donors and you believe that your organization should exist in 50 years, encouraging legacy gifts is a strategy you need to consider implementing sooner rather than later. All of your current donors are eventually going to die. A significant percentage of them will pass away with a will or a trust in place. Of those, 8% will have made bequests to nonprofits. Your organization should be one of them.