Understanding Legacy Giving in 2023: Planned Giving Basics, Gift Types, Benefits and More

Finding a way to give back to your community or to an organization that aligns with your values provides purpose and meaning. While we often take a ‘what can we do now’ approach to charitable giving, the truth is planned giving is a great way to maximize charitable impact after your lifetime.

Planned gifts are often larger than standard donations and help drive major philanthropic dollars into the nonprofit sector.

In 2021 alone, charitable bequests (the most common type of planned gift) accounted for 9% of all donations, totaling $46.01 billion. It’s a significant amount – more than doubling donations from corporations ($21.08 billion) – and underscores the importance for nonprofit organizations.

What is Planned Giving?

Planned giving, also referred to as gift planning or legacy giving, is a donor’s intention to contribute a planned gift to an organization beyond their lifetime. This is often a continuation of the donations an individual or couple has made while living, but on a much larger scale.

Unlike an annual gift, a planned gift is scheduled for the future – often as part of financial or estate plans. Typically donated through a will or trust, planned gifts are realized after a donor passes away. Typically, planned gifts are coordinated with professional advisors, attorneys and nonprofit organizations.

It’s important to note that planned giving is not limited by your current wealth.

Planned gifts are typically larger than lifetime donations because they can come from a variety of traditional and non-traditional assets at times not eligible for gifting during one’s lifetime, including life insurance policies, retirement assets, equity, or real estate holdings, rather than standard income.

This means even if you consistently contribute small gifts, your planned gift can be of a much greater value and impact.

Why Make a Planned Gift: Benefits of Planned Giving

Couple on laptop

Why is planned giving important?

“Not only does planned giving represent the opportunity to provide long-term support to an organization, but it also gives donors a chance to establish a legacy,” explained an article in Trust & Will.

Other benefits include:

Perhaps the biggest benefit is that planned giving preserves a donor’s legacy.

Typically, a donor begins thinking about planned giving as they near retirement age but could start the process as early as their 40s. Since a planned gift usually aligns with a donor’s values and beliefs, the gift can be a personal one that represents a cause or nonprofit close to their heart, thus solidifying an impactful and lasting legacy for the donor.

Legacy Giving vs. Planned Giving

Planned giving is often referred to as legacy giving. The terms are generally interchangeable.

Planned gifts – or legacy gifts – can be used to support nonprofit organizations or establish legacy funds at community foundations. Legacy funds often fall into one of four categories:

Opening an endowment, or permanent legacy fund, with a planned gift is a flexible, efficient, tax-effective way to ensure the causes you care about will benefit from your generosity forever.

Legacy gifts are usually given upon a donor’s death – but not always.

According to an article by Nonprofit Hub, legacy giving can take several forms, “including recurring donations that begin while the donor is alive and continue after they’re deceased. And legacy gifts don’t have to be monetary, either. They can include material goods, property, stocks—anything that’s of value to the beneficiary.”

Types of Planned Gifts

The planned gift definition is any charitable donation that funds a legacy fund.

Planned gifts come in several forms, each distinct and beneficial in their own unique way.

Some planned gifts provide lifelong income to families while others use estate and tax planning to provide for charity and heirs in ways that maximize gifts or the impact on an estate.

What is a planned gift example?

Some of the more common types of planned gifts San Diego Foundation stewards are:

Maximizing Planned Gifts with Community Foundations

SDF can help determine which planned giving option is best for you and your family.

Our Giving Team is available to answer questions and assist with planning to ensure that your values and interests live on. By creating a charitable legacy, you can provide lasting benefits for you, your family, and your community.

Download our Guide to Estate Planning and Wills today to continue learning about planned giving and legacy funds.

Download the Planned Giving Guide

This helpful resource will show you how you can leave a legacy to your family, your charity or your community that complements your will and trust(s).

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