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Establish a Plan Early for Counting Planned Gifts in a Campaign

by Andy Canada



Nonprofit organizations across the country utilize campaigns to rally key constituents around programs and projects that move the organization forward. Fundraising campaigns provide a great platform to share the vision of the organization, serve as the catalyst to engage volunteers in hands-on fundraising activities, and significantly increase philanthropic resources to the organization. When done properly, campaigns can significantly enhance an organization’s impact and improve operations, however, much planning and preparation are required before moving into a campaign.


The role of planned gifts in a campaign is one area that must be discussed early. Planned gifts are funding as much as 40 percent of some comprehensive campaign goals, so it is crucial to establish a clear policy for these types of donations before beginning to solicit gifts for a campaign.


In the simplest form, planned gifts refer to gift intentions that are made during someone’s lifetime that will benefit an organization after that individual, or additional beneficiaries, pass away. These types of gifts can include bequest intentions, life insurance, charitable gift annuities, charitable remainder trusts, and many other giving vehicles.


At JGA we have seen an increased focus from donors on planned gifts as they consider how they can support an organization they care about with a significant gift. However, before entering into these discussions with donors, organizations need to have internal discussions with staff, leadership, and the board to ensure that everyone is on the same page regarding the role of planned gifts in a campaign.


Here are some of the questions that should be addressed about planned gifts before moving into a campaign:


  • Given the specific components of the campaign, can planned gifts play a role in the campaign and if so at what level?

o   If your campaign is focused on capital projects or immediate needs, then planned gifts are most likely not the best gift vehicle for the organization to pursue or count towards a campaign goal.

o   Components that focus on establishing or building endowment align very well with planned gifts. This is particularly true when the donor will also consider making a blended gift – an outright gift during their lifetime in addition to a planned gift. This might be able to provide immediate funding for the specific purpose of the endowment.


  • What level of spendable assets does the organization need to have in hand when the campaign is concluded?

o   For instance, if the campaign goal is $25 million, and $15 million of that goal was funded through planned gifts, will the board and senior leadership be able to implement the intended outcomes from the campaign?

o   Counting deferred gifts in a campaign total can create challenges if an organization announces publicly that the campaign met or exceeded its goal, yet donors don’t see the improvements or programs outlined in the campaign case become a reality because it will be several years before the organization has the cash-in-hand to implement the changes.

o   Engaging the CFO and fundraising staff in early planning discussions and developing cash flow projections can ensure everyone is on the same page and limit any surprises or confusion as campaign gifts are being solicited.


  • How will planned gifts be counted in the campaign, particularly if it is a comprehensive campaign where all gifts to an organization are counted in the campaign?

o   Clients in the early stages of developing a campaign regularly ask our recommendations on counting planned gifts. Some feel that if a donor elects to make the organization aware of a planned gift during the campaign it should be counted towards the campaign goal. However, there are factors that need to be considered when outlining your policy towards planned gifts.

o   One of the primary considerations is the age of the donor. Why should a donor’s age determine whether their commitment counts toward a campaign goal? If a donor makes the gift commitment, then why shouldn’t we count the gift? When looking at a 45-year old donor as compared to a 75-year-old donor, the important difference to the organization is the timing of when the gift will make an impact on the organization. It is wonderful that a younger donor wants to include an organization in their estate plans, and we need to recognize that gift and steward that donor just like we would the 75-year-old donor. However, from a campaign perspective, that gift will most likely not impact the organization for many decades and that timeframe needs to be considered when determining if the gift should be counted toward the campaign goal.

o   Recommended standards for counting deferred gifts have been developed by CASE and the National Association for Charitable Gift Planners. These can be used as a guide for your organization in establishing a policy for counting deferred gifts in a campaign. At JGA, we generally recommend using a conservative age of 65 years or older at the conclusion of the campaign to determine which gifts should be included in the campaign.


  • Should an organization allow naming opportunities to include planned gifts? If so, should the planned gift count in the same manner as an outright gift?

o   In many cases, an organization will rightly limit its most prominent naming opportunities to outright gifts. For example, the naming opportunity associated with a new building that is yet to be constructed. Often, organizations must first raise funds through private philanthropy in order to move forward with such a project. Naming the building in return for a planned gift won’t help with short term construction costs.

o   On the other hand, planned gifts may be appropriate for naming opportunities unrelated to new construction. In higher education, for example, donors often establish endowed scholarships or faculty positions through estate commitments or through blended gifts. Perhaps a donor will agree to establish a named scholarship, fund the principal of the scholarship through a bequest in her estate plan, and replicate the impact of endowment income during her lifetime by making annual gifts to be awarded to scholarship recipients each year.

o   When including planned gifts in the funding of naming opportunities, it is important to account for the time value of money. An outright gift of $100,000 today presumably has greater value than a gift to be received 20 years from now through a donor’s estate. How should an organization calculate this difference in value? First, the organization should establish a policy to use a specific discount rate. One option to consider is the Charitable Federal Midterm Rate (also known as the “sec. 7520 rate”) which is commonly associated with charitable remainder trusts and charitable gift annuities. Adjust the dollar amount of the naming opportunity to reflect the donor’s actuarial life expectancy and the discount rate. Depending on the specific situation, a naming opportunity of $100,000 might be adjusted to $150,000 or $250,000 for a bequest. Some organizations use an escalator clause in the gift agreement (and for the donor’s attorney to include in the estate). The bequest language in the donor’s estate plan indicates an increasing amount for the bequest in the future. The year of the donor’s passing then determines the amount of the bequest.


  • How do you communicate your campaign counting policy to your development team and prospective donors during the campaign?

o   Be transparent and communicate the policy with donors through personal communication. Share the thought process for how the policy was set.

o   Recognize all donors and provide a high level of stewardship. If your organization has a planned giving or legacy society, then include donors who have a planned gift in their estate plans but are too young for the gift to be counted in the campaign in this society. If you don’t have a planned giving society, consider starting one.


Planned gifts are the ultimate gift a donor can make to your organization and for most donors this is how they can make their best gift to support a mission about which they care deeply. Be prepared ahead of time to properly handle these types of gifts before you begin soliciting them for your campaign. Have these crucial internal conversions early in the process to ensure all of the internal team are on the same page and it will be easier to communicate to donors a clearly refined policy that will show how much you appreciate their support.