What Is a Legacy Donor?

Has your nonprofit considered the power of legacy giving?

Legacy giving is a form of charitable donation that allows individuals to extend their support for your organization well beyond their lifetime. Legacy donors, as they’re called, choose to include your nonprofit in their estate plans, designating gifts like cash, property, or investments to fuel your mission after they’re gone.

In this article, we’ll explore how legacy giving works, what it can achieve for nonprofits and their donors, and we’ll explain how you can set up a legacy donor program for your nonprofit. Plus we’ve thrown in some tips for how to successfully connect and build relationships with potential donors.

What are the benefits of legacy donations?

Legacy giving is a win-win for both nonprofits and donors. By encouraging legacy giving, nonprofits can secure their financial future and ensure their continued ability to fulfill their mission for generations to come. As for the donors, they get the opportunity to leave behind a meaningful legacy that will continue to reflect their values and beliefs long after they pass. We all want to feel like we’ve made a lasting impact on the world, and legacy donations are one way for people to ensure that their contributions will live on after them.

Legacy donations offer nonprofits a stable and predictable source of funding that can be used to support long-term projects and initiatives. A legacy donation program can help you build stronger relationships with your donors and their families.

Legacy giving also provides tax advantages for donors and their estates: it helps them minimize tax liabilities while maximizing philanthropic impact.

What types of legacy donations are there?

When it comes to supporting nonprofits beyond one’s lifetime, there are lots of avenues for donors to explore. Different types of legacy donations cater to different financial situations, philanthropic goals, and personal preferences. Here are some of the most common ones.

Bequests

Bequests are a way for donors to leave money, property, or assets to a nonprofit in their will. Donors can designate a fixed dollar amount, a percentage of their estate, or specific assets to be transferred to an organization upon their passing. Bequests are one of the most common and straightforward forms of legacy giving because they provide donors with the flexibility to support causes close to their hearts while ensuring their wishes are carried out after they’re gone.

Charitable Gift Annuities

Charitable Gift Annuities (CGAs) allow donors to make a gift to an organization in exchange for receiving fixed payments for life from the nonprofit. Donors transfer assets to the charity, which then pays them a regular income stream starting either immediately or at some point in the future. Upon the donor’s passing, the remaining funds are used by the charity to support its mission. CGAs offer donors a way to support causes they care about while receiving financial benefits during their lifetime. They provide a win-win scenario by combining philanthropy with financial planning.

Retained Life Estates

With a Retained Life Estate, donors transfer ownership of a property, such as a home or piece of land, to a nonprofit but retain the right to live in or use the property for the duration of their lives or for a predetermined amount of time. This arrangement allows donors to receive an immediate charitable income tax deduction based on the present value of the property’s remainder interest. The donor is responsible for taxes, maintenance, and upkeep while they still live on the property, but upon their passing, full ownership transfers to the nonprofit for their use or sale.

Retirement Funds

Donors can also name a nonprofit as a beneficiary of their retirement accounts, including Individual Retirement Accounts (IRAs), 401(k)s, 403(b)s, or pension plans. This method of giving avoids the complexities of will or trust modifications and offers tax advantages: for instance, unlike distributions to heirs, these gifts typically pass tax-free, maximizing the amount that goes to the charity. Donors also retain full control and access to their retirement savings throughout their lifetime, ensuring their security while still supporting their chosen cause and leaving a lasting impact after they’re gone.

Life Insurance

As with retirement funds, Donors can also name nonprofits as beneficiaries of their life insurance policies. Donors can make significant contributions through low, spread-out premiums, making this form of donation more financially accessible for the average contributor. Donors can designate a portion or the entire death benefit to a nonprofit, tailoring their gift to their goals and budget. Life insurance proceeds typically bypass probate, ensuring the charity receives funds quickly and efficiently, easing the settlement process for all involved.

Charitable Remainder Trusts

With a Charitable Remainder Trust (CRT), donors transfer assets, such as cash, securities, or real estate, into an irrevocable trust. The trust then pays income to the donor or their designated beneficiaries for either their lifetime or a specified term of up to 20 years.

CRTs offer a variety of benefits. Donors receive an immediate tax deduction for the charitable remainder going to their chosen nonprofits. They can also diversify their portfolio within the CRT, selling appreciated assets tax-free and reinvesting for potentially higher income. CRTs can also reduce estate taxes by removing assets from the taxable estate.

How to set up a legacy donor program for your nonprofit

So we’ve established the benefits for nonprofits and donors – but how do you establish a robust legacy donor program for your organization? If you think a legacy donation program is right for your nonprofit, follow these actionable steps for creating a successful program that enhances your organization’s  impact and promotes enduring partnerships with donors.

1. Know your goals

Before launching a legacy donor program, it’s crucial to define clear goals and objectives. Determine what you aim to achieve, whether it’s increasing legacy donations, fostering donor relationships, or ensuring long-term financial security. Align your goals with your organization’s mission statement and strategic priorities to guide your program’s development effectively.

2. Get your board on board

Engage your board members in the development and promotion of the legacy donor program. Educate them about the importance of legacy giving and its impact on the organization’s future. Encourage their active participation in fundraising efforts and leverage their networks to identify potential legacy donors and advocates.

3. Build an advisory committee

Form an advisory committee with members who have established expertise in fundraising, estate planning, and nonprofit governance. This committee can provide valuable insights and guidance in developing and implementing your legacy donor program. Utilize their knowledge and connections to strengthen your program’s effectiveness and reach.

4. Establish a legacy society

Create a dedicated legacy society to honor and recognize individuals who have included your nonprofit in their estate plans. Offer exclusive benefits and recognition to members, such as special events, newsletters, and commemorative gifts to foster a sense of belonging and responsibility among legacy donors.

5. Develop legacy donation acceptance policies

Establish clear guidelines and procedures for accepting and managing legacy donations. Since these donations are more complicated than a single or recurring cash contribution, you’ll want to define criteria for acceptable gifts, such as bequests, charitable trusts, and beneficiary designations and outline protocols for acknowledging donors, managing their gifts, and ensuring compliance with legal and ethical requirements. Regularly review and update these policies as needed to maintain transparency and accountability.

6. Create a legacy donation page on your website

Develop a dedicated webpage on your nonprofit’s website specifically for legacy giving. Provide information about the importance of legacy donations, different giving options, and how donors can include your organization in their estate plans. Make it easy for donors to access resources, contact information, and testimonials to inspire their generosity.

7. Market, market, market

Promote your legacy donor program through diverse marketing channels, including SEO, content marketing, newsletters, social media, email campaigns, and direct mail. Highlight success stories, testimonials, and impact stories to inspire potential donors. Continuously engage and educate your audience about legacy giving opportunities to increase awareness and participation.

8. Thank your legacy donors

Express sincere appreciation to your legacy donors for their generous contributions and commitment to your nonprofit’s mission. Personalize acknowledgments and recognition efforts to convey gratitude and build a strong sense of connection and loyalty. Regularly update donors on the impact of their gifts and involve them in special events and activities to cultivate lasting relationships.

Tips for successfully soliciting legacy donations for your nonprofit

Successfully soliciting legacy donations requires you to educate, engage, and empower potential donors. Here are some key tips to guide your efforts in cultivating meaningful relationships with legacy donors and securing vital support for your nonprofit’s mission and programs.

• Cultivate Relationships with Major Donors: Legacy gifts often come from long-term, loyal donors who have a deep connection to your organization’s mission. Invest time in building relationships with these individuals, understand their philanthropic interests, and personalize your communication.
• Be Transparent About Your Organization: Build trust and confidence in your organization by demonstrating strong financial stewardship, accountability, and transparency. Clearly communicate how legacy donations will be used to support your mission and programs, and provide donors with regular updates on the impact of their gifts.

• Educate Donors about Legacy Giving Options: Many potential donors may not be aware of the various ways they can leave a legacy to support your organization. Provide clear and comprehensive information about different legacy giving options.

• Share Stories About the Impact of Legacy Gifts: Emphasize the transformative power of legacy donations and how they can make a lasting difference in advancing your mission and programs. Share compelling stories and examples of how legacy gifts have positively impacted your organization and the communities you serve.

• Make It Easy for Donors to Get Involved: Offer individualized assistance to donors who express interest in making a legacy gift. This may include meeting with donors one-on-one to discuss their philanthropic goals, providing resources and guidance on estate planning, and connecting donors with legal and financial professionals who can help facilitate their legacy giving plans.

By following these tips, your nonprofit can create a strong legacy giving program and secure the future support it needs to continue your mission for years to come.

Let Big Sea help market your nonprofit to legacy donors

Big Sea specializes in nonprofit marketing, including reaching out to potential legacy donors. Our expertise in SEO, web design, and marketing strategies can help your organization effectively promote legacy giving opportunities and attract and cultivate lasting relationships with donors. Contact us to find out how to harness legacy donations to ensure your nonprofit’s future.