What is Planned Giving?

Planned giving (also referred to as gift planning or legacy giving) enables philanthropic individuals to make larger gifts to charitable organizations than they could make from ordinary income (such as salaries, wages, bonuses, rents, tips, royalties, interest income from bonds, commissions, dividends).

Some planned gifts provide life-long income to donor in return for their gift. Other gift plans use estate and tax planning to provide for charity and heirs in ways that maximize the gift and/or minimize its impact on the donor’s estate.

Thus, by definition, a planned gift is any major gift, made in lifetime or at death as part of a donor’s overall financial and/or estate planning. These include gifts of equity, life insurance, real estate, personal property, or cash.

By contrast, gifts to the annual fund or for membership dues are made from a donor’s discretionary income, and while they may be budgeted for, they are not planned.

Whether a donor uses cash, appreciated securities/stock, real estate, artwork, partnership interests, personal property, life insurance, a retirement plan, etc., the benefits of funding a planned gift can make this type of charitable giving very attractive to both donor and charity.

Types of Planned Gifts

Although planned gifts have been around for years, their perceived level of complexity have made it inaccessible to the general population until 2000 by Viken Mikaelian and John Foster who established the planned giving marketing firm VirtualGiving.Com and bring planned giving to the Internet. They divided planned gifts into three categories on their planned giving websites and publications directed to donors:

  1. The Simple Gifts (they named it “gifts anyone can make”
  2. Gifts that Pay You Back (life-income gifts)
  3. Gifts that Protect Assets

The Simple Gifts

These include:

  • Bequests
  • Stock and Appreciated Securities
  • Life Insurance – Lifetime Gifts
  • Life Insurance – Estate Distributions
  • Business Interests, Closely Held Stock, Partnerships
  • Tangible Personal Property
  • Intellectual Rights
  • Real Estate
  • Retirement Plan – Lifetime Gifts
  • Retirement Plan – Estate Distributions
  • Donor Advised Funds

The Gifts that Pay You Back

  • Charitable Gift Annuity: Immediate
  • Charitable Gift Annuity: Deferred
  • Charitable Gift Annuity: Flexible Payment
  • Remainder Annuity Trust
  • Remainder Unitrust
  • Flip Unitrust

Gifts that Protect Assets

  • Charitable Bargain Sale
  • Charitable Lead Trust
  • Retained Life Estate

All of these gift plans are covered in depth at Planned Giving Wiki.