America’s coming generational wealth transfer: A Fundraising Frontier for Nonprofits
By Carolyn Kley Fanning, president of Planned Giving Solutions, Inc. based in Alexandria, VA.
According to the Boston College Center on Wealth and Philanthropy, the wealth transfer from the aging baby boomers (those born between 1946 and 1964) will reach almost $60 trillion over the next 55 years.
While some individuals will leave their assets to family, friends, and charitable organizations, almost 60 percent of Americans die without a will, leaving important decisions about the distribution of these estates to courts or government officials and agencies. The inevitable result is excessive taxation and government interference into what should be a private family matter.
One way nonprofits can avoid this situation is to encourage its supporters to complete a will or other estate plan. Doing so will not only provide for their families, but also for charitable organizations that have been important to them. Of course, any gifts to nonprofit organizations in an estate plan also reduce the likelihood of estate taxes.
Are you encouraging your donors to remember you in their wills? Are you providing helpful information to assist them in this process? Obviously these types of efforts can reap enormous future rewards for your organization and could reduce and redirect the almost $5.6 trillion that will wind up with Uncle Sam through estate taxes.
These types of estate gift are commonly referred to as “planned gifts,” meaning that they require more planning than simple outright gifts of cash or other assets. Furthermore, estate gifts require your supporters to consider all of their assets in addition to cash (e.g., stocks, real estate, retirement plans, other investments, tangible property, etc.).
The following options are planned giving opportunities that your organization can begin educating donors about today. These opportunities not only empower donors to choose how their estates will eventually be distributed, but they also encourage your organization to develop a long-term fundraising strategy that enables donors to support you even after their deaths.
Unlike elaborate trusts and other estate planning vehicles, individuals may very easily choose to include your organization in a will or other plan. A charitable bequest is simply a gift made at the end of an individual’s lifetime, directing a specific amount, percentage or remainder of the estate to a named charitable organization. Bequests may be funded with different types of assets, including cash, stock, real estate, personal property or savings bonds (to avoid payment of the accrued interest).
Bequests are totally revocable during a donor’s lifetime and require no upfront commitment of assets. If a supporter does pass away without revoking the gift, his or her estate will receive a tax-saving deduction.
Please review the following suggested bequest language with your supporters and their attorneys:
I give, devise, and bequeath to the [Organization Name] of__________________, [enter tax identification number, address, city, state and zip code], [enter amount, percentage or remainder of estate] for [undesignated or a donor-designated purpose].
You can provide supporters with this bequest language to make it easy for them to include your organization in their wills should they wish to do so.
Another “bequest-like” gift involves naming a charitable organization as the beneficiary of certain accounts, such as bank accounts, insurance policies, retirement plans, commercial annuities or stock brokerage accounts. Even simpler than a bequest in a will, a beneficiary designation only requires a donor to complete a change of beneficiary form from the plan administrator. There is no need for a new will or an amendment to an existing will.
Like a bequest in a will, a beneficiary designation is completely revocable during a donor’s lifetime and requires no upfront commitment of assets. If not revoked, this gift to your organization provides the donor with a tax-saving estate tax deduction for the value of the assets transferred.
Now you may wonder how to let your donors know these opportunities are available to them. Go here to learn easy marketing tips for encouraging donors to include your organization in their estate plans.
