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How to Set Up a Planned Giving Program

A planned giving program will help your shelter look after the animals in its care while helping potential donors look after the money in their bank accounts.

Planned giving programs are among the best ways for a nonprofit organization to raise money, yet many shelters are afraid to tread such unfamiliar territory. Simply put, these programs allow donors to plan today to make substantial contributions tomorrow. One of the biggest hurdles in front of many shelters is understanding the many ways that your organization can accept contributions. Although you don’t need to get too caught up in all the complex terms, a basic knowledge of these plans will help you understand the concepts before you talk to qualified investment professionals.

Bequests. A bequest is simply an instruction that individuals write into their wills leaving money or other property to another person or organization; for example, “I give, devise, and bequeath $5,000 to the PAWS Animal Shelter, a charitable organization located at 123 Main St., Springfield, IL 45678.” It’s the simplest way for people to give, and the simplest way for your shelter to get a planned giving program underway.

Charitable Gift Annuities. In this case, an individual gives your organization (the “charity”), say, $10,000 as a “gift” and your shelter returns a certain sum of money to that individual every year, say, 6.5% or $650 annually (thus the term, “annuity”), which varies with the person’s age (the older the donor, the higher the percentage). Think of it as the donor giving your shelter the tree but continuing to get the fruit. The shelter is able to invest the money prudently; meanwhile, the donor gets great tax benefits while still collecting an “income” until his death, when the remainder of the gift becomes the property of the shelter.

Pooled Income Funds. This is similar to charitable gift annuities, only with a few more ingredients—more people, to be exact. In this plan, any number of people provide smaller gifts, say $1,000 each, and your shelter “pools” the gifts into one account, then invests that money responsibly. Rather than caring for an individual tree, the shelter is now tending a community garden. As with the previous option, the shelter then pays donors a certain amount of money annually, but in this case the sum varies depending on the success of the investment. Similar funds called charitable remainder trusts may involve a single donor and a different money manager, but ask your financial advisor for more information.

Life Insurance. An attractive option for people ages 35–50, this plan allows the donor to write a check to your shelter monthly, biannually, or yearly (say $200 over the course of a year for a $10,000 policy). Rather than spend the money, your shelter pays the premiums to an insurance company, and upon the individual’s death, the shelter receives the full value of the policy. In the meantime, the donor gets to deduct the monthly payment from his taxes because in effect he’s giving to a charity.

Appreciated Property. In this plan, a donor gives you something that’s worth more now than it was when originally acquired—stocks, bonds, real estate, even collectible coins and stamps. If someone buys shares of stock for a total of $400 and years later they’re worth $8,000, that person can pass on the entire amount to your shelter, and claim it all as a charitable donation. If he had cashed in those stocks first, he would have had to pay taxes on the gain ($7,600) and donated whatever was left over. But because the money is going directly to your charitable organization, there’s no need to pay the taxes, so your shelter gets every cent.

Now that you understand some of the basic ways to accept donations, you can take the next step—locate people who can contribute their talents and time so that donors will contribute even more.

1. Go Professional

Sit down with a lawyer, accountant, insurance agent, and a financial planner to discuss your goals for a planned giving program. These professionals can guide you through the legal and financial maze of investing, and they’ll be able to answer all the complex questions that can’t be addressed here. They’ll also help you develop some standard wording that donors can use when preparing bequests, to help you avoid legal complications when wills are executed.

2. Bank On It

Set up an account at a local bank or brokerage firm so that you have a place to hold any funds, and talk about how you might invest the money: CDs, stocks, bonds, or a simple savings account. Although you can’t expect to see any returns on this “investment” for a number of years, you’ll want to be prepared well before donations start coming in.

3. Spread the Word

Place notices about planned giving in your shelter newsletter and in adoption kits. Speak to local attorneys, accountants, certified financial planners, bank trust officers, insurance agents, and brokers who interact regularly with potential donors. When people ask an attorney, “How can my money be used to help animals?” your shelter’s name should be on the tip of her tongue. If people don’t know that you have a planned giving program, then you won’t have a planned giving program.

4. Hurry Up and Wait

The initial investment of time and energy involved in setting up and promoting the program won’t bring immediate results. You’ll need to actively pursue those potential donors who know that they want to give but are unsure which charity is the best or which plan is the most advantageous. And those development directors who are just starting a program may not even be around long enough to see the payout. But if you lay the groundwork for a planned giving program today, you’ll be able to care for animals tomorrow, and in the years to come.

Note: This article is not intended to provide the legal, tax, or financial advice that you will need to implement the ideas presented. To obtain such advice, you’ll need to employ the services of competent legal and financial professionals in your locale.


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