Picture this: a world where your values, your dreams, and your unwavering commitment to the causes you hold dear continue to flourish long after you’re gone.
Welcome to the realm of planned giving, a strategic journey that goes beyond ordinary philanthropy … beyond one-time donations.
In this 2025 guide*, we’ll discuss the world of planned giving, looking at some of its various names and forms, including legacy giving, charitable bequests, and planned giving programs.
So, if you’re eager to explore how you can leave a legacy that echoes into the future, you’ve landed in the right space.
What Is Planned Giving?
At its core, planned giving is an intentional way of supporting the causes you’re passionate about.
It goes beyond traditional donations, involving meticulous planning and consideration to ensure your support continues beyond your lifetime.
Planned giving offers a channel to create a lasting legacy that shapes the world long after you’re gone, regardless of whether you’re an advocate for:
- • Environmental conservation.
- • Education.
- • Health care.
- • Any other cause.
Remember, planned giving isn’t confined to a dollar amount and doesn’t have to be a major gift; it’s a testament to your values and aspirations.
As you navigate the realm of retirement plans, real estate, life insurance, and estate planning, you’re fashioning a story that goes beyond you — a story of transformation, a story of making the world a better place.
Let’s look at various types of planned gifts and highlight their similarities and differences.
1. Legacy Giving
Legacy giving, also known as legacy gifts or legacy donations, is the heartfelt act of bestowing a portion of your assets or estate to a nonprofit organization or charity of your choice after you have passed.
This benevolent gesture is typically outlined in your will or trust, ensuring that your philanthropic aspirations continue to thrive beyond your lifetime.
At the heart of planned giving lies the intention to create a lasting impact, and legacy giving serves as its embodiment.
When you engage in legacy giving, you’re thoughtfully designing a road map for your charitable contributions, often taking into account:
- • Financial or estate planning.
- • Tax benefits (e.g., estate tax considerations).
- • Long-term philanthropic goals
Within this framework, legacy giving emerges as a pivotal mechanism to solidify your imprint on the world. This type of gift leaves a legacy — signifying something that you stood for in life and want others to continue to benefit from after your death.
2. Charitable Bequests
Charitable bequests are a cornerstone of planned giving.
A specific type of legacy gift, a charitable bequest is a gift outlined in your will or trust document, earmarking a specific amount or asset to go to a chosen nonprofit organization.
Charitable bequests take various forms, including donations of money, property, or other assets.
As you navigate the world of estate planning, consider the profound impact of charitable bequests.
Collaborating with financial advisors and legal experts can help ensure that your bequest aligns with your overall financial strategy and estate plan, maximizing the positive impact on both your chosen cause and your financial legacy.
3. Nonprofit Planned Giving
Nonprofits reap profound benefits from embracing planned giving. As they establish structured planned giving programs, they open doors for supporters to forge a legacy aligned with their beliefs.
These programs extend a spectrum of options to donors while securing the organization’s future projects. Split-interest gifts such as charitable gift annuities, pooled income funds, and charitable remainder trusts allow a donor to contribute cash or appreciated assets, receive a tax deduction, and receive income for a period of time. At the death of the beneficiary, the remainder passes to the nonprofit organization.
To complement planned gifts, donor-advised funds offer unique avenues for individuals — and families — to make a positive difference in the world. An established DAF can even be named in a donor’s estate plan as a charitable beneficiary, allowing a successor advisor to continue recommending charitable grants on the donor’s behalf.
Crafting Your Planned Giving Program
Are you a nonprofit grappling with the idea of venturing into planned giving?
Starting a planned giving program could be the first step to ensuring your organization’s enduring success.
This journey involves not only educating potential supporters about the impact of legacy giving but also collaborating with legal and financial advisors to facilitate a seamless asset transition that echoes the person’s wishes at the eventual point of a donor passing.
Maximizing Tax Benefits & Beyond
Engaging in planned giving isn’t just about creating a legacy – it’s also about the financial and tax benefits. By incorporating planned gifts into your financial or estate plan, you can often optimize your tax deductions while contributing to causes that resonate deeply with you.
Charitable Remainder Trusts
A Charitable Remainder Trust (CRT) is an estate planning tool that allows individuals to provide for both charitable causes and their beneficiaries.
It is an irrevocable, tax-exempt trust that pays income to beneficiaries for a set period or for life, then leaves the remainder to charity.
In a CRT, an individual transfers assets, such as cash, securities, or real estate, into a trust.
The trust then pays out income to one or more designated beneficiaries (usually the donor and/or their family members) for a specified period, which can be a set number of years or the lifetime of the beneficiaries.
At the end of the trust’s term, the remaining assets in the trust are distributed to one or more charitable organizations specified by the donor.
This distribution generates a charitable deduction for the donor, which can help reduce their taxable income. Additionally, by removing the contributed assets from their estate, they may reduce estate taxes.
There are two primary types of CRTs.
1. Charitable Remainder Annuity Trust (CRAT): In this type of trust, the donor and beneficiaries receive an annual payment from the trust based on a predetermined percentage of the initial trust assets.
2. Charitable Remainder Unitrust (CRUT): With a CRUT, the beneficiaries receive a percentage of the trust’s value, as revalued annually. This means that if the trust assets appreciate in value, the beneficiaries’ payments increase, potentially providing a hedge against inflation.
Charitable Gift Annuities
A Charitable Gift Annuity (CGA) is a contract between a donor and a qualified public charity. An individual donates a sum of money or assets to the charitable organization in exchange for a guaranteed stream of income for themselves or another beneficiary.
The charity agrees to make regular annuity payments to the beneficiary for the remainder of their life or for a specified period.
Presently, there is a tax-free opportunity for people 70½ and older to direct a single $53,000 IRA distribution toward a CGA, and numerous individuals are seizing this chance.
The annuity payments are determined based on factors such as:
- • The donor’s age.
- • The amount of the gift.
- • Prevailing interest rates.
A portion of the initial gift is considered a charitable contribution, which often provides the donor with a tax deduction in the year the gift is made. Additionally, by removing the contributed assets from their estate, they may reduce estate taxes.
The remainder of the gift is used by the charity to fund its programs and activities.
Pooled Income Funds (PIF)
A PIF offers a compelling way for donors to support their favorite causes while maximizing tax benefits.
Essentially, when you contribute to a PIF, your gift is pooled with contributions from other donors, and the combined assets are professionally managed to generate income.
As a donor, you receive a proportional share of the income generated by the fund for your lifetime (or another designated beneficiary’s lifetime).
One of the key advantages of a Pooled Income Fund lies in its tax benefits.
When you make a contribution, you can claim an immediate charitable income tax deduction based on the projected remainder value that will eventually go to the charity. This deduction often reduces your taxable income. Additionally, by removing the contributed assets from your estate, you may reduce estate taxes.
Contributions to a PIF also provide income diversification, which can be advantageous. Donors will receive variable payouts. Ultimately, after the lifetimes of all designated beneficiaries, the remaining assets go directly to the chosen charity.
This makes a Pooled Income Fund an excellent planned giving option, allowing you to achieve both financial goals and meaningful impact for causes that deeply resonate with you.
Charitable remainder trusts, charitable gift annuities, pooled income funds, and outright gifts can be powerful tools that not only shape your legacy but also provide you and your heirs with considerable tax advantages.
Next Steps: Leaving Your Imprint
Planned giving isn’t solely about what you leave behind; it’s about the indelible mark you make on the world. Through legacy giving, charitable bequests, and structured planned giving programs, you are crafting a narrative of change and compassion that echoes through generations.
But let’s face it, navigating the complex world of legacy giving can feel overwhelming.
Don’t worry — at the Convoy of Hope Foundation, we’ve got you covered! We provide a simple, four-step process that makes sure your wealth is maximized for the greatest impact.
Step 1
Meet With
Our Team
They’ll work toward understanding your unique giving desires and pair those goals with the appropriate financial strategies.
Step 2
Create Custom Giving Road Map
Our team will create your custom giving road map — a detailed plan charting the course to your unique destination.
Step 3
Meet With Your Tax or Financial Advisor
Don’t worry, we’ll guide you through this process to ensure you’re confident in your ability to communicate what you want to accomplish.
Step 4
Ongoing
Check-Ins
Your financial plan is a marathon, not a sprint — we’ll provide ongoing check-ins to make sure you’re on track to reach your goals.
Schedule a call today and let’s kick off your journey to becoming a wise giver. Together, let’s make lasting positive change in this world.
*Disclaimer: Convoy of Hope and Convoy of Hope Foundation do not provide legal, tax, investment, or financial advice. The information in this article is intended for educational purposes only and should not be construed as professional advice. Donors are encouraged to consult with their own legal, tax, investment, or financial advisors when evaluating gifts to charity. Convoy of Hope and Convoy of Hope Foundation disclaim any liability arising from reliance on information provided herein.
