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February 13, 2023

Everything You Need To Know About Planned Giving

By Kevin Donaldson

Making charitable contributions is a crucial part of helping charities and nonprofit organizations carry out the crucial work that they do. The more funds that an organization has, the more staff it can hire and the more services it can provide to those who need them most.

The amount of money that is given to charity continues to grow each year, with over $484 billion being given in 2021 in the United States alone. That money represents a lot of positive change in the world. 

While we know that giving is important, how we give is another question we must answer when looking to make an impact. There are many different ways to give to charity, with each one having its own advantages and disadvantages. The most common method of giving is cash donations, which is simply giving money to a charity in some form, such as cash, check, credit card, electronic funds transfer (EFT), or payroll deduction. Another way to contribute to charities is known as planned giving. In this article, we’ll explain everything you need to know about planned giving.


What Is Planned Giving?

Planned giving—sometimes called legacy giving—refers to a charitable donation that is arranged in advance and typically made as part of an individual’s overall financial and estate planning. It allows individuals to support their favorite charitable organizations in a way that fits their financial goals and long-term plans.

The goal of planned giving is to create a mutually beneficial arrangement between the donor and the charity, in which the donor’s gift helps support the charity’s mission, while also providing the donor with tax benefits, financial benefits, and a sense of fulfillment.

What Are the Different Types of Planned Giving?

There are many different types of planned gifts, each with its own unique advantages and disadvantages. Some of the most common forms of planned giving include:

1. Bequests – A bequest is a gift made through a will or trust that is paid out after a donor has passed away. This type of gift is a simple and flexible way for individuals to support the charities they care about even after they are gone. Bequests are the most popular form of planned giving, making up about 68% of all planned gifts.

2. Charitable Gift Annuities – A charitable gift annuity is a contract between a donor and a charity in which the donor makes a gift of cash, property, or other assets in exchange for the charity’s promise to pay a fixed amount of income to the donor for the rest of their life. After the donor passes, the rest of the assets are kept by the charity.

3. Charitable TrustsCharitable trusts are flexible, customized arrangements in which a donor can direct how their assets are to be used by the charity, both during a donor’s lifetime and after their death. There are several different types of charitable trusts, including charitable remainder trusts, charitable lead trusts, and supporting organizations.

4. Life Insurance – Donors can also use life insurance policies to make a planned gift to charities and nonprofit organizations. This can be done by making the charity the owner and beneficiary of the policy or by naming the charity as the beneficiary in a policy that the donor retains ownership of.

5. Retirement Plan Assets – Additionally, donors can name a charity as the beneficiary of their retirement plan assets, such as an IRA or a 401(k). This can be a tax-efficient way to make a planned gift, as the charity can receive the assets tax-free, while the donor’s estate can benefit from an estate tax charitable deduction.

There are many benefits to making a planned gift, both for the donor and for the charity. For the donor, planned gifts can provide tax benefits, help to meet financial goals, provide a source of income during retirement, and allow the donor to support the charities they care about in a way that fits their long-term financial plans. For the charity, planned gifts provide a dependable source of support that can help sustain the charity’s mission over time.

Nonprofit planned giving also allows donors to leave a lasting legacy that supports the causes they care about, and can help to make a positive impact on the world for years to come.

If you’re interested in making a planned gift, there are several steps you can take to get started. First, it’s important to do your research and find a charity that aligns with your values and goals. Then, you can work with a financial advisor or attorney to determine the best type of planned gift for your situation. This will help ensure that your gift is structured in a way that meets your financial and charitable goals.

At Habitat for Humanity of the Charlotte Region, we rely on our donors and volunteers to make our work possible. They are the ones who provide the benefits of homeownership to the individuals we serve by contributing to our programs, including through planned giving.

There are many different ways to contribute to the crucial work that we do. Legacy gifts, such as a bequest, life income plan, or beneficiary designation, provide a way to support Habitat Charlotte Region in the future while maintaining control over your estate and assets. Find out more about how you can make a lasting impact through a legacy gift to Habitat Charlotte Region here

Habitat Charlotte Region welcomes volunteers, supporters, and potential homeowners from all backgrounds. You can help us make a difference in the lives of others in the community by signing up to volunteer with us today! You can also get involved by supporting our work with a donation or even exploring our Homebuyer Program!

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