chapter 23 Legacy Giving

The term legacy giving (also called planned giving) refers to arrangements made for a nonprofit to receive contributions from the estate of a donor. These gifts are generally made by long-time donors who believe the work of the organization must continue after their own lives are over, and, more important, who have faith that the organization will continue to do a good job for years and years to come. These are not necessarily major donors; many bequests come from donors who have given small amounts to an organization for a long time. When I look around at board meetings I attend, I often reflect that in thirty years (which is really very little time), people who aren’t even born yet will be running the organization. I will be deceased. What would I need to know about this organization to trust that it will continue to attract people to its board and staff (people who don’t exist yet) who will continue to do good and needed work? Whatever information creates that confidence is fundamental to persuading donors to consider legacy gifts.

Some organizations use legacy gifts for annual expenses, but because the gift is not repeatable, this practice is unwise. A more appropriate use of legacy gifts could be for capital improvements. But most nonprofits use legacy gifts to build endowments. An endowment is a permanently restricted fund invested to generate interest. The principal, or corpus, is never spent but is added to as more legacy gifts come in. Unless ...

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