Planned Gifts: A Phone Call Worth $250,000

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The first time the trust department of the local bank called me, I was totally unprepared.

According to the bank, the church would be receiving a bequest worth nearly $250,000. This planned gift was nearly double the entire annual budget of the church!

We immediately agreed to meet in person to discuss the expected gift, and I learned of its source. The donor was a woman who had grown up in the small town more than eighty years earlier, had left during World War II to find work in a larger town two hours away, and had never looked back. She had not visited or been in contact with the church since her teenage years.

She did, however, remember with fondness the Sunday School class that she had attended as a little girl. In her will, she divided her estate into three gifts – half to a beloved charity in her adult home, and the other half split between another charity and the little church of her childhood. This gift came as a bequest – a planned gift given through her will.

What Is a Planned Gift?

Planned Gifts provide long-term benefits to churches. A donor may designate a planned gift in many ways: a bequest in their will, a beneficiary designation in an IRA or life insurance policy, or other more complicated arrangements. Fully 85% of planned gifts are made through a simple bequest in a will. For most people, this will be the largest gift they make. The gift will usually be realized after the donor’s death.

The most effective way to encourage church members to leave a bequest is also the easiest – a wills emphasis program. Such a program becomes a ministry to constituents, as everyone with loved ones to care for and assets to protect should have a will. Encouraging constituents to craft a will gives a church a perfect opportunity to ask to be remembered in someone’s estate plan.

Types of Planned Gifts

A planned gift may be restricted or may be unrestricted. A restricted gift will be given for a specific purpose. Legally, it must be used for that purpose, except in very special circumstances. An unrestricted gift may be used at the discretion of the charitable organization.

A bequest is the simplest and easiest form of a planned gift. A will may specify a dollar amount or a percentage of the value of the donor’s estate or the residual after other gifts are made. A donor may wish to designate their church as a beneficiary for an IRA, life insurance policy, or other retirement account. This is another simple way to remember the church in your will.

More complicated examples of planned gifts include:

IRA Rollover – a donor who is 70½ years old may gift a portion of their IRA distribution to charity for tax savings
Charitable Gift Annuities – a donor transfers a large gift to the charity. The charity guarantees a a fixed income payment to the donor for the rest of their life. The charity receives the residual amount of the gift.
Charitable Unitrust – a donor transfers property to a charitable trust. The trust liquidates the property tax free and provides the donor income for life or for a term of years, receiving the residual when the specified term ends.
Charitable Lead Trust – a donor funds a lead trust that makes gifts to the charity for a number of years. The donor’s family then receives the remainder of the trust at substantial tax savings.

Planned gifts require the expertise of a professional, such as a lawyer or accountant. Advise your constituents to consult their own advisers when establishing planned gifts. Be ready to suggest friendly advisers when asked.

The Importance of Planning

Another phone call story. The secretary of the church I currently serve called to say she had received a check from a life insurance company. She asked me to guess the amount. I guessed $35,000. I must admit, that is an educated guess. The average charitable bequest gift in the U.S. is $35,000. As it turns out, our beloved member was above average (of course!), leaving a life insurance benefit to the church of $43,000.

Many bequests will come unexpectedly. Don’t wait until you are forced to develop a formal planned giving or endowment policy. The receipt of a large, unexpected gift can cause problems when a church is unprepared. With gift policies in place, a church can determine in advance how an unexpected gift will be stewarded.

Directing gifts into an endowment – which can be started with just a $1,000 gift – helps churches avoid conflict, and permits the church to be supported into the future. Consider starting an endowment or promoting your existing endowment. We can help direct you toward a financial institution that can help start an endowment.

Planned gifts offer a huge blessing to churches, lasting across the generations, especially when they are well-managed with carefully considered policies and procedures. Begin building your congregation’s future today by developing a planned giving ministry that helps your constituents and helps support your church.

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