Planned giving: Complete introduction for nonprofits

Now, more than ever, nonprofits should invest in planned giving. 

Over the next 25 years, an estimated $68 trillion will be passed on as the large and wealthy Baby Boomer generation ages. This will mark the largest wealth transfer in human history and an unprecedented opportunity for philanthropy.

Americans have also demonstrated an increased interest in estate planning in recent years. As more organizations tune into this opportunity and ask for planned gifts, this form of giving has grown in popularity. Bequests alone made up a full 8% of all charitable giving in 2024, totaling $42.68 billion. 

Moreover, planned giving creates opportunities to engage your entire donor base. 

At FreeWill, we’ve seen fascinating planned giving trends among donors of all age groups. For example, while older segments remain able to give the largest gifts, donors aged 18-24 were highly likely to create a bequest in 2023 (and even increased their average gift value to $34,798).

If nonprofits can cultivate supporters now and make it easy for donors to include their organization in their wills, they can tap into what may be the biggest moment for planned giving, ever.

In this complete guide, we’ll cover everything you need to know about this form of giving and how to start creating your own planned giving program.

Understanding the basics of planned giving

What is planned giving?

Planned giving refers to the process of donors committing to give planned gifts to nonprofit organizations. Planned gifts are charitable contributions that are part of a donor’s financial or estate plans, typically given to nonprofits once the donor passes away. Planned giving is also often called legacy giving, although this term refers more specifically to deferred estate gifts.

What is the most common type of planned gift?

While there are a few different ways to give via planned giving, bequests are by far the most popular and easiest type of planned gift. Bequests are left in a donor’s trust, will, or estate plan and given to a nonprofit upon the donor's passing. Bequests make up roughly 8% of all charitable giving, and bequests made on the FreeWill platform alone in 2023 reached a total value of $1.8 billion.

How do nonprofits secure new planned gifts?

Nonprofits create and operate planned giving programs to grow their number of planned gifts and support the future of their organizations. Today, nonprofits commonly use dedicated Planned Giving Websites to promote programs and facilitate gifts.

Planned giving officers build relationships with prospective and current planned giving donors. Because planned gifts can often take years to materialize and donors may revise their wills over time, it’s essential for organizations to keep in touch with these donors and remind them of the impact of their gifts.

What kinds of nonprofits succeed with planned gifts?

Some organizations see especially pronounced success with planned giving. Churches benefit from their tight-knit communities and meaningful relationships to build thriving legacy giving programs. Many major universities receive large gifts, including complex planned gifts, that often flow into endowments or particular funds. 

But while churches and universities are on two ends of the spectrum, nonprofits of all missions and sizes with active donor bases can succeed with planned gifts. As we’ll explore below, this form of giving is uniquely (and often surprisingly) accessible to large segments of donors.

Who gives planned gifts to nonprofits?

Major donors contribute the largest planned gifts to nonprofits and are more likely to express interest in complex giving arrangements beyond simple bequests. However, donors at all giving levels can make valuable prospects.

After all, anyone can easily create a bequest (particularly using online tools like FreeWill). Planned giving commonly helps nonprofits uncover opportunities that they’d otherwise miss, for example, casual donors who commit mid-level bequest gifts or mid-level donors who unexpectedly leave the equivalent of a major gift in their wills.

The benefits of planned giving for nonprofits

If you want to invest in your organization’s capacity for planned giving, you’ll need to be able to make the case to your leadership. Why is it such a worthwhile priority?

Planned giving has a major impact on how an organization is able to plan for its future and sustain itself in the long run. Here are three key benefits that nonprofits receive from planned giving programs:

1. Planned giving opens up a pool of untapped revenue.

Because planned gifts don’t affect a donor’s everyday cash flow, they’re accessible to everyone—from those whose incomes rarely permit them to give to major donors who give generous annual gifts. While most planned giving officers focus on cultivating relationships with top donors, research from our founders actually shows that frugal donors who are lifelong savers are often in the best position to give large bequests.

An estimated 2% to 5% of the US population leave bequests in their estate plans. But in our planned giving report, we found that 16% of our users creating wills chose to create a charitable bequest, well above the national average. 

We’ve generated over $10 billion in planned gifts for nonprofits, with bequests spanning from $100 to $15 million—representing a pool of planned giving revenue that would have otherwise gone untapped.

2. Planned gifts help secure an organization's future.

The average gift size from a will-maker on FreeWill is quite high, consistently above $30,000 for younger donor segments and above $55,000 for older cohorts. 

These large gifts create a consistent source of funding and support for nonprofit organizations, even in times of economic crisis or losses in annual giving. 

Keep in mind that recent changes to the tax code in the United States have made securing these gifts even more essential. An increase in standard deductions leaves fewer Americans able to itemize deductions on their tax returns. Starting in 2018, this has resulted in the first year-over-year decreases in charitable giving from individuals in many years. By securing planned gifts from a wide range of prospects, nonprofits recoup these losses and build capacity outside of annual fundraising methods.

3. Planned giving increases annual giving.

Planned giving is generally thought to be at the top of the traditional donor pyramid—secured after donors give major gifts. But this isn’t necessarily true. 

Planned giving officers are often a part of the major gifts team at their organizations, adopting the tools of that discipline: identifying top prospects, meeting with them in person, and then gradually securing bequest commitments.

However, planned giving has been shown to increase annual giving from donors who create bequests, effectively inverting the traditional donor pyramid. It has proven a viable and effective way to engage donors at all giving levels.

Russell James, a Texas Tech professor and planned giving expert, conducted an in-depth analysis of charitable giving in 2014. He found that donors who left a charitable bequest in their will increased their average annual giving by more than $3,000.

How donors benefit from planned gifts

Donors also see unique, outsized benefits from creating bequests and other planned gifts. Once you understand these benefits and donors’ giving motivations, planned giving can make for an easy pitch to many supporters. Emphasize these benefits when discussing planned giving with your donors:

1. Planned giving allows donors to leave a legacy.

First, planned gifts are uniquely meaningful. If a donor has supported your organization for years, making a bequest in their will is a powerful way to leave a lasting impact. And if they haven’t been able to make a large gift during their lifetimes, they can establish their legacy by making a bequest in their will and supporting their favorite organization for years to come.

2. Donors can decide how their planned gifts are used.

When leaving a bequest in a will to a charitable organization, donors can allocate how or where they want the organization to spend it. Because wills are fairly easy to update, donors can also keep their bequests up-to-date by checking in with gift officers on where their donations will make the most impact.

3. Planned gifts can come with (often large) tax breaks.

Depending on the type of planned gift a donor makes, they can claim tax deductions. Bequests can reduce federal estate taxes for heirs, and these deductions aren’t limited to cash—they can include assets like real estate, IRAs, and stock. 

The IRS grants some other types of planned gifts, such as charitable remainder trusts, tax-exempt status. However, the tax advantages of planned gifts can be a little complicated, so gift officers should help donors evaluate them on a case-by-case basis and avoid giving explicit financial advice, instead referring donors to tax and finance professionals.

4. Planned gifts are highly flexible giving vehicles.

As mentioned above, planned gifts can take many forms and incorporate assets beyond cash, potentially involving a mix of cash, in-kind contributions, and other assets and securities. 

While bequests typically stay simple as portions of liquidated estates, more complex types of planned gifts can be highly customizable to meet donors’ wants and needs. For wealthy donors concerned with financial planning, the makeup of their estates, and receiving regular income during retirement, these gifts can be very helpful tools to consider (with added tax benefits).

The most common types of planned gifts

Planned gifts generally fall within a few categories: outright gifts of cash or non-cash assets, gifts that pay income back to the donor, and more complex gifts that protect or retain a donor’s assets. Within these categories, several popular types of planned gifts stand out:

• Bequests. These ‘outright’ gifts are left as a bequest in a legal will, given as a specific amount or portion of a donor’s estate.
• Charitable gift annuities. Annuities allow donors to give large amounts of cash or assets in exchange for a fixed income payment according to the agreement’s terms, with the organization keeping leftover funds and, typically, income generated through investment.
• Charitable remainder trusts. Trusts can take several forms, but all generally involve the nonprofit receiving its remaining value after the trust’s term ends. A charitable remainder annuity trust pays the donor a fixed amount based on the initial fund assets, while a charitable remainder unitrust pays the donor a percentage of the principal that’s revalued annually.
• Charitable lead trusts. A lead trust pays the donor an income to the nonprofit according to the agreement’s terms, with the remaining funds returning to the donor or their heirs.

Nonprofits increasingly include non-cash giving in their planned giving programs, as well. Gifts of stock, real estate, QCDs from IRAs, cryptocurrency, DAF grants, and pooled income funds all offer flexible ways to meet donors’ needs and expectations.

The various types of planned gifts can get complicated, and there are many more to explore—please refer to our complete guide to the types of planned gifts to learn more.

How to get started with planned giving

If your organization wants to make planned giving a sustained priority, there are a few steps you should follow to kick off your efforts successfully. 

For a full walkthrough of the recommended practices and resources you’ll need, check out our full guide to creating a planned giving program. Here are the must-knows to get you started:

Step 1: Unify your teams.

Before you start a planned giving program, everyone at your nonprofit should be on board. Secure buy-in and determine where this program will fit within your organization’s existing infrastructure. Answer these questions:

• Will planned giving belong to the major gifts department? Will it have its own department? Who will take the lead in managing it?
• Will your organization hire an expert or train an existing staff member to source, secure, and steward planned gifts?
• What resources will your organization allocate to increasing or marketing planned gifts?

However your organization decides to approach planned giving, ensure that your development and communications teams are aligned about marketing planned giving to your supporters. These teams should create shared goals and balance any competing priorities in order to identify key moments to solicit supporters and fundraise for your organization.

Step 2: Equip your organization with tools to track and manage planned gifts.

Team members in charge of running your planned giving program will need the right tools that empower them to succeed. Effective planned gift fundraising and stewardship require:

• A CRM or database that can track individual engagement and donation data and has moves management capabilities
• Marketing collateral and resources for one-on-one discussions with donors
• A Planned Giving Microsite to serve as the program's digital home
• Donor-facing estate planning tools and resources to simplify the process of creating planned gifts

If you already have a robust development program in place, your organization is likely familiar with moves management, ongoing donor stewardship, and how to use a CRM for these purposes. Planned giving requires a similar approach but truly exceeds when you can make your asks as easy as possible for donors to complete—FreeWill can help.

FreeWill provides donors with an easy, completely free way to create their own wills and leave bequests to your nonprofit. 

Estate plans made on our platform are five times more likely to include bequests, and these gifts are more than twice as large as the national average. Simply empower your donors to create their free wills, encourage them to create a bequest, and begin securing new planned gifts.

Our tools also give you the data you need to manage your planned giving program proactively. We’ll even provide your team with customized marketing materials and guidance to ensure your program reaches as many potential donors as possible.

Learn more about our complete set of planned giving tools or explore case studies to see how other organizations have built thriving planned giving programs.

Step 3: Identify initial planned giving prospects.

Develop an initial outreach list for your development team by following a few best practices:

• Review trends and common demographics among planned gift donors using industry reports like our Planned Giving Report.
• Send an initial survey to a broad segment of your donors to gauge familiarity with and interest in planned giving.
• Create donor profiles or personas based on your research, survey findings, and data about any existing planned gift donors to your organization.
• In your donor database, hone in on your donor personas, then screen these groups by giving affinity and capacity as you would for typical prospecting.
• Work your way through your initial outreach list, record touchpoints, and identify trends.

This foundational process will help you get started but don’t constrict your scope too narrowly over time. Planned gifts are highly accessible and popular among donors at all giving levels, so focusing your prospecting solely on high-wealth donors will likely limit your results. 

Instead, take a dynamic and iterative approach—learn over time and adapt your prospecting practices as new trends and opportunities emerge. Broader marketing of your program ensures you cover your bases and boost its general visibility in the meantime.

For a closer look at planned gift prospecting best practices, check out our how-to guide.

Step 4: Outline your marketing plan.

Just like communicating to your supporters about any other fundraising options or campaigns, repetition and ease are key for marketing planned giving.

First, make it incredibly easy for supporters to find and access this new way to give. Add planned giving as a donation option on your website, or create a dedicated landing page or website to explain all the ways a donor can make a planned gift. Give them resources that make it easy to leave a bequest, such as making a will through FreeWill, or offer them support by giving them a person at your organization to contact for more information.

Then, create marketing materials such as emails and direct mail to inform your donors about the impact and benefits of planned gifts. Identify the best marketing channels for planned giving, and add a few planned giving campaigns and informational events to your organization’s annual communications calendar.

Once your program is set up, actively gather insights from both your direct prospect outreach and engagement with marketing materials. Together, they’ll give you a full picture of your donor base’s interest in planned giving and reveal new insights over time.

Step 5: Acknowledge your donors.

Planned gifts, and especially bequests left in a will, can be difficult to track. Some organizations occasionally survey their supporters to see if there are any donors who have left bequests and forgotten to notify them. When you do learn about a planned gift, make sure you thank the donor and acknowledge the impact their gift will have on your organization’s mission.

If you set up a legacy society with any special perks, such as public acknowledgments, access to special events, or organizational communications, make sure you invite donors to take part. Doing so will help make the donors feel like a part of the community and strengthen their relationship with your organization.

These foundational steps will help you establish a solid planned giving program that you can improve and grow over time, but remember that success takes a sustained investment of your time. Planned giving pays off and generates a high ROI for nonprofits, but you’ll need to devote attention and resources to it—even just an hour or two a week at first will pay dividends.

Common planned giving pitfalls

As you begin securing planned gifts for your mission, stay aware of these common pitfalls:

• Passively waiting to receive bequests. You must actively solicit planned gifts to see results. Donors also technically don’t need to tell you when they’ve created a bequest—you might receive a surprise gift, but you completely missed the chance to thank and steward that donor during their lifetime. Avoid this missed opportunity and strengthen your community by using FreeWill to facilitate planned gifts and receive automatic notifications of new gifts.
• Losing touch with committed donors. Bequest donors can change their wills at any time. It’s on you to stay in touch and grow your relationships through ongoing stewardship, legacy societies, and more.
• Not collecting the data you need. Along with maintaining relationships, you’ll need to keep track of all your program’s relevant data over time. Create an intentional process for recording and analyzing your program’s performance in your CRM. Use planned giving tools that generate and report data for you to reduce any gaps.
• Missing the full range of donor motivations. Donors give bequests and other planned gifts for all kinds of nuanced reasons. Talking about planned giving can certainly be tricky for newcomers, but it’s made much easier when you can confidently speak to and address donors’ motivations. Legacy-building, tax benefits, estate planning, and more can all come into play.
• Failing to demonstrate social proof. Testimonials from other donors go a very long way to help prospects choose to create planned gifts with your organization. Use quotes and photos on your website. Publicize your legacy society, and invite prospects to join your next special event or estate planning seminar. Show them the thriving community of supporters who’ve chosen to give in such a meaningful way.

Looking ahead: Planned giving as a launchpad for growth

Due to both demographic trends and the rising importance of diverse types of gifts, planned giving is currently a major topic of conversation for nonprofits of all sizes. Wealthy donors increasingly prefer to give via DAF grants, donations of stock, and more as they fine-tune their philanthropic strategies to maximize impact and tax benefits.

Planned giving offers an ideal way to help your organization expand into these new forms of fundraising. Why?

• Planned giving starts conversations about estate and financial planning that otherwise might not come up, creating natural opportunities to discuss various non-cash and in-kind donations when prospects express interest.
• Planned giving expands your team’s knowledge, both in terms of more financially complex gifts but also in how to guide more nuanced cultivation and solicitation journeys with prospective donors.
• Planned giving creates a great impression of your organization as dynamic, forward-looking, and appreciative of its deep relationships with donors—qualities that many funders and DAF grantors look for!

Remember, take an iterative approach. Planned giving is a highly productive way to elevate your nonprofit’s fundraising practices, but there’s no need to rush. Improve your approach and giving programs piece by piece as you learn more about your donors and their preferences. The right tools will make this process much easier.

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Planned giving resources and knowledge base

Ready to learn more about planned giving and how to secure planned gifts? Or do you have more questions about specific topics discussed above? Browse our library of nonprofit resources full of best practices and examples to help you succeed with planned and major giving.

Here are a few highlights that newcomers to planned giving will find especially helpful:

• 8 types of planned gifts your nonprofit should know
• What are charitable bequests for nonprofits?
• How to start a planned giving program: Step-by-step guide
• The benefits of planned giving for nonprofits and donors
• Planned giving marketing: 7 strategies and ideas you need
• Make-A-Will Month: 3 effective marketing tips for planned giving
• Planned giving for churches: How to build legacy & community

Ready to kick start your planned giving program? FreeWill can help. Let’s discuss your goals and lay out a way to build a next-level legacy for your mission.