How Planned Giving Improves Campaign Success

Has the dreaded “C” word started to come up again at your nonprofit? 

If you put away all thoughts of a campaign during COVID, chances are the conversation is resurfacing and for good reason. Campaigns allow organizations to focus on specific fundraising needs. This focused urgency is why campaigns are loved by some and hated by others — campaigns can be a distraction from day-to-day ministry.  

But when run effectively, campaigns have the capacity to propel your day-to-day ministry and financially provide for it for years to come. How? By incorporating planned gift invitations in your campaign strategy.

Unfortunately, too many nonprofits flat out reject the idea of including planned giving in their campaigns because of three common myths. In fact, during campaigns, most nonprofits shelve their planned giving programs altogether and miss out on life-giving generosity from their donors.

In this article we will debunk three common myths about inviting planned gifts during a campaign. In a follow up article we will walk you through how to invite planned gifts during a campaign. Let’s get started by defining terms!

What is a Campaign?

Generally speaking, a campaign is an organized course of action to achieve a goal. When it comes to fundraising there are usually two kinds of campaigns a ministry or nonprofit will run:

1. Capital campaigns — those that raise money for specific construction projects — are the most common types of campaigns among nonprofits. 
2. Comprehensive campaigns tend to raise money for capital projects, but also can include gift goals for day-to-day ministry, endowment, and planned gifts for the nonprofit’s future. 

Regardless of the specific campaign an organization runs, most include their budget needs — they don’t want to take the chance that their core purpose would be financially compromised. Unfortunately, most nonprofits exclude fundraising goals for endowment or planned gifts, despite the fact that these gifts are essential to meeting the organization’s needs for the future. 

Excluding planned giving from campaigns can keep your organization from what it needs to exist over the next few decades. Let’s unpack the myths that keep ministries from inviting these gifts during their campaign so that you can uplevel your campaign strategy with confidence and a long-term vision.

Myth #1: Inviting planned gifts during a campaign will cannibalize our capital goals

When nonprofit leaders bow to this myth, they’re really asking, “Will inviting gifts for the future during a campaign decrease the major gifts we need now for our capital project?” When a campaign is thoughtfully orchestrated, the answer is, “No.” 

Having planned gift conversations during a capital campaign can lead to reaching your goal faster because it introduces the subject of assets. Some of these assets allow donors to give now and later. Some assets can be used now to make much larger gifts at a lower cost, and also be given as gifts at the end of life.

Unless you introduce the idea of giving assets during your campaign, most inexperienced donors will automatically think to give cash. But only 10% of a donor’s wealth is held in cash; 90% of their wealth is in assets. Inviting campaign gifts from cash, only scratches the surface of your donor’s ability to give. Inviting gifts from assets exponentially increases peoples’ ability to make major gifts to your campaign.

Myth #2: Inviting planned gifts during a campaign will be confusing for our donors

On the contrary, people are confused when suddenly we do put our emphasis on a capital project and don’t even discuss our current budget needs or our future needs for legacy gifts.

What if instead we shift our perspective and actually put our focus on peoples’ intent to give instead of our institution’s need to get? What if our focus were on a donor’s hopes and dreams for the impact they wanted to make through their philanthropy? What if we shifted our belief from “I need to invite this gift to meet our goal” to “This person loves our ministry, and it would make them feel great to invest in something they love”?  

With this donor-centric approach, all of the many ways your friends can invest in your ministry can be a part of the conversation, and you can meet the donor’s need to give along with all of the needs of your ministry.

Myth #3: Inviting planned gifts during a campaign will let people off the hook for a gift now

Leaders often have a scarcity mentality and falsely believe that, given the chance, donors will take the ‘easy road’ and hold back on giving gifts today if they can make a gift later by putting the organization in their will.

But the evidence is to the contrary. Studies show that:

• donors who name a charity in their will double their current giving to that organization
• donors who discover the tax benefits of gifting assets like stock start giving 6 times the amounts they once gave on average in cash

You’re still probably wondering two valid questions:

1. Don’t planned gifts take years to mature and provide revenue to the nonprofit? 
2. Are there any planned gifts that can create cash for a capital campaign in the next 1-3 years?  

The answer to both is “yes.” Most planned gifts don’t materialize until a donor’s death.   However, there are several assets that can be used for planned gifts that can also provide current gifts for ministry now. 

Keep reading to discover the gift plans that have made our comprehensive campaigns so successful.

What Gift Plans can also provide Current Gifts for Your Campaign? 

There are many creative ways donors can use assets to plan gifts that can provide for your campaign today and bless your ministry in the future! I’ll illustrate four of them here, starting with the super simple and progressing to slightly sophisticated. I hope that you can readily identify some of your donors through the vignettes we share.

Retirement Plan

Ron and Jean are both 73 years old and want to make a significant gift to their congregation’s campaign. As self-employed people, they’ve accumulated more than $1 million in their IRA, and are now at the age when they must take their required minimum distributions. They don’t currently need the entirety of their required minimum distribution to support their lifestyle.  

Ron and Jean make a current gift to their congregation’s campaign by requesting a $50,000 qualified charitable distribution (QCD) from their IRA, and they avoid the payment of income tax on their required minimum distribution. They also make a planned gift by naming their congregation as the death beneficiary of their remaining retirement funds, leaving other assets with lesser tax consequences to their heirs. 

The Donor Advised Fund

Linda and Jack are in their mid-60s and established a Donor Advised Fund several years ago after Linda sold her highly successful business. They’ve made modest distributions from the fund so far, anticipating that they would have the opportunity to do something really significant for an upcoming campaign at their favorite Bible camp. They’ve already received a significant charitable tax benefit for establishing the DAF.

Linda and Jack make a current gift to their Bible Camp by requesting a $100,000 distribution from their Donor Advised Fund this year. They also make a planned gift by naming that camp as one of the final beneficiaries of the remainder in the Donor Advised Fund after both of them pass away.

Charitable Gift Annuity

Dorothy Johnson is a loyal 86 year old member of her church. She wants to make a significant gift to their campaign and prefers to do so without reducing her current income. Though Dorothy has never needed the principal of her maturing $50,000 CD, she likes the guaranteed income.

If renewed for another 24 months, Dorothy will earn approximately 1% or $500 per year. 

Instead, after the CD matures, Dorothy makes a current gift to her church by giving $25,000 directly to their campaign, and she received a charitable deduction for making this gift. She also makes a planned gift by establishing a Charitable Gift Annuity and naming her church as the remainder beneficiary upon her death.  Until her death, Dorothy will receive a guaranteed, fixed payment of 8% or $2,000 a year — four times the CD’s return with only half the investment. She also receives a charitable deduction and a portion of her income is tax free.

Charitable Remainder Trust

​​The Andersons, both 80 years old, want to make a significant gift to the campaign being conducted at their favorite Christian school. They inherited and lease 160 acres of farmland that generates $25,000 in income each year. They are weary of their ownership responsibilities, but depend on the income and want to consider gifting the land in exchange for a similar income.

The Andersons gift the land to a charitable foundation, receive a large charitable tax deduction, and avoid the capital gains tax they would have paid if they sold the land themselves. The charitable foundation sells the land to create a current gift of $150,000 which passes directly to the Christian school for its campaign. The foundation also establishes a Charitable Remainder Trust funded with $500,000 from the land sale. The Trust provides $25,000 a year in income to the Andersons. The Andersons make a planned gift by naming the school as the beneficiary of the remainder value of the trust after both have passed away. 

How Brenda Moore And Associates Can Help You Incorporate Planned Gifts into Your Campaign Strategy

Wrapping your mind around a new way to position campaigns can feel overwhelming. Even if after reading this article you’re convinced that inviting planned gifts throughout a campaign is a good idea there is still the question of “How?”. 

We can help you unpack the “How?” of campaigns in two ways:

1. A follow up article. We will walk you through what to do before, during, and after a campaign to get the full benefit of integrating planned giving into your fundraising. Follow us on Linkedin or join our newsletter to make sure you don’t miss it!
2. Scheduling a no-cost consultation with our team. We would cherish the opportunity to answer your questions and talk you through next steps specific to your organizational needs.

A well prepared for and effectively executed campaign can sustain your ministry now and for decades to come.

Co-authored by Brenda Moore, CFRE and Samantha Roose.