Planned Giving Coach

Letters to Prospects

This section provides you with how-to procedures that allow you to respond to requests for information from planned giving prospects and gives you model letters and documents that may be helpful to your prospects.

Requests from donors fall into two broad categories: asset transfers and income plans. Asset transfers are usually, though not always, revocable. They include bequests, general estate planning, retirement designations, life estate agreements - that’s the irrevocable one - and others. Income plans include charitable remainder trusts, gift annuities, pooled income funds and others.

When a planned giving prospect first calls you, both the quality and timeliness of your response are crucial. Nothing is more off-putting to a planned giving prospect than to sense confusion at the other end of the line. As a courteous, confident, and quickly responsive first contact, you provide donors with the sense that they have called the right organization. If you don’t have a consistent and quick way of getting donors more technical information after this first contact, hire the Coach to do tax and income projections for specific cases.

Asset Transfers

You are grateful but not astonished if a donor writes a check to your annual appeal. You expect gifts of income. But what if that same donor wants to give you a source of income or shelter or enjoyment to your cause: a personal residence, a rental property, stocks, works of art, and so on. Now you’re dealing with an asset transfer. Asset transfers often represent a significant portion of a donor’s wealth, and the transfer methods are not as familiar to them as writing a check or using a credit card. The model letters under Asset Transfers allow you to explain to your prospects how many of the most common methods work.

Asset Transfers

Bequests

A bequest in a will or living trust remains by far the most common method donors use to include charities in their estate plans. This is the reason some nonprofit organizations include bequest wording in almost every response they send to planned giving inquiries.

If a donor is asking you for information on a charitable remainder trust, gift annuity, pooled income fund or any other of the more complex planned giving instruments, include sample bequest wording in your response packet. Many donors just kick the tires of the fancier planned giving vehicles before settling on the user-friendly revocable bequest. The document below provides a model cover letter and typical wording for donors asking about bequests. Don’t hesitate to slip the suggested bequest wording and the invitation to join your Legacy Circle (see Recognition under Presentations in the Marketing section) into your other planned giving response packets.

Bequest Letter and enclosures

Estate Planning

A simple and effective way to stimulate charitable bequests is to encourage your donors to write or revise their estate plans. They win, their families win, and your organization has a better chance of receiving a bequest.

You can provide this service to your donors simply and inexpensively. First, alert your donors that they can receive a free estate-planning organizer from you through simple ads. (See Ads under Marketing: Promotions.)

Send those who respond a cover letter, an estate-planning organizer, typical bequest language for your organization and bar association booklets on estate planning. The document below shows you how to do all of this.

Estate kit

IRAs and other Retirement Plans

Individual Retirement Accounts (IRAs) and other tax-deferred compensation plans may pose estate tax and income tax problems if left directly to heirs. For that reason, charities have been encouraging donors who wish to make a planned gift to them to consider using their IRA to do so. The logic is simple: donors, by leaving highly tax-vulnerable gifts to charity and less tax-vulnerable gifts to heirs, cost their heirs less. The document below touches on gifts of IRAs lightly and urges donors to seek professional guidance in this complex area.

Gifts of IRAs Letter

Life Estate Agreement

A donor signs an agreement that deeds a personal residence or farm to your charity, and retains the right to live there for life. That’s a life estate agreement. Unfortunately “life estate agreement,” “reserved life estate” and “life tenancy agreement” do not mean much to the general public. “How to give away your home and keep it, too” captures the nature of a life tenancy agreement in plain English and may generate inquiries. But what do you do when you get them?

The document below provides you with a way to open the discussion with a charitable life tenancy prospect. If you need help working through a specific case, hire the Coach.

Life Estate Letter

Life Insurance

Owners of life insurance sometimes confuse simple completion of a beneficiary designation form to provide a gift at death to a good cause with an irrevocable transfer of an existing insurance policy to a charity by the owner during life. Insurance Designation below gives you a model letter to send to donors interested in a beneficiary designation. Such designations have no immediate tax consequences for the donor. The document, Lifetime Gifts of Insurance Policies, provides guidance on the irrevocable transfer of policies to charities by the donor during life. These transfers trigger a charitable deduction.

Insurance Designation
Lifetime Gifts of Insurance Policies

Tangible Personal Property

Sometime a donor wants to give you something other than cash, stock or real estate. These gifts are frequently what lawyers call “tangible personal property” and what development officers call “all that stuff.” Typical examples are paintings, sculptures, musical instruments, antiques and the like. If you get an inquiry from a donor who wants to give your organization a gift like this, use the letter below as a model.

Tangible Personal Property

Charitable Life Income Plans

Inquiries about charitable trusts, gift annuities, pooled income funds and the like result from presentations, newsletter articles, ads, the luck of the draw and the reputation of your organization. Whatever the reason for the call, when an interested prospect wants more information, nothing encourages confidence like same-day or next-day response.

The model letters in the Income Plans section gives you responses to life income plan inquiries so you can get preliminary information to the prospect quickly. If the prospect then comes back with questions that are beyond you, hire the Coach.

General Letter on Charitable Remainder Trusts

Sometimes donors want something in writing on charitable remainder trusts (CRTs) before they are willing to talk to you in detail. The letter below is a general, non-technical overview of a CRT.

The letter, adapted and personalized by you, should go out the same day or next day after the donor’s request is received. The letter promises more detailed information such as tax calculations or income projections. If you do not have someone to provide that kind of information, hire the Coach.

Along with the letter, send basic bequest wording and a sign-up form for your Legacy Circle. You will find those forms when you open the General-CRT Letter.

General CRT Letter

Letter on Charitable Trusts Funded with Cash or Stock

If donors say they are considering funding a charitable trust with cash or stock, the following letter offers an introduction to the topic, with no mention of real estate and its complications.

The letter, adapted and personalized by you, should go out the same day or next day after the donor’s request is received. The letter promises more detailed information such as tax calculations or income projections. If you do not have someone to provide that kind of information, hire the Coach.

Along with the letter, send basic bequest wording and a sign-up form for your Legacy Circle. You will find those forms when you open the CRT-with-Cash-or-Stock Letter.

CRT with Cash Or Stock Letter

Letter on Charitable Trusts Funded with Real Estate

If donors are considering funding a charitable trust with real estate, the letter below offers an introduction to the topic, with mention of some of the complications that may accompany transfers of real estate to a charitable trust.

This letter, adapted and personalized by you, should go out the same day or next day after the donor’s request is received. The letter promises more detailed information such as tax calculations or income projections. If you do not have someone to provide that kind information, hire the Coach.

Along with the letter, send basic bequest wording and a sign-up form for your Legacy Circle. You will find those forms when you open the CRT with Cash or Stock Letter.

CRT with Real Estate Letter

Gift Annuities: What To Do Before You Write the Letter

Unlike charitable remainder trusts, gift annuities are a direct contract between your organization or an intermediary nonprofit organization and a donor. If your donor uses an intermediary organization such as a financial institution with a nonprofit entity specializing in charitable gift annuities, of a community foundation with a gift annuity program benefiting local nonprofit organizations, you can guide them to it. If your organization has a number of older donors and you want to offer them gift annuities directly, Understanding Gift Annuities helps you get started. It presents tools to educate yourself and your board to the fundamentals of establishing and marketing a gift annuity program and leads you to the American Council on Gift Annuities where you can find current annuity rates, the names of consultants who specialize in gift annuity licensing, and other information. Be warned, however. Board members are often reluctant to take on the liabilities that come with gift annuity programs. If that’s the case, Understanding Gift Annuities mentions some alternatives you can use. If you need help in establishing a gift annuity program or in handling gift annuity proposal calculations, hire the Coach.

Understanding Gift Annuities

Letter on Pooled Income Fund, and More

As Understanding Pooled Income Funds below will tell you, “Charitable pooled income funds provide donors with many of the same advantages of charitable remainder trusts, (see General Letter on Charitable Remainder Trusts in this section) but with far less expense and bother.” But before you establish a pooled income fund, you should know their strengths and limitations. Understanding Pooled Income Funds describes what pooled income funds are. The article also provides you with typical correspondence and forms charities use in assisting donors opening pooled income fund accounts.

Understanding Pooled Income Funds

Other Life Income Plans

There are important variations of the basic charitable remainder unitrust that go beyond what is usually addressed in a first response letter to an inquiring prospect. These variations include net-income and flip unitrusts, term-of-years unitrusts, fixed term unitrusts, unitrusts that run for one or two lives and then for a term-of-years, fixed term unitrusts, and others. These variations usually are best presented in conversation with a prospect rather than in an introductory letter to the subject.

There are also other specialized charitable tools such as deferred gift annuities, gift annuities for a remainder interest in a home, charitable bargain sales and charitable lead trusts. Deferred gift annuities, gift annuities for a remainder interest in a home, charitable bargain sales and charitable lead trusts are usually not part of a basic planned giving program, but they are good for you to know about, just in case. The following briefly describe these other plans and unitrust variations so you will have something to start with if they crop up. If all this seems a bit too much, hire the Coach.

Unitrust Variations
Deferred Annuity
Annuity for a Home

Donor Information Form

Sometimes CRT prospects brush aside your best effort to encourage them to seek independent legal counsel in the early stages of the conversation when they are unsure that a CRT will work for them or is worth the time and cost to establish one. If you find yourself with that kind of donor, using this Donor Information Form can help you keep the conversation going. Let them know this is a stopgap measure until more expert help arrives.

Donor Information Form