Planned gifts can come in a variety of forms, from simple bequests to complex trusts, all with different requirements and advantages depending on a donor’s circumstances. However, planned gifts most commonly fall within a few categories: outright gifts of cash or non-cash assets, gifts that pay income, and more complex gifts that protect a donor’s assets.
Within these broad categories, there are a few common ways to give:
Bequests are a popular and fairly simple way to make a planned gift. These ‘outright’ gifts are charitable contributions left as a bequest in a legal will. They’re usually given as a specific amount, a remainder of a donor’s estate after other bequests have been paid, or a percentage of a donor’s total wealth.
Charitable Gift Annuities
A charitable gift annuity allows a donor to give a large amount of cash or securities in exchange for a fixed income payment for life. The nonprofit keeps any leftover funds as well as any income generated from investing those funds.
Charitable Remainder Trusts
There are a few types of charitable remainder trusts, but in each, the remaining funds go to the nonprofit after the trust is terminated. A charitable remainder annuity trust pays the donor a fixed amount based on a percentage of the initial assets used to fund it. A charitable remainder unitrust pays the donor a percentage of its principal and is revalued annually so that payments increase over time.
Charitable Lead Trusts
When a donor makes this type of gift, the charitable lead trust pays an ‘income’ to the nonprofit for a specified number of years or for the donor’s lifetime. And when that term is up, the assets are given back to the donor or their beneficiaries.
Other gift types that some organizations include in their planned giving programs are non-cash assets, such as stock or real estate, giving from IRAs (also known as Qualified Charitable Distributions or QCDs), and Pooled Income Funds.