Back to basics series: this post covers the basics of legacy giving. If you’re new around here, you might find it especially helpful. Go ahead and check out back to basics for other articles covering key concepts.
So, what is legacy giving anyways?
Legacy giving happens when a person plans to give money or assets to a non-profit organization that will be transferred after they die.
Why would someone do this?
First of all – and most importantly – the person making the gift has to believe that their gift will have an impact on making the world a better place.
Most people will leave what’s left after they die to their spouse, their kids, or other people important to them. But what if these loved ones got 95% of the estate and a cause that mattered got just 5%?
Helen’s kitchen window looked over a marsh and she took great pleasure in watching the birds and the changes of the seasons, so she decided to leave almost everything to family except a portion of her assets to Save the Pond, my favourite imaginary charity.
Her gift would ensure that the wetland out her window is protected from development, wildlife education programs are developed to teach local school kids about the value of wetlands, and the pond is managed in a way that provides optimal housing for rare birds. It is highly likely that Helen would also give to the Save the Pond charity during her lifetime, but not necessary.
So, the MAIN reason why someone would make a legacy gift is to support a cause that is important to them during their lifetime.
For example, someone who loves dogs might make a legacy gift to an animal shelter. Someone who loses a family member to an illness might make a legacy gift to a health charity or the hospital that cared for their relative. My friend who is a sailor would like to make a gift to an organization that rescues ships floundering at sea. Whatever your interests, there is probably a non-profit out there working on your cause.
A benefit to making a legacy gift is that there might be positive tax implications for the donor.
Sometimes this is at the top of the list of why someone would make a gift, but there ALWAYS has to be charitable intent first. Tax advantages are only available when the non-profit is a registered charity and are very specific to the personal situation of each donor.
Another benefit is that their actions will be recognized and remembered long after their death.
Imagine that Helen, from our previous example, was the youngest of a four girls. Her father built the house with a marsh view from the kitchen. He chose to build it in this spot in part because of the pond behind. Making a gift in her name (she’d never married) allows her family’s name to be remembered after she’s gone. In this way, she is able to remember the legacy of her father and know that future generations will also do so.
Another benefit is that it is often the largest gift an average person can make.
For instance, if Helen’s house was built in Mississauga in the Greater Toronto Area or Burnaby in the Greater Vancouver Area, the land and house were probably inexpensive when originally purchased many decades ago. However, given the housing market in these places today, the sale of this house could be well over a million dollars, and even a small percentage of the total estate could be a transformative gift for Save the Pond Charity.
Finally, the last benefit for our imaginary donor is that by planning for a legacy gift AND telling Save the Pond she is doing so means that she could be part of shaping exactly how her gift will make a difference.
A staff person from Save the Pond (I see you, legacy-fundraiser-sometimes) could sit down with her and work out what’s most important to her and how her wishes dovetail with the strategic priorities of Save the Pond. And what’s feasible for the long term future. (Remember, Helen might live for another twenty years, so focusing on next summer’s programming isn’t realistic.)
Even if the a donor like Helen is willing to leave the gift open to the discretion of the organization to decide where the funds are most needed, letting the organization know ahead of time is still a good idea. Sometimes the legal name of the organization is not the same as the one most commonly used, or there are local and national versions of the organization. By making their intentions known to the charity, the donor (or their lawyer) can find out the exact wording to use to prevent any confusion.
Legacy giving is also sometimes called planned giving, and the fundraising professionals that work in this field are sometimes called gift planners. But for me, I find that the term legacy giving best illustrates why someone might make this kind of gift.
A legacy gift is a way to take the values you held during your lifetime and extend them far into the future.
So, why would someone do this?
It is a way to take what matters to you and make sure it is not forgotten or lost. Making a gift to an organization as part of your wishes means you leave something important behind when you die – your legacy will be remembered as serving others.