What Is Planned Giving?

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  • Written By: Geri Terzo
  • Edited By: PJP Schroeder
  • Last Modified Date: 24 August 2019
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Planned gifts are a form of charitable giving that have benefits both for a charity and the donor. This form of philanthropic giving is a way for donors to intentionally use gifts, including cash, property, or investments, that will benefit a charity or foundation and that will provide tax and income benefits to the donor. Planned giving is a creative way of taking what someone has and using it to provide the most possible good while limiting any financial repercussions to the donor's assets.

Participants of planned giving do not have to be wealthy individuals, and there are ways to give that will have little to no impact on a donor's current lifestyle. Many people hold wills or trusts. Nonprofit organizations such as foundations make it possible to include that charity as a beneficiary to those benefits. A donor can leave cash or a percentage of property, for instance, and the gift can go toward the foundation in general, or it can be designated for a targeted purpose. If circumstances surrounding the life of a donor changes, the details of a planned gift can similarly be amended.


Another way to accomplish planned giving without affecting cash flow is to donate from a retirement account. In this scenario, a foundation or another charitable foundation must be named as a beneficiary to the qualified retirement plan. Upon the death of the donor, the balance of the retirement payments are then transferred to the foundation. There are tax benefits associated with naming a nonprofit as a second beneficiary to a retirement plan, mainly avoiding a second layer of tax that would be passed on to an individual beneficiary.

Planned giving can take other forms. A donor can extend philanthropic gifts during his or her lifetime or reserve the donation for after death. The gift could be in the form of cash, investments such as stocks or bonds, or even artwork. Gifts could also include partnership stakes and insurance policies.

To donate stock and bond investments, the giver might have to have owned the securities for a period of time, such as one year. Those securities can be transferred over to a charitable foundation. In order to cash in on the investments, the organization must to sell the securities for cash.

Benefits to planned giving include, of course, the positive impact on any charitable cause. The advantages do not end there, however. Donors of planned giving are eligible for immediate tax deductions and potential annuity-type income payments for life.


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