It’s been a historic year here at Foundation Source. Just a few months ago, we acquired PG Calc, the leading provider of planned giving solutions, and we’re excited to bring you a brand-new series where we’ll explore the fundamentals of planned giving. Follow along to see how planned giving fits into other charitable vehicles and activities—and why donors may want to consider these programs. In our first issue by guest author Craig Wruck, PG Calc’s Senior Advisor, we’re starting with the basics to better define planned giving.
Sometimes there are really obvious and very simple answers. Everyone knows what planned giving is, right? Not so fast. A quick web search reveals a slippery slope into a morass of ambiguity.
“Planned giving involves providing a future gift to charity through your financial and estate plans,” declares one charity’s website. A financial services company broadens the definition, but only a bit: “planned giving refers to any arrangement that will result in a future contribution to charity.” Strictly speaking, a pledge for an outright gift fits both of these definitions, but such a pledge is not a planned gift.
These definitions insist that planned giving does not happen now but occurs at some time in the future. While it’s true that charitable bequests that do not make distributions until the death of a donor account for the vast majority of planned gifts, what about a Qualified Charitable Distribution, a current gift of a paid-up life insurance policy, or an outright gift of appreciated securities? These are current gifts requiring careful planning.
Wikipedia’s definition eliminates the “future” limitation, “planned giving is an area of fundraising that refers to several specific gift types that can be funded with cash, equity, or property,” but evades exactly which types of gifts are planned gifts. When we asked ChatGPT, well don’t get me started…
Let’s be candid: we’ve created a good deal of this confusion ourselves. “Deferred giving” seemed narrow and evolved into “planned giving” to capture a broader range of gift opportunities. “Gift planning” sounded more universal, acknowledging that a donor’s financial interests are a legitimate consideration and that it’s not solely about fundraising. And don’t forget “philanthropic planning.” Are we doomed to concede as many different definitions as there are readers of this article? Justice Potter Stewart famously said, “I know it when I see it.” Of course, he was offering a definition of obscenity, but perhaps the definition of planned giving is destined to be just as vague.
A donor or advisor may hear the following phrases that are related to this concept, but with slight variations. Let us propose the following definitions:
- Gift Planning is a generally broader term outside of pure fundraising that encompasses the activities involved in creating and completing a charitable contribution, which can include tax and financial strategies, clarification of charitable objectives, and the legal and administrative work required to document and carry out a donor’s wishes. Gift planning is more than just calculating a charitable deduction, preparing financial projections, and drafting wills, trusts and other documents. It includes the ongoing work required to ensure a donor’s charitable dreams are carried out and that the gift is optimized for both the donor and charity, and it typically involves a donor, the gift planning officer at the charity and a donor’s advisor and lawyer. Advisors looking to expand their work to support wealthy clients will benefit from brushing up on this.
- Planned Giving usually describes a fundraising strategy used by a nonprofit that offers opportunities to integrate a proposed charitable contribution into a donor’s overall financial or estate plan. Planned giving can involve a variety of assets, such as cash, securities, real estate, life insurance, or retirement accounts. Importantly, planned gifts can be current or future gifts, made during a donor’s lifetime or after death, and can include opportunities for life income for a donor or a donor’s beneficiaries (for example, by creating a charitable gift annuity or charitable remainder trust) or not.
- Deferred Giving is an obscure and somewhat obsolete term describing certain specific charitable gifts where the charity’s eventual use of the gift is postponed until sometime in the future. It’s usually applied to charitable gift annuities and charitable remainder trusts and, sometimes, charitable bequests. The term “deferred giving” doesn’t really resonate with most donors and is probably best reserved as a bit of insider jargon that we use among ourselves.
Whether you choose to call it planned giving, gift planning, or even deferred giving, two important characteristics of this type of charitable giving are optimism and a belief in the future. Like virtually all charitable giving vehicles, these are the essential elements that give meaning to giving. Keep an eye out for the next installment in this series where we’ll continue to dive deeper into the fundamentals of these programs.
It is our privilege to work with generous donors and the organizations that serve our communities to help create opportunities for donors to join in building a better future.
Want to learn more about planned giving?
Check out the PG Calc Blog.
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Schedule a call with us or reach us at 800-839-0054. Together, let’s #begiving.
