What Are Bequests? How Every Nonprofit Can Get Them

Couple talking about their will with representative of a charity.
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Bequests are the transfers of wealth that occur upon a donor's death and that include transfers using a will or a trust. Bequests can take several forms such as:

  • Specific bequest - a certain amount of cash, securities, or property.
  • General bequest - property that is similar to all other items distributed, usually cash.
  • Percentage bequest - a stated percentage of the donor's estate.
  • Residual bequest - all or a portion of what remains of the estate after specific and general bequests are distributed.

    Besides an outright bequest, donors can also set up a trust that will benefit charitable organizations during or after their lifetime, such as a charitable remainder trust or charitable lead trust.

    Donors can also name one or more nonprofits as beneficiaries of an insurance policy or as the recipient of an IRA or another qualified retirement fund

    How and Why Nonprofits Must Have a Bequest Program for Their Donors

    Setting up a bequest program is easier than you may think. Now is also the time.

    It has been estimated that the Baby Boomers, now reaching retirement age at a rate of 10,000 per day, will pass on some $30 trillion over the next 30 to 40 years. Those figures are just for North American Baby Boomers, as set out by Accenture in its report on wealth transfer.

    Successful nonprofits today take bequests very seriously and often have sophisticated planned giving programs to help them capture some of this wealth transfer.

    However, even small nonprofits can set up a bequest program that will ensure their survival well into the future. Bequests can be beneficial both to nonprofits and donors. Donors often wish to leave money to their favorite causes, and they and their heirs can reap considerable tax benefits in the process.

    Raising Money Through Bequests: How Your Organization Can Profit from the Biggest Intergenerational Transfer of Wealth in History is an easy-to-read book that takes the stress out of setting up a bequest program. Authors, David Valinsky and Melanie Boyd, explain the steps to setting up a bequest program, how to market it, and what to do when bequests start rolling in.

    Why Do People Give?

    First, it is wise to understand the reasons why donors make bequests. Valinsky and Boyd identify some these, including:

    • They believe in the mission. Donors are inspired by what your organization does to change or save lives in the community.
    • They've seen the mission realized first hand. A donor may have worked as a volunteer in your nonprofit. They may serve on the board, taken a tour or heard testimony to what your organization does.
    • They know you'll use their gift wisely. Donors must trust you to steward their gifts. That means that you are upfront about finances and don't squander their money. Tell donors frequently how their contribution has changed the lives of others.
    • Your organization has directly impacted their life or the life of a loved one. Providing great service is the key to gaining gratitude as well as gifts and bequests.
    • They feel like they know you. Build relationships. Stay in touch. Reaching out to donors must be your priority.
    • It feels good to give. Many donors feel that they are only trustees of the money they have earned or inherited. It is fun and fulfilling to give money to help those in need.
    • They hold the staff and volunteer leadership in high regard. How donors view your executive director or your board president, especially their integrity, may dictate whether a donor leaves a bequest.
    • They appreciate your organization's products and services.
    • A bequest allows them to honor or memorialize a loved one.
    • Becoming a donor, now and in the future, serves the need to be accepted and to belong. .

    How Do You Get Started?

    There are several organizational tasks involved in setting up a bequest program. However, one of the first, and perhaps most important, is to get your board's approval.

    But how do you get the board to see the value of a bequest program?

    Valinsky and Boyd suggest a presentation that includes these elements:

    • Include a report on the history of bequests your organization has received. How many of those bequests were unsolicited? When were they received? Who were those donors? How were they connected to your charity?
    • Explain how a bequest program will benefit donors. The program will allow you to educate people about the importance of having a will, and you will be offering a real opportunity to donors of making a dramatic impact on the community.
    • Review the benefits to your organization and present the cost to introduce and operate your bequest program. Revenue from a bequest program will take years to realize. If board members balk at this, point out that if you had started this earlier, the organization could have been enjoying its fruits by now.
    • Suggest personnel to staff the program. Although new staffing might not be needed right away, board members should understand that as time goes on and the program grows, new personnel will be required.
    • Address some common myths of donor bequest decision making, such as that tax considerations drive donors' estate planning; and that donors want to leave their entire estates to their children.

    Setting Up the Bequest Advisory Committee

    After convincing the board, the second big organizational task is forming a Bequest Advisory Committee.

    Valinsky and Boyd say that the best bequest committees are made up of a mix of volunteers and board members, regardless of their profession. They do not all have to be financial wizards. Including ordinary folks who can understand the human aspect of including a charity in your will makes your group stronger and more effective.

    Bequest Committee members should be expected to:

    • Attend Advisory Committee meetings and actively participate.
    • Assist in the creation of the bequest society, such as developing a format, establishing membership eligibility and appropriate recognition, and creating initial marketing plans
    • Review and recommend gift acceptance policies.
    • Help staff to implement and market the program.
    • Serve as ambassadors and advocates to the board and in the community. This includes speaking to groups about the bequest program.
    • Identify prospects and when appropriate accompany staff on personal visits.
    • Become a member of the bequest society, by naming your charity in their will.

    There will be other important things to do to market your bequest program, such as creating a sample brochure to introduce prospects to the program and developing your case for support.

    It will all take some work up front, but no nonprofit should neglect setting up a bequest program. It may not result in immediate gifts, but could be vital for future financial stability.

    Recommended Resources:

    Raising Money Through Bequests, by David Valinsky and Melanie Boyd, Emerson & Church Real World Guides, 2007.

    Starting a Bequest Program Is Easier Than You Think: Interview with David Valinsky, GuideStar

    Planned-Giving Programs & the Small Nonprofit: Getting Started, Association of Fundraising Professionals (AFP)

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