Here you’ll find 10 popular planned giving terms and their definitions.We’ve deconstructed each word or phrase and explained it in plain English. We hope this list will clarify a few things for you.
Term #1: Beneficiary and Secondary BeneficiaryA beneficiary is the person or organization that is legally appointed to receive the benefits/funds as deemed by a will or contract. Just as it sounds, the second beneficiary will receive the benefits after the primary beneficiary passes away. In the case of certain arrangements, an individual can establish a charitable organization as a secondary beneficiary in his or her will. That way, once that donor’s primary beneficiary passes away and no longer needs the funds, the money is then gifted to a previously determined organization.
Term #2: Bequest IntentionDonors do not have to notify you of a bequest. They can simply write your organization into their wills and you’ll receive their gifts after their deaths. That system of unannounced planned giving is a looming reason why nonprofits claim that planned gift prospects are hard to identify. If even the people already committed to leaving a planned gift are not notifying your organization, how are you supposed to find more prospects? Well, many donors do make their plans known, through bequest intentions. This term refers to a donor’s decision to tell the nonprofit that he or she is planning on leaving a future gift. Knowledge of a bequest is huge for a nonprofit. It can help the organization better cater stewardship of the individual donor. These donors should receive the same level of care and attention as a major gifts donor would. However, it is important to remember that a bequest intention is not a legally binding contract. These donors are not obligated to follow through with these gifts. The bequest intention is not a guarantee.
Term #3: Charitable BequestA donor can make a charitable bequest via a trust, will, or estate plan. Through a charitable bequest, the donor selects a charity to receive a set gift. Charitable bequests usually organize into three categories:
- Specific Amount: Just as it sounds, in these cases a donor allocates an exact set of funds to an organization.
- Remainder: This is the leftovers package. A donor can choose to have a nonprofit receive any money left after all other bequests are paid out.
- Percentage: A donor can also choose to gift your organization a set percentage of his or her total wealth.
Term #4: Charitable Gift AnnuityA charitable gift annuity is an interesting scenario. There’s a bit of back and forth with these gifts. It is easiest to think about the charitable gift annuities as a process. Let’s look the stages.
- A donor gives a nonprofit a large amount of money
- That nonprofit pays the donor a set income from that sum annually
- The pay period ends, usually with the death of the donor
- The nonprofit keeps any remaining funds