Legacy donors, those who name a charity in a will or trust as a beneficiary to assets upon death, are typically associated with only the wealthiest in society.
But that is not the case, nor is it necessary to have great wealth during a lifetime to make a substantial financial impact on an organization after death. Planned giving departments in nonprofits across the country are educating people on this concept.
“In general, when you’re alive you’ve got bills to pay, every day cares, and you want to live a good life,” said Michael Friedman, senior vice president of philanthropic planning and services at The Associated: Jewish Community Federation of Baltimore. “But at the end of your life, you’ve accumulated more than you thought possible, and think, ‘I can do greater impact than when I’m alive.’ People can give much more through their estates than they ever could during their lifetimes.”
Friedman was quick to point out this doesn’t mean his department takes away from the annual gifts received by The Associated. Estate giving is on top of that generosity, he said.
The ability to be a legacy donor “is not reflective of the amount they’re giving annually,” added Orlee Engler Kahn, director of planned giving at Kennedy Krieger Institute’s Department of Philanthropy. Legacy donors can be “longtime loyal donors, of any amount. It shows they have a loyalty and connection to the mission, so they may be interested in doing something bigger and planned for beyond their lifetime.”
“Everyone wants to be remembered,” Friedman said, quoting a recent presentation by the department’s chairwoman, Beth Goldsmith, “How do you want to be remembered and what will your legacy be?”
Friedman is in the business of divining exactly that for people who choose The Associated as recipient of their gifts.
“I help make people’s dreams come true,” said Friedman. “I help them do what they want to do. Helping people create legacies that reflect their values and that they feel good about. … Through our legacy program, we provide people a way to express their values through their generosity so that the good work of The Associated can carry on.”
Through The Associated, a donor can choose from several legacy-giving opportunities, such as naming The Associated as a beneficiary in a will, insurance policy or an IRA or other retirement plan; donating stock or other property; or developing a charitable income plan such as a charitable remainder trust or a charitable gift annuity.
Kahn, who loves to “help people create their philanthropic roadmap,” works with those same tools as options and calls the charitable gift annuity a “win, win, win.”
“[The donor] gets to have the pleasure of giving a gift, because that’s the most important thing, the intention of the gift,” she explained. “They also get the tax deduction, and the charity at the end gets the [bequest] gift.”
“A legacy gift is at the same level as giving to a family member. If someone wants to leave an organization a gift in their estate, they’re putting the organization on the same level as their family.” — Orlee Engler Kahn, director of planned giving at Kennedy Krieger Institute’s Department of Philanthropy.
“[Very often] legacy donors don’t even let the organization know they’ve left them the money,” said Kahn.
Brett Cohen, 36, owner of the home improvement company Kitchen Saver, and his wife Julie, a genetic counselor, recently named The Associated as a beneficiary in their will, which they created after the birth of their child about two years ago.
“We wanted to make sure the Jewish community would be a recipient of some of our estate,” said Brett, “because its very important to continue giving long after we’re gone.”
The couple also named The Associated as a beneficiary in a life insurance policy, and they were first to participate in IMPACT funds, in which a young person can accumulate $2,000 per year for five years in order to create a Donor Advised Fund.
“It’s about giving back to the community that’s giving us so much,” said Brett, “and giving others the opportunities and safety net that we’ve had.”
And giving back to community is something for which the United States is considered a world leader.
In June 2015, Giving USA reported that Americans donated $358.38 billion to charities last year, the highest total in the report’s 60-year history.
“The United States is really special, because its tax laws are set up to incentivize people to be donors and philanthropists,” said Kahn, who has also directed planned giving for The Ronald McDonald House and the Minneapolis Jewish Federation. “And legacy planning certainly falls into that category and not everyone is educated on that.”
Legacy gifts “secure endowment funds for The Associated, our agencies and the entire Jewish community,” said Friedman.
The Associated also offers a Donor Advised Fund option, in which the donor receives an immediate tax benefit and retains the right to recommend grants from contributed funds, which gain interest, to almost any charity over a period of years, said Friedman. It requires $10,000 to start.
There is also a Supporting Foundation option, typically established by families, and requires $1 million to fund. It has its own board of directors that consists of appointees from The Associated as well as family members.
“There are about 350 Donor Advised Funds, worth close to $100 million and more than 50 Supporting Foundations, which are worth many times more than that,” Friedman said.
If a donor doesn’t feel a connection to the charity, it’s just a financial transaction which, Kahn said, isn’t the profile of a legacy donor.
“A legacy gift is at the same level as giving to a family member,” said Kahn. “If someone wants to leave an organization a gift in their estate, they’re putting the organization on the same level as their family.”