Planned Giving and Legacy Gifts: How Small Nonprofits Start

The treasurer of a small county historical society opened a letter from a law firm: a member who had paid $35 in dues every year since 1998 had left the society $85,000 in her will. Nobody on the board had known her well. Nobody had ever asked. The gift was wonderful, and it raised an uncomfortable question: how many other loyal members might do the same if the society simply let them know it was possible?

Planned giving means gifts that a donor arranges now but that take effect later, or that use assets and structures beyond a simple check: bequests in a will, beneficiary designations on retirement accounts and life insurance, charitable gift annuities, charitable remainder trusts and gifts from donor-advised funds. Legacy giving usually refers to the subset that takes effect at the donor's death. You don't need a planned giving officer to start. A small organization can begin with bequests and beneficiary designations, a simple web page, a legacy society and a habit of mentioning legacy gifts to its most loyal supporters.

This guide explains the main types of planned gifts with facts from the IRS, then shows how a small nonprofit, association or faith community can launch a legacy program in 12 months, and which compliance issues need a professional.

Planned Giving and Legacy Giving: The Difference

The terms overlap, and many organizations use them interchangeably. A useful distinction:

• Legacy gifts are made at death: bequests and beneficiary designations.
• Planned gifts include legacy gifts plus lifetime arrangements that need planning, such as gift annuities, charitable remainder trusts, gifts of appreciated assets and qualified charitable distributions from IRAs.

What they share is that the donor usually involves an attorney, financial advisor or family, and that the gift often comes from assets rather than from monthly income. That's why a donor who has given $50 a year for two decades may be able to make a far larger legacy gift.

Why small organizations should bother

• Legacy gifts don't depend on wealth today. A bequest costs the donor nothing during their lifetime and can be changed, which makes it accessible to many loyal supporters, not only major donors.
• It's the natural next step for your most committed people. Longtime members, volunteers and donors who already show up year after year are often the people who want their support to continue.
• It builds long-term stability. Realized gifts can seed an operating reserve or an endowment.

Be realistic about timing: a legacy program is a long-term investment. Intentions you record this year may be realized decades from now, so it supports your annual fund and major donors program rather than replacing them.

Types of Planned Gifts Explained

Bequests

A bequest is a gift in a will or living trust. Donors can leave a specific dollar amount, a specific asset, a percentage of the estate, or the residue (what's left after other gifts and expenses). Some name your organization as a contingent beneficiary if other beneficiaries don't survive them.

Bequests to qualified charities can be deducted from the gross estate for federal estate tax purposes, according to the IRS estate tax overview. But the federal estate tax return filing threshold for deaths in 2026 is $15,000,000, so for most of your supporters a bequest is about values, not taxes. Talk about impact, not tax savings.

Give donors and their attorneys exact language to use. Ask an attorney to review your version once.

Sample bequest language (for donors to share with their own attorney): I give [the sum of $______ / ______ percent of the residue of my estate / the following property: ______] to [Full Legal Name of Organization], a nonprofit corporation organized under the laws of the State of [State], with its principal office at [street address, city, state, ZIP], federal tax identification number [EIN], to be used for its general purposes.

If donors want to restrict a gift to a purpose, such as scholarships, ask them to talk with you first so the restriction is one you can honor for decades.

Beneficiary designations

Donors can name your organization as a full or partial beneficiary of a retirement account, a life insurance policy or other accounts that allow a beneficiary. They do this on the custodian's form; no will change is needed.

Retirement accounts are worth mentioning specifically. Individuals who inherit a traditional IRA generally must include taxable distributions in their income, according to IRS Publication 590-B, while a tax-exempt charity doesn't pay income tax on what it receives. Some donors therefore leave retirement assets to charity and other assets to family. Encourage donors to discuss this with their own advisor; don't advise them yourself.

Qualified charitable distributions

A qualified charitable distribution (QCD) is a lifetime gift, but it often comes up in legacy conversations with older donors. According to the IRS:

• The IRA owner must be at least 70½ when the distribution is made, and the IRA trustee pays the charity directly.
• Total QCDs can't exceed $111,000 for 2026 (IRS Notice 2025-67).
• A QCD can count toward the donor's required minimum distribution.
• A one-time election allows up to $55,000 in 2026 to fund a charitable remainder trust or charitable gift annuity through QCDs.
• The donor needs the same written acknowledgment from you that they would need for a deductible contribution.

Make sure IRA custodians can identify you: put your legal name, EIN and mailing address on your website, and when a QCD check arrives, send the acknowledgment to the IRA owner. Our donation receipt guide covers the wording.

Charitable gift annuities

A charitable gift annuity is a contract: the donor transfers cash or other assets to your organization, and you promise fixed payments for the life of one or two people. Generally, the part of the transfer that exceeds the value of the annuity is treated as a charitable gift; the donor's advisor calculates the exact figures.

For a small organization, gift annuities carry real obligations. You owe payments for life, regardless of how long the annuitant lives or how investments perform, and some states regulate gift annuities like insurance. New York, for example, requires organizations to obtain a special permit or exemption from its Department of Financial Services before issuing gift annuities, to file annuity rates and forms, and to keep reserve assets in a segregated fund. California's Insurance Code also sets reserve requirements for gift annuities. Rules differ by state.

Most small organizations should not issue gift annuities when they start a legacy program. If donors ask, consider whether a community foundation or another established charity could help, and get qualified legal advice before making any commitment.

Charitable remainder trusts

A charitable remainder trust is set up by the donor and their advisors. Your organization is named as a remainder beneficiary. According to the IRS:

• It's an irrevocable trust. The donor transfers cash, property or other assets, and the trust pays income to at least one living beneficiary.
• Payments continue for the life of one or more beneficiaries or for a term of up to 20 years.
• At the end, the remainder passes to one or more qualified charities, and the remainder must be at least 10 percent of the initial net fair market value of the property placed in the trust.
• A charitable remainder annuity trust pays a fixed dollar amount each year, at least 5 percent and no more than 50 percent of the initial value. A charitable remainder unitrust pays a percentage, generally at least 5 percent and no more than 50 percent of the trust's value, revalued every year.
• The donor may receive a partial charitable deduction for the present value of the remainder interest, and the trust must file Form 5227 every year.

Your role is usually simple: provide your legal name and EIN, stay in touch with the donor, and wait. Avoid serving as trustee unless you have the expertise and governance to do it properly.

Donor-advised funds

A donor-advised fund is a separately identified account maintained by a 501(c)(3) sponsoring organization. Once the donor contributes, the sponsor has legal control of the assets, while the donor keeps advisory privileges over grants and investments, according to the IRS.

Two practical points for legacy giving:

• Donors can recommend grants to you during their lifetime. Thank them personally, and acknowledge the grant to the sponsoring organization rather than issuing the donor a tax receipt.
• Donors can ask their sponsor whether it lets them name a charity to receive what's left in the account. If it does, your organization can be named.

Gifts of appreciated assets

Stock is simple to accept if you have a brokerage account. Real estate, closely held business interests, art and vehicles are not; they need a review of title, environmental issues, valuation and costs. For many noncash gifts worth more than $5,000, the donor must complete Section B of IRS Form 8283, and your organization must sign Part V of it, according to IRS Publication 526. Put the rules for what you'll accept in a written gift acceptance policy before the first unusual offer arrives.

How a Small Organization Starts a Legacy Program

You can launch a credible program within a year using people and tools you already have.

1. Get board approval and a gift acceptance policy

The policy should state which assets you'll accept and which need review (real estate, business interests), that you won't issue gift annuities for now, who signs gift agreements, how unrestricted legacy gifts are used (for example, a set share to an operating reserve or endowment), and how donors are recognized.

2. Identify your prospects

Look first at loyalty, not wealth. Good prospects include:

• Donors who have given in most of the last 10 years, at any amount
• Longtime members, especially those who have renewed for 15 or more years
• Current and former board members, committee chairs and long-serving volunteers
• People who have told you about a personal connection to your mission

A member database with custom fields and tags makes this easier. In campai, you can tag legacy prospects and society members on their member profiles, save the filter as a segment and add notes and follow-up reminders after each conversation.

3. Start a legacy society

A legacy society recognizes everyone who tells you they've included your organization in their plans. Keep it simple:

• Name it after a founder, a place or a symbol tied to your history.
• Membership is open to anyone who informs you of a planned gift. Don't require proof or amounts.
• Benefits are recognition, not perks: a listing in your annual report with permission, an annual gathering, occasional insider updates.
• Founding members: invite the board first. A society that launches with eight board members has instant credibility.

Legacy intention form (fields to include): Name and contact details · "I have included [Organization] in my will/trust, retirement plan, life insurance or other plan" (checkboxes) · Optional: approximate amount or percentage · Optional: intended purpose · How I'd like to be listed (or anonymously) · Permission to share my story (yes/no) · Statement that this form is not legally binding

4. Talk about it, gently and often

Legacy giving grows through repetition, not one big push.

• Add a line to every newsletter: "Have you considered a gift in your will? Here's how."
• Include the legacy web page in renewal letters and the email footer of staff and board.
• Share a short story from a legacy society member about why they made the decision.
• Mention legacy gifts in personal conversations with longtime donors: "We've been talking with longtime supporters about how to make sure the society keeps going for the next 50 years. Has that ever crossed your mind?"
• Offer an informational session with a neutral estate-planning attorney who doesn't solicit for your organization.

campai's newsletters and segments let you send a legacy letter only to longtime donors and members instead of your whole list.

5. Steward legacy society members

Thank every person who tells you about an intention, personally and promptly. Then keep them close: invitations, updates, an annual thank-you gathering and a personal note on the anniversary of joining. Our donor stewardship guide has more ideas, and donor recognition covers how to list members respectfully.

6. Prepare for realized gifts

When a bequest arrives, an executor or attorney will contact you. Respond quickly, keep copies of all correspondence, track expected distributions and thank the family. Record the gift according to the donor's wishes and your policy, and tell the story (with the family's permission) to inspire others.

Compliance and Caveats

• You are not the donor's advisor. Staff and volunteers shouldn't draft wills, choose beneficiaries or give tax advice. Encourage donors to involve their own attorney, advisor and family. Never act as a witness to a will that benefits your organization.
• Gift annuities are regulated. Don't issue them until you've confirmed the rules in every state where you'd offer them and have qualified legal advice.
• Restricted gifts last a long time. If a restricted bequest can no longer be used as intended, changing its purpose may require legal steps involving your state attorney general or a court. Talk to counsel.
• Acknowledgments still apply. QCDs and lifetime gifts need acknowledgments that meet IRS rules, and noncash gifts over $5,000 may require your signature on Form 8283.
• Not every organization can receive deductible gifts. If your association, chamber or club isn't a 501(c)(3), donors don't get a charitable income tax deduction for gifts to it. Ask counsel whether a related charitable foundation should be the recipient.
• Track intentions separately. Revocable intentions aren't money in the bank. Keep them out of annual fundraising totals, and let your accountant decide how and when realized gifts are recorded.

This article provides general information, not legal or tax advice.

Frequently Asked Questions

What is the difference between planned giving and legacy giving?

Legacy giving refers to gifts made at death, mainly bequests and beneficiary designations. Planned giving is broader and includes lifetime arrangements such as charitable gift annuities, charitable remainder trusts, qualified charitable distributions and gifts of appreciated assets.

What should our bequest language include?

Your full legal name, state of incorporation, mailing address and federal tax identification number (EIN), plus wording that lets the donor choose a specific amount, a percentage or the residue of the estate. Have an attorney review it once, and publish it on your website.

Can a small nonprofit offer charitable gift annuities?

It can, but it usually shouldn't at first. A gift annuity is a lifetime payment obligation, and some states regulate it like insurance; New York, for example, requires a permit or exemption and segregated reserves. Start with bequests and beneficiary designations, and get legal advice before offering annuities.

Do donors have to tell us they've included us in their will?

No, and many won't. That's why a legacy society and an easy, non-binding intention form matter: they give donors a reason to tell you, so you can thank them while they're alive.

How much can a donor give through a qualified charitable distribution in 2026?

Up to $111,000 for 2026, according to IRS Notice 2025-67, if the IRA owner is at least 70½ and the IRA trustee pays your organization directly. The donor needs a written acknowledgment from you, just as for a deductible gift.

How should we count legacy intentions?

Track them separately from your annual fund and campaign totals, with the estimated value only if the donor shared it. Count money when it's realized, and follow your accountant's guidance on recording.

Next Steps

1. Put it on the board agenda: approve a legacy program and a simple gift acceptance policy.
2. Publish your details: legal name, EIN, address and sample bequest language on a "Leave a legacy" page.
3. Build a prospect list from your most loyal donors, members and volunteers, and tag them in your database.
4. Launch a legacy society with board members as founders and a non-binding intention form.
5. Mention legacy giving regularly in newsletters, renewal letters and personal conversations, and thank every person who tells you about a plan.

Whether you're a faith community or a historical society, the same steps apply. Your most loyal supporters are already in your database.