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Lesson Navigator
Introduction to
Legacy Giving
Introduction to Legacy Giving
In this lesson, you’ll learn:
Why you should pursue legacy giving
What you’ll need before creating a legacy giving initiative
The various types of legacy giving
The various types of endowment
Studies show that donors tend to
increase their annual campaign gift
after making a legacy commitment
because they feel more invested
in the organization.
Donors who make annual gifts
for five or more years will often
leave a legacy gift as well.
Philanthropic advisors state that if 20% of your operating budget is not coming from your endowment by 2030, then your organization will be in fiscal crisis. It’s important to dedicate time and resources to build your future endowment base.
Board support
A pool of engaged and loyal donors
Lay leadership support
A history of fundraising (e.g., annual galas)
Professional staff support
Legacy giving, also referred to as planned giving, is a way for philanthropic individuals to support nonprofits. Whether a donor uses cash, appreciated securities or stock, real estate, life insurance, a retirement plan, a donor advised fund, or another giving vehicle, making a legacy gift can benefit both the donor and nonprofit.
Some legacy gifts provide lifelong income to a donor; other gifts have tax benefits for both the estate and heirs while also maximizing their gift to charities. As a best practice, boards should pass a policy designating that legacy gifts be used to fund the principal of an organization’s endowment.
An endowment is a fund in which the principal balance remains intact and the interest generated is used to support the annual operating budget and/or special initiatives.
As long as an endowment remains intact, a nonprofit will become more sustainable. The spinoff interest each year can offset annual operating expenses or any additional expenses. This allows the endowment to become an added revenue stream for the nonprofit.
Endowments are like an organization’s savings account, while the annual campaign is like a checking account.
Endowments can take a variety of forms, such as:
Term Endowment
This type of endowment
stipulates that the principal
can be used after a
period of time or after
a certain event.
Unrestricted Endowment
A board-designated
endowment funded either
through unrestricted donor gifts or organizational funds.
Restricted Endowment
Usually, the principal is
held in perpetuity and
the earnings are used to
support a specific cause
determined by the donor.
Donors can commit funds to an organizational endowment fund or request that their gifts be held in a separate named endowment fund.
Let’s review what you’ve learned so far.
1. What’s one of the reasons you should pursue legacy giving?
2. What will you need before creating a legacy giving initiative?
3. What are some types of legacy giving?
4. What are the various types of endowment?
