3 Dynamic Ways Donors Can Leave a Legacy

Planned giving has long been a valuable tool for donors wanting to make a significant future gift to your nonprofit, without affecting their current finances. While options like bequests and other planned gifts are excellent, they might not suit every donor. Some may want to leave a legacy that they can witness in action during their lifetime.

This post highlights three powerful ways donors can leave a lasting charitable legacy—without relying on traditional planned giving. Though not often categorized as "legacy giving," these approaches offer a meaningful, long-term impact for your organization. Let’s dive in.

1. Donor-Advised Funds (DAFs)

Donor-advised funds (DAFs) are increasingly popular among high-capacity donors. As of 2022, nearly 2 million DAF accounts held over $228 billion in charitable assets. But why are DAFs gaining so much traction?

A DAF is essentially a charitable giving account established at a public charity. Donors contribute to the fund, allow it to grow, and make grant recommendations to nonprofits over time. While they don’t directly manage the fund, they have advisory input on how the money is distributed.

DAFs have become a favored option for several reasons:

• Donors build a legacy in their lifetime: DAFs allow donors to make impactful gifts throughout their lives and experience firsthand the positive change their contributions foster.
• Support multiple causes: Unlike traditional planned gifts that usually benefit a single organization, DAFs enable donors to give to various causes and nonprofits.
• Potential for growth: Funds in DAFs are invested, allowing donors to grow their charitable assets over time, which can result in larger eventual grants to your nonprofit.
• Immediate tax benefits: Donors can take a tax deduction in the year they contribute to the DAF, even if the funds are distributed at a later date.

While DAFs offer powerful opportunities, donors may need occasional reminders to recommend grants to your organization. Adding a DAF widget to your donation page or using specialized fundraising software can simplify the process and encourage more consistent giving.

2. Endowments

Endowments are another effective way for donors to create a lasting legacy. An endowment consists of funds donated to your nonprofit, which are then invested for long-term growth. Unlike DAFs, endowments are managed directly by your organization, with only a portion of the earnings (usually 4-5%) being used each year to cover expenses.

Donors can engage with endowments in two ways:

• Contribute to an existing endowment: Once your nonprofit has an endowment established, donors can add to it through cash or stock donations. Their contributions grow over time, helping ensure the sustainability of your organization for years to come.
• Create a micro-endowment: For donors seeking a more personal connection, they can establish a micro-endowment in their own or their family’s name. While less common, this option allows donors to create a long-term funding source that will continue supporting your nonprofit well beyond their lifetime.

If your nonprofit is considering setting up an endowment but isn’t sure where to begin, partnering with a nonprofit investing advisor can be invaluable. Look for advisors with experience in managing endowments, who offer low fees, transparency, and a fiduciary responsibility to act in your organization’s best interest.

3. Matching Gift Challenges

Most nonprofits are familiar with corporate matching gift programs, but individual donors can also sponsor matching gift challenges, creating an immediate and powerful impact.

In a matching gift challenge, a donor (or sometimes a foundation or business) pledges to match donations to your campaign at a specified ratio. For example, during GivingTuesday, a sponsor might agree to double every donation made within a certain timeframe. This strategy not only amplifies the donor’s contributions but also encourages more giving from smaller donors who see their gifts doubled.

To set up a successful matching gift challenge, follow these steps:

1. Identify a match sponsor: Find a major donor, business, or foundation willing to sponsor the challenge by matching donations.
2. Define the challenge terms: Work with the sponsor to determine the match ratio (1:1, 2:1, etc.), fundraising goal, and campaign timeframe.
3. Promote the challenge: Spread the word through your marketing channels, explaining to donors how their gifts will be multiplied during the challenge.
4. Track your progress: Monitor key metrics such as the number of matched donations and total matching gift revenue.
5. Report the results: Share the final impact of the campaign with your sponsor and donors to highlight the powerful outcomes of their generosity.

Matching gift challenges are a great way for major donors to leave a legacy that they can see in action while engaging a wider audience of smaller donors.

Empowering Donors to Leave a Lasting Legacy

To maximize these legacy-giving opportunities, make sure you actively promote them—just as you would planned giving. By providing clear information on your website and across marketing channels, you can show donors how they can create an enduring impact for your nonprofit.

Whether through DAFs, endowments, or matching gift challenges, these strategies give donors the chance to leave their mark and support your mission for years to come.

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