In the world of fundraising, planned gifts represent one of the most impactful ways donors can support your organization. From bequests to charitable gift annuities, these contributions can provide significant financial stability and long-term support. However, effectively counting these gifts can often be a complex and nuanced process. This guide aims to demystify the practice, offering you clear strategies to efficiently account for planned gifts in your fundraising efforts.
Why Count Planned Gifts?
Planned gifts, while often realized in the future, play a crucial role in shaping an organization’s financial health and strategic planning. Here are some compelling reasons why you should count planned gifts:
- Financial Forecasting: Understanding the potential incoming funds helps in creating accurate long-term budgets.
- Donor Stewardship: Recognizing planned gifts can strengthen donor relationships, fostering loyalty and future contributions.
- Strategic Planning: With a clearer picture of future assets, your organization can make informed decisions about growth and development.
How to Count Planned Gifts
1. Assigning Present Value
One effective method to count planned gifts is by assigning them a present value. This approach involves discounting the estimated future gift to its present-day worth, using a reasonable discount rate. This gives you a more accurate reflection of the gift’s value over time.
2. Classifying Gifts by Certainty
Not all planned gifts carry the same level of certainty. Classifying them based on factors like the donor’s age, health, and the type of planned gift can provide a more accurate picture. For example:
- High Certainty: Bequests from elderly donors with no dependents.
- Moderate Certainty: Charitable remainder trusts from middle-aged donors.
- Low Certainty: Life insurance policies from younger donors.
3. Using Software and Tools
Modern fundraising software can simplify the process of counting planned gifts. Tools like Blackbaud, Donor Perfect, and Salesforce Nonprofit Cloud offer features to track and value planned gifts efficiently. These tools can help you:
- Automate calculations of present values.
- Track donor commitments and follow-ups.
- Generate reports for strategic planning.
4. Incorporating Donor Intentions
Directly communicating with donors to understand their intentions can offer invaluable insights. Surveys, interviews, and regular check-ins can provide data points that strengthen the accuracy of your planned gift counting.
Best Practices for Accurate Counting
- Regular Updates: Periodically update the values and classifications of planned gifts to reflect any changes in donor circumstances or economic factors.
- Transparent Reporting: Ensure your financial reports clearly distinguish between realized gifts (those you’ve received) and planned gifts (future commitments).
- Professional Appraisals: For complex gifts like real estate or business interests, professional appraisals can provide accurate valuations.
Conclusion
Counting planned gifts doesn’t have to be daunting. By understanding the types of planned gifts, utilizing present value calculations, employing modern tools, and maintaining clear communication with donors, you can effectively manage and leverage these essential contributions. Remember, planned gifts are a testament to the trust and commitment your donors have in your mission. Recognize and honor this trust by accurately counting and reporting these gifts, ensuring your organization’s sustainable growth.