Legacy giving, or giving by bequest, is one of the best ways for donors to support charities and charitable programs they care about. But not all bequests are made the same: donors should be asking themselves five key questions before settling on a legacy giving plan.
1. What do I want my legacy to be?
When creating a legacy plan it helps to have a clear high-level goal statement that defines what donors want to achieve. Before beginning a legacy giving journey, they should start by defining how they want their bequest to make a difference in the world; in other words, understanding exactly why they are giving. It is also useful at this stage to define a geographic area or group of people that will benefit from the legacy plan. This statement then serves as a “guiding light” for the rest of the plan and will also help to inform any other stakeholders that donors recruit to sustain their legacy after they are gone.
Examples of these goal statements could be:
- My legacy will be to help children in my community.
- My legacy will be to invest in the health and well-being of the people of XYZ town/village
- My legacy will be to support environmental conservation efforts in XYZ country(ies)
How we can help
Most donors have a good idea of what they want their legacy to look like, but for those who are looking for more structure for their charitable legacy CAF America recommends that they reference the UN’s Sustainable Development Goals (SDGs), a convenient framework for contextualizing the issues addressed through their legacy plan. CAF America can show donors how their goal statements align with the SDGs, which then provide a convenient structure for building out the rest of the plan.
2. How do I want to make an impact?
Once donors have defined their legacy goal statement, they should think about how they want their gift to make an impact. The basic output of this process is a simple problem statement and solution statement. Donors should think of their chosen issue (“problem”) as sorted into one of three categories:
- Simple problems: Usually caused by simple lack of resources or a funding gap. We know how to solve them and the solution is to apply more funding or resources. An example of a simple problem is lack of health or education infrastructure, which could be solved by building more hospitals and schools.
- Complicated problems: The solution to a complicated problem usually involves multiple intermediate steps that build on each other towards a final goal. An example of a complicated problem is the spread of an infectious disease, which could be addressed by investing in the development of vaccines or in programs that encourage preventative measures (i.e. the use of bednets to combat malaria).
- Complex problems: Complex problems are systemic issues that cannot be solved with simple interventions. Examples of complex problems include poverty, systemic diseases such as diabetes, and corruption.
An example of a simple solution to a simple problem is:
Goal: My legacy will be to help children in my community.
Problem: Children in my community suffer from food insecurity and often go hungry. Food banks in the area are short of funding and often lack supplies to distribute meals.
Solution: My gift will support access to food for children in my community by providing grants to food banks in my area.
How we can help
Understanding the type of problem donors want to address is crucial to any legacy giving plan; after all, complex problems cannot be solved by simple solutions. CAF America’s team of experts can help donors craft their problem statement, and then together we can identify the types of charitable programs that are already in place to address the issue in question. We use the SDG framework to set out exactly how solutions to complicated and complex problems can make a difference. In this stage, CAF America helps donors define how they want to leave their impact.
3. How long do I want my legacy giving plan to last?
Depending on the type of solution that donors choose, the impact that they make through their legacy plan can be made all at once or over a period of time. While there is no “bad” way to give to charitable causes, these are some questions donors may want to answer before finalizing their legacy giving plans:
- Once my initial donation is expended, what is the lasting impact of my gift?
- Are there any ways to multiply the impact of my gift by investing in charities’ long-term capacity?
- How involved is the community I want to impact in the solution I have chosen? Will they maintain the changes I want to achieve once I am gone and the initial gift is spent?
There is no single answer to these questions: each charity and each issue are different! The best way to design a plan with long-term sustainability is by creating strong relationships with the charities you are looking to fund, and match the giving vehicle you choose with the needs of your targeted beneficiaries.
How we can help
CAF America’s Legacy Giving services allow our donors to choose from the following giving vehicles:
- Option 1: Leave a Legacy Gift. Donors may name CAF America as a beneficiary of their will or estate, and leave instructions for their Executor to communicate their grant advice once CAF America receives the gift. With this vehicle, the charity receiving the donation decides how and where to apply the funding.
- Option 2: Build your Legacy with a Donor Advised Fund. Donors may set up a Donor Advised Fund at CAF America and name the Fund as the beneficiary of their will or estate. This option allows donors to design a sustainable long-term legacy—CAF America can manage investments in a DAF as an endowment that makes grants in support of donors’ chosen causes.
We can also help identify high-quality charities for our donors, and facilitate introductions that lead to long-term meaningful relationships that support ongoing charitable legacies.
4. Who will make sure that my legacy is secured?
Depending on how donors want to leave an impact, they will want to consider who they want to include in their plans so that their legacy endures. During their lifetime, many donors will encourage their family members—especially children and grandchildren—to be involved in their philanthropic giving.
Donors can also build these dynamics into their legacy giving plans. Donor Advised Funds are an excellent way to pass on philanthropic values to future generations, and they are attractive to many donors because of their low cost of maintenance. The last thing many philanthropists want is to pass an unnecessary administrative burden to their heirs.
Alternatively, for donors without close family to carry on their legacy, finding the right charity partner to oversee their giving plan is critical. Especially when working across borders, it is vitally important that the partner donors choose has the expertise to deliver the impact they want to leave behind.
How we can help
CAF America’s Legacy DAF service allows donors to craft a philanthropic legacy to include whomever the donors want to remain involved; for example, our flexible advisory structures allow for the next generation to inherit the advisory privileges of the Fund and carry on the legacy of giving. Alternatively, donors can rely on CAF America’s team of experts to oversee grants to charities that meet specific criteria. There is no one approach that works for all donors: Speak with us to find out what is right for you.
5. Does my international legacy giving plan comply with the relevant rules and regulations?
If donors want to plan their charitable impact to extend across borders, many additional rules and regulations apply to their gifts that are not relevant for 501(c)(3) charities here in the United States. Regulatory compliance is extremely important to ensure not only that legacy plans are implemented correctly, but also that there are no adverse consequences due to unintentionally funding illicit or sanctioned activities.
How we can help
CAF America guarantees compliance with all of the rules and regulations that govern and restrict potential grants to foreign nonprofits. Our industry-leading approach is driven by the 3 Rs of international grantmaking:
- Regulatory compliance with all relevant legal frameworks in the U.S. as well as grantees’ home countries—the adherence to laws aiming to prevent the use of charitable funds to finance organized crime and terrorism, prevent fraud or personal gain; along with recipient country-specific laws impacting inflow of foreign philanthropic funding.
- Risk mitigation to prevent the misuse of funds once they are sent (including reporting and oversight) while ensuring that the grant is used for its intended purposes.
- Reputation protection from the inherent risks of cross-border giving— overcoming barriers to ensure that a donor’s reputation will be protected via their association with the recipient charity, Board, and Senior Staff.
Interested in learning more? Contact Brooks at brooks@cafamerica.org with any questions about how we can support your charitable legacy plan.
