Maximizing Legacy Giving at a Time of Change

As we look ahead to the next five years, the landscape of legacy giving is shifting dramatically. Recent research and real-world trends confirm what many of us have sensed: the way donors think about their long-term impact—and how they choose to plan for it—is evolving rapidly. For nonprofits, this is both a time-critical challenge and a real opportunity. Organizations that act now to sustain and grow their planned giving programs will disproportionately benefit, while others will be left behind.

The State of The World

While the pandemic sparked a surge of interest in estate planning, it didn’t automatically translate into more legacy gifts. Organizations that continued engaging donors saw sustained or increased legacy interest – some seeing marketing engagement reach new heights, while those that pulled back saw declines. This underscores a crucial lesson that some organizations haven’t yet learned: legacy gift marketing isn’t a luxury—it’s a necessity.

The stakes are high. Political, economic, and social upheavals have left many donors feeling disoriented, distressed, and deeply concerned about the future.

These attacks feel deeply personal for donors who may have spent their lives advocating for the core values that have informed their lives. For many, legacy giving is no longer abstract—it’s a concrete way to preserve what matters most – or to ensure that damage happening now can be repaired.

Who Are the Planned Giving Donors of Today and Tomorrow?

Data shows that wealth and age are strong predictors of whether someone has an estate plan. About 77% of individuals with over $1 million in assets have a plan, compared to just 36% below that threshold. Baby Boomers and Gen X are leading the way, but younger generations—including Millennials and Gen Z—are beginning to think about legacy gifts, though with different motivations and vehicles.

Unsurprisingly, many donors are shifting their priorities as they age. Some are focusing on causes closer to home, while others are drawn to organizations that are visibly standing up for core values. This shift creates a critical opportunity for nonprofits: those who are seen as brave advocates are more likely to inspire legacy commitments.

And it’s a good reminder that the traditional indicators of commitment – especially long-term giving - that we believed will lead to legacy gifts are not as predictive as we think. Newer donors can be your best prospects.

DAFs and the Changing Paradigm

One of the most significant shifts in legacy giving is the rise of Donor-Advised Funds (DAFs). More than a quarter of individual giving dollars now flow through DAFs, and that share is growing.

(As a reminder: our role as fundraisers is to get money OUT of DAFs – not to spend our time and resources telling donors how to open DAFs!)

Only about 20% of DAF holders intend to distribute those funds to charities upon their death. Instead, many appoint successor trustees or set up endowed DAFs, keeping assets in a family-controlled or constrained structure. This means that a traditional planned gift (such as a bequest in a will) is no longer the only—or even the primary—way donors think about legacy. And at the same time that donations are being diverted to DAFs without a commensurate payout rate, future funds that would have been distributed to charity in estate plans are also being diverted – often permanently.

 (The DAF Collaborative estimates that DAF payout rates are much lower than advertised - The median payout rate across all accounts is approximately 9%, higher than the 5% minimum required of private foundations but still leaving substantial assets accumulating in DAFs. Among active accounts, the payout rate rises to 15%. However, around 22% of accounts were inactive (no grants) over a recent three-year period.)

For fundraisers, this shift requires a fundamental rethinking of how we message and market planned giving. Are we talking about wills and bequests, or also about succession planning for DAFs? Are we prepared to cultivate relationships not just with the donor, but with their successors or trustees? And can we break down siloes across our fundraising departments to create effective strategies that advance DAF giving up and down the file?

The Risks of Standing Still

The next five years are critical. Many of the donors who will leave the bulk of traditional planned giving revenue over the next 15 – 20 years are reaching the age when they will make or confirm their final estate plan. And once that plan is made, we will generally lose the opportunity to ever get in/get back in.

 If we continue to under-invest in planned giving programs we risk permanently losing significant revenue. This isn’t speculative: organizations that cut back on planned giving marketing and staffing in recent years are already seeing declines in legacy revenue that will impact them for decades to come.

And the long-anticipated “great wealth transfer” is unfolding much differently than predicted back in the 90s. The top 1% of wealth holders will receive the lion’s share – those who have the most now will receive the most later. And the level of wealth inequality not anticipated 20 years ago is fundamentally limiting opportunities to leave or receive funds. The haves will have and the have-nots won’t.

A Call to Action

Planned giving isn’t just a nice-to-have revenue stream or “icing” on the revenue cake —it’s a strategy for long-term sustainability. It’s about honoring donors’ legacies, aligning with their values, and ensuring that your organization remains relevant and resilient in an unpredictable future – particularly one where traditional funding is evaporating. And it’s about cultivating a culture where planned giving isn’t the responsibility of a single team, it’s an organization-wide mindset.

Here's What You Can Do Now:

1. Invest in planned giving marketing, even if budgets are tight. Consistent messaging pays off over time.

2. But don’t wait to have dedicated planned giving staff or a sufficient marketing budget! There’s a lot you can and should do before then.

3. Lean into new marketing channels – your budget can go further and you can meet donors where they are.

4. Tell powerful stories that reflect your organization’s values and mission. A great story can animate and inform your marketing across all channels and over time.

5. Focus on stewardship. It’s the key to keeping donors engaged for the long term.

Planned giving is essential for nonprofits that want to thrive in a changing world. Let me know how I can help!