Important Planned Giving Terms and Phrases

Deferred gift: An agreement to give a donation at a later date. Bequests, trusts, gift annuities, and donations of life insurance are all types of deferred gifts. The term is often used interchangeably with planned gift.

Bequest: A gift from an estate, which might include a transfer of cash, property, or other assets to charity that is stipulated in a will. Some bequests specify an amount of money to donate, while others earmark a percentage of an estate or the amount left after other specific payments are made.

Trust: A legal agreement that assigns a third party, like a bank, to hold assets on behalf of a beneficiary. The individual who sets up the trust is called the grantor. The outside entity who manages the fund is called the trustee. In arranging a trust, the grantor designates one or more beneficiaries of the funds. These might be individuals, a charity, or a combination of both.

Revocable trust: Also known as a “living trust,” a trust arrangement in which the donor can cancel or change the terms up until death.

Irrevocable trust: The opposite of a revocable trust. Donors cannot modify the terms of these trusts after they are established. Because the assets are transferred out of the estate, donors of these trusts are not taxed for any income their assets generate.

Charitable remainder trust: A trust that provides income for a donor, usually for the lifetime of that person, and in some cases also for a spouse or another individual for his or her lifetime, before generating a gift to charity.

Donors may receive immediate income-tax and gift-tax deductions. Income from the investment is also tax-exempt, and the assets given to the charity are not included when determining the donor’s estate tax. Unlike bequests, which can be altered or withdrawn when a donor changes his or her mind, charitable remainder trusts are irrevocable.

Charitable gift annuity: An arrangement in which a donor gives cash, securities, or other assets to a charity to invest and, in return, receives a tax break and fixed, regular payments for life. Annuity payments are typically worth more than donors would receive from treasury bonds, certificates of deposit, or money-market funds, but because the payments are fixed, their value may diminish over time due to inflation.

The American Council on Gift Annuities suggests maximum payment rates that will leave 50 percent of the original contribution to the charity. Payment amounts are established based on a variety of factors, including the value of the contribution and the donor’s age.

Blended gift: A gift that combines a cash or in-kind outright donation with a bequest or other planned gift. Donors who make a major gift during their lifetime may do this to ensure that their support of the organization continues into the future.