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Common Planned Giving Terms and What They Mean

Planned giving or legacy giving describes any major gift made in lifetime or at death as part of a donor’s overall financial and/or estate planning. Planned giving can include bequests, gifts of appreciated stock, real estate/property, artwork, life insurance, or a retirement plan. Legacy gifts are typically more substantial than those made during a donor’s lifetime.

Using a planned gift, donors can establish a Legacy Fund at CFAAC that becomes active upon their death. Donors may designate one or more nonprofits as the beneficiary, and they have the ability to name successor advisors to the fund.

For example, CFAAC Board member, Kate Caldwell, has taken the important step of including CFAAC in her estate plans. While providing for her husband and three adult children, she also believes strongly in supporting her local community. Her planned gift, designated as a percentage from one of her IRAs, will be used to establish the Caldwell Family Endowment Fund, a Donor Advised Fund.

Kate says, “At the time of my eventual realized gift, I have full confidence that CFAAC will invest my gift wisely to provide a stream of income which will support the Foundation’s operations and its work in the community in perpetuity. I encourage others to take this simple and tax-wise step.”

Some people might wonder what the terms mean when hearing someone speak about planned giving. Here are some commonly used planned giving terms:

  • Beneficiaries: An organization designated to receive funds or assets from a will or trust.
  • Bequest: A bequest is a financial term used to describe the act of giving assets to organizations through a will or estate plan.
  • Charitable Bequest: There are four types of charitable bequests: Specific—a gift of a specific item to a specific beneficiary. Residuary—a gift of all the “rest, residue and remainder” of your estate after all other bequests, debts, and taxes have been paid. Unrestricted—this is a gift to be used for general purposes, without conditions attached; especially useful for charities, like CFAAC, because it allows for the changing needs of the organization.  Honorary/Memorial—a gift made in honor of or in memory of someone.
  • Charitable Remainder Trust: This is gifted to a charitable organization after the terms of the trust are complete.
  • Complex or Non-cash Assets: These are assets other than cash or cash equivalents such as life insurance, real property, IRAs, or stocks.
  • Charitable Lead Trust: Donors can make a substantial gift to a charitable organization via an irrevocable trust designed to provide fixed annual payments to one or more nonprofits for a period of time, with the remaining assets eventually going to heirs.
  • Donor Advised Fund (DAF): A giving account established at a public charity such as CFAAC, allowing donors to make a charitable contribution to a nonprofit(s) of his or her choice and receive an immediate tax deduction. This type of fund can be set up as an endowment so donors can continue support their causes in perpetuity.
  • Endowment: A donation of money or assets to a nonprofit, which uses the resulting income for a specific purpose.
  • Legacy Fund: A fund set up during a donor’s lifetime, becoming an active fund upon the donor’s death, fulfilling the donor’s charitable wishes. It can also be set up to include the ability for family members to make grants from the fund.
  • Nonprofit: A not-for-profit or tax-exempt legal entity organized and operated for a collective, public or social benefit.
  • Perpetuity: Lasting forever.
  • Real Property: Land or permanent property on that land that cannot be moved.
  • Successor Advisors: A person selected by a fund advisor or donor to exercise the privileges and duties of a fund advisor. Successor advisors may assume the privilege to advise the fund only after the deaths or resignations of all initial fund advisors named on the fund.

There are numerous ways to organize your future giving that are mutually beneficial to you, your heirs, and your favorite charitable organizations through bequests, trusts, beneficiary designation on retirement accounts, life insurance, appreciated securities, or real estate.

CFAAC can work with you and your professional advisor to find the best way for you to distribute your assets. For more information, contact Amy Francis at or 410.280.1120 ext. 102.


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