When small nonprofits think about planned giving, they usually think about wills. And then they stop, because talking with donors about wills feels like a big, slow, slightly awkward project that needs a specialist.
Here’s the problem with starting there. In a 2025 Caring.com survey of more than 2,500 adults, only 24% said they have a will. If your legacy program depends on donors hiring an attorney and rewriting a will, you’re asking most of them to do something they’ve already put off for years.
There’s a simpler ask that many organizations skip: beneficiary designation gifts. A donor can name your nonprofit as the beneficiary of a retirement account, life insurance policy, or bank account by filling out a form, often online, without changing their will at all. For a lot of donors, that’s the most realistic planned gift they’ll ever make. It’s also the one you can start promoting this month.
What a beneficiary designation gift is
Some assets don’t pass through a will. Retirement accounts (IRAs, 401(k)s, 403(b)s), life insurance policies, and many bank and brokerage accounts with payable-on-death or transfer-on-death instructions go directly to whoever is named on the account’s beneficiary form. The will doesn’t control them.
That means a donor can leave part of one of these accounts to your organization with a few minutes of paperwork. They can name you for a percentage (say 10% of an IRA), as one of several beneficiaries, or as a contingent beneficiary who receives the money only if the primary beneficiary has died. They can change it later, which matters more than you might think. A revocable, low-commitment decision is much easier for someone to say yes to.
Bequests in general are not a small slice of philanthropy. Giving USA estimates that giving by bequest reached $62.19 billion in 2025, up 19.7% from the year before. That’s about one in every ten dollars given to charity.
Why retirement accounts are the asset to talk about
Beneficiary designations work for several kinds of accounts, but retirement accounts deserve most of your attention, because the tax picture often favors leaving them to charity.
When someone inherits a traditional IRA, the money they withdraw is taxable income. The IRS says beneficiaries “must include any taxable distributions they receive in their gross income.” And since the SECURE Act, most non-spouse beneficiaries (an adult child, for example) have to empty an inherited account by the end of the tenth year after the owner’s death. Spouses, minor children, disabled or chronically ill beneficiaries, and people not more than 10 years younger than the owner have other options.
A charity is tax-exempt. It doesn’t owe income tax when it receives the account.
Here’s what that can look like. Imagine a retired teacher with a $200,000 traditional IRA and a $200,000 taxable brokerage account. She wants to leave something to her two children and something to the literacy program she’s supported for 15 years. If her children inherit the IRA, every dollar they withdraw is taxed as income. If they’re in a 24% federal bracket, roughly $48,000 of that IRA could go to federal income tax before you count state taxes. Inherited investments in a regular brokerage account are generally taxed more lightly, because their cost basis usually resets to the value at death.
So she could leave the IRA to the literacy program and the brokerage account to her children. The program receives the full $200,000. The children receive assets that typically carry much less income tax. The charity would receive $200,000 under either plan. Swapping which account goes where simply means more of her estate reaches the people and causes she chose.
That’s a real reason for a donor to act, and it’s a reason that has nothing to do with your organization’s needs. Lead with it.
One caution: you are not a tax advisor, and your materials shouldn’t pretend you are. Every person’s situation is different. Your job is to make donors aware of the option and encourage them to talk with their financial advisor.
Who to ask first
You don’t need a wealth screening to find good prospects for this. Planned gifts often come from loyal donors, not only from your largest ones. A donor who has given $50 a year for twelve years may be a far better prospect than someone who gave $5,000 once.
Pull a list of donors who meet two tests:
- They’ve given in at least five of the last seven years.
- They’re likely 60 or older (from your records, the age of their giving history, or what you know personally).
Imagine a youth mentoring nonprofit with 1,400 active donors. That filter might leave 140 people. That’s a manageable list for a small team, and it’s where your first beneficiary designation gifts are most likely to come from. If you want more ways to spot these donors, see 5 ways to identify a planned giving prospect for your nonprofit.
Donors who are 70½ or older and already giving through their IRA are an especially natural fit. If someone is sending you qualified charitable distributions, they already understand that their IRA can support your work. A beneficiary designation is the same idea extended past their lifetime. (If you’re not yet asking for those gifts, here’s how to ask donors 70½ and older for QCD gifts.)
What to say and where to say it
Beneficiary designations are easy to explain, so you don’t need a glossy planned giving brochure. You need a few clear, repeated mentions in places your loyal donors already look.
A simple web page. Create one page called something like “Leave a gift from your IRA or life insurance.” Include your organization’s full legal name, mailing address, and EIN, since that’s what a donor or their advisor needs to complete the form. Add a sentence or two on how it works, a note to consult their advisor, and a short form or email address for letting you know.
A short paragraph in your newsletter, two or three times a year. For example:
“You can support [mission] for years to come without changing your will. Name [Organization] as a beneficiary of your IRA, 401(k), or life insurance policy, even for a small percentage. It takes a single form from your account provider, and you can change it anytime. Talk with your advisor about whether it makes sense for you, and let us know if you do so we can thank you.”
A line on your reply device or donation confirmation page for older loyal donors: “I’d like information about naming [Organization] as a beneficiary of my retirement account.”
A personal conversation with your most loyal donors. You don’t need a script. You need a question. “Some of our longtime supporters have named us as a beneficiary on an IRA or insurance policy. Is that something you’d ever want to hear more about?” Then listen. For more conversation starters, see these 10 questions to ask donors to determine interest in planned giving.
The mistakes that cost small shops these gifts
Never asking donors to tell you. Most beneficiary designation gifts are invisible until someone dies and an account administrator contacts you. If you don’t invite donors to let you know, you can’t thank them, steward them, or count them. Make telling you easy, and don’t require them to share the amount.
Making the legal name hard to find. If your legal name differs from the name on your letterhead, or you have a similarly named organization in another state, a vague designation can create real confusion later. Put your exact legal name and EIN on the page.
Ignoring spouses. For many employer plans like 401(k)s, federal law generally gives a spouse rights to the account, and naming someone else usually requires the spouse’s written waiver. Community property states add their own rules. IRAs are usually more flexible. You don’t need to explain all of this. Just don’t be surprised when a married donor says, “I need to talk with my husband first.” That’s a normal, healthy part of the decision.
Treating it as a one-time campaign. Donors decide on this when it’s convenient for them: when they retire, open a new account, review a policy, or meet with an advisor. Steady, low-key mentions throughout the year will usually do more than a single big push.
Where to start this week
Don’t build a full planned giving program yet. Do three things. Write a one-page “leave a gift from your IRA or life insurance” web page with your legal name and EIN. Add the newsletter paragraph above to your next issue. Then pull your list of loyal donors who are likely 60 or older and pick five you’ll talk with personally in the next 60 days.
If you want to go further after that, listen to the podcast episode on how a nonprofit can get started with legacy giving.
