CFRE Major Gifts and Planned Giving 1 — Questions and Answers
Question 1: What is a 'planned gift'?
- A gift that is budgeted in the organization's annual plan
- A charitable contribution arranged in advance through legal or financial vehicles, often fulfilled through the donor's estate (Correct answer)
- A gift scheduled to be paid in installments over time
- A gift from a foundation that is planned in a grant cycle
Correct answer: A charitable contribution arranged in advance through legal or financial vehicles, often fulfilled through the donor's estate
Planned gifts (or legacy gifts) are charitable contributions arranged through estate plans, trusts, annuities, or other financial vehicles, often realized after the donor's lifetime.
Question 2: Which of the following is the most common type of planned gift in the United States?
- Charitable remainder trust
- Charitable lead trust
- Bequest through a will or living trust (Correct answer)
- Charitable gift annuity
Correct answer: Bequest through a will or living trust
Bequests — gifts made through a will or revocable living trust — are the most common form of planned giving in the US, making up the majority of legacy gift revenue.
Question 3: A 'charitable remainder trust' (CRT) benefits the donor by:
- Providing an immediate lump sum cash payment to the charity
- Giving the donor (or named beneficiaries) income for life or a term of years, with the remainder passing to charity (Correct answer)
- Requiring the charity to manage all investment decisions
- Eliminating all federal estate taxes on the donor's estate
Correct answer: Giving the donor (or named beneficiaries) income for life or a term of years, with the remainder passing to charity
A CRT provides the donor or named beneficiaries with an income stream for life or a specified term, after which the trust's remaining assets pass to the designated charity.
Question 4: What is a 'bequest society' in planned giving?
- A legal entity that holds planned gift assets in trust
- A recognition program for donors who have notified the organization of their intention to include the charity in their estate plan (Correct answer)
- A committee that approves all estate gifts over a certain threshold
- A special investment fund for planned gift proceeds
Correct answer: A recognition program for donors who have notified the organization of their intention to include the charity in their estate plan
A bequest society (or legacy society) acknowledges and recognizes donors who have made or expressed intention to make a planned gift, helping to cultivate and retain these long-term relationships.
Question 5: Which of the following is a key indicator that a donor may be a strong planned giving prospect?
- The donor is under age 30 and making their first gift
- The donor is an older, loyal annual fund donor with no children and a long history of supporting the organization (Correct answer)
- The donor made one large event-night gift
- The donor gives only through workplace giving programs
Correct answer: The donor is an older, loyal annual fund donor with no children and a long history of supporting the organization
Older donors with sustained giving histories, especially those without children or other significant heirs, are statistically stronger planned giving prospects due to fewer competing asset claims.
Question 6: What is a 'gift annuity'?
- An insurance product that donates to charity at death
- A contract where a donor transfers assets to a charity in exchange for fixed income payments for life, with the remainder benefiting the charity (Correct answer)
- An annuity fund managed by the government for charitable purposes
- A pooled investment fund open only to nonprofit organizations
Correct answer: A contract where a donor transfers assets to a charity in exchange for fixed income payments for life, with the remainder benefiting the charity
A charitable gift annuity is a contract between the donor and the charity: the donor transfers assets, the charity pays a fixed annuity income for life, and upon the donor's death the remaining assets benefit the charity.
CFRE Major Gifts and Planned Giving 1
What is a 'planned gift'?