Creating a Legacy Giving Flywheel to Fuel Growth
Build Your Legacy Giving Flywheel
The Power of Legacy Giving, Planned Gifts, and Endowment
After spending more than 25 years in the world of legacy and planned giving, I can tell you that the organizations that build lasting impact are not the ones with the most robust annual campaigns. They are the ones who play the long game.
Whether you lead a small community nonprofit or serve on the board of a mid-sized organization, you have likely felt the pressure of the fundraising treadmill. It’s when you raise the money towards your yearly goal and then you need to start over the following fiscal year. That means you’re either going back to the same donors or finding new donors or funders. There’s very little control you have in the process, and a lot of overwhelm and pressure. If you find yourself in this situation, are you looking for a different, smarter, more sustainable model that compounds over time, builds donor loyalty, and creates financial stability that lets your programs thrive for generations?
I call that model is the Legacy Giving Flywheel, and it is built on three interconnected pillars: legacy giving, planned gifts, and quasi-endowments. In this article, I’ll walk you through how it works, why it matters, and how your organization can start building it today, no matter your size or budget.
The Problem: The Nonprofit Sustainability Gap
Many nonprofit leaders are experiencing over-reliance on annual giving, including grants, events, direct mail, and end-of-year appeals. And while these revenue streams are important, they can be unpredictable, such as when a major funder shifts priorities, a gala gets cancelled, or government funding changes. Or all three (remember the pandemic?) And when this happens, your budget is in crisis, and people start to panic.
At the same time, the philanthropic landscape is experiencing one of the greatest wealth transfers in history. Estimates suggest that somewhere between $84 trillion and $124 trillion will pass between generations over the next several decades. [Cerulli Associates, The Cerulli Report: U.S. High-Net-Worth and Ultra-High-Net-Worth Markets (2021 and 2024 editions)] This is an extraordinary opportunity, and many nonprofits are completely missing it. This is because legacy and planned giving programs require an upfront investment of time and strategy without an immediate return on investment that feels hard to prioritize when you are just trying to make payroll. The irony, of course, is that building this program is exactly what would reduce that financial pressure over time.
What Is the Legacy Giving Flywheel?
The flywheel is a concept originally popularized by business strategist Jim Collins (Jim Collins, Good to Great (HarperBusiness, 2001). and it fits perfectly with the trifecta of planned giving, legacy giving and endowment. It works like this: instead of pushing harder on a single lever (such as only planned giving), you build a self-reinforcing cycle where each component feeds the others.
In the legacy giving context, the flywheel works like this:
Your organization establishes a quasi-endowment, which generates dependable annual income for operating expenses each year (or events to be used for funding your planned giving and legacy giving marketing). That financial stability builds donor confidence. Confident donors are more willing to make legacy and planned gifts because they are in essence, investing in your future. Those gifts, when received, flow into the quasi-endowment and grow it further. A larger quasi-endowment generates more income to operating support, supports stronger programs, attracts new donors, and the cycle continues to spin faster and stronger with every revolution.
It is a strategy available to every nonprofit, regardless of size.
Understanding the Three Components
Legacy Gifts
A legacy gift is a gift commonly thought of as a bequest in a will or trust (I have my own thoughts about how a legacy gift is more about intent and values rather than the actual gift vehicle, but that is for another time). These are often the largest gifts a donor will ever make to your organization. They are personal and deeply value-based. It’s impactful when someone names your organization in their estate plan, right next to their family and friends.
Legacy gifts can be transformational for organizations, and they are also meaningful for donors. The conversation around legacy giving is not really a fundraising conversation. It is a conversation about values, impact, and what we want our lives to stand for. As fundraisers and board members, we have the privilege of holding that conversation with our donors. Having this conversation with donors is also a gift to them to allow them to reflect on what is meaningful in their lives.
Building a legacy program starts with creating a legacy society. This is a group where you can begin to include donors who have indicated that they made a legacy gift so that you can honor and recognize them. Once you establish your legacy society, identify and cultivate the donors who are most likely to participate. With focused effort, you can establish a strong foundation of several legacy intent donors within six to twelve months.
Planned Gifts
Planned giving is the broader category that encompasses legacy gifts and a range of additional gift vehicles, including charitable gift annuities (CGAs), charitable remainder trusts (CRTs), and life insurance gifts. These are, quite frankly, gifts that require planning. Gift vehicles may offer tax and income benefits to donors while generating future gifts for your organization.
One of the most important things I tell organizations when they are starting out is not to overcomplicate it. Begin with bequests since they are the most common planned gift and, the easiest to understand. It’s likely many of your donors have already made a gift in their will. As your program matures, you can introduce other vehicles that serve donors with more complex financial situations.
The benefits of planned giving run in both directions. Donors receive tax advantages, potential income streams, and the connection of knowing they have made a lasting commitment. Through these planned gifts, your organization will receive a pipeline of transformational future gifts.
Quasi-Endowments
Here is where I often see eyes light up in the room. Once people understand what a quasi-endowment actually is and what it can do, it changes the way they grow their program.
A quasi-endowment is a board-designated fund that functions like an endowment. The board sets it aside, invests it for long-term growth, and draws from the investment income to support operations or programs. Note, in order to be a quasi-endowment is needs to act like an endowment, a pool of funds sitting in a money market account is not a quasi-endowment (but you can turn it into one). Unlike a true endowment, where the donor has permanently restricted the principal, a quasi-endowment's principal can be accessed by the board if truly needed.
This distinction is important. It means that even if your organization has never received a restricted endowment gift, you can create this structure right now, using unrestricted reserves, surplus funds, or the first planned gifts you receive. There is no minimum threshold to start. The goal over time is to grow it to the point where it supports 10 to 25 percent of your operating budget, or a level that you decide meaningfully reduces your dependence on other revenue streams.
The Confidence Loop: Why It All Works Together
The magic of the flywheel is what I call the Confidence Loop, and it is worth tracing through the full cycle to understand why integration is so powerful.
When donors see that your organization is financially stable their confidence increases. And donors who are confident in an organization's future are far more likely to make a legacy commitment. Why would someone leave a bequest to an organization they fear might not exist in twenty years?
So financial stability drives legacy giving. Those legacy gifts, when they are received, feed the quasi-endowment. The quasi-endowment grows, generating more annual income, which supports stronger programs, which attracts more donors, which builds more confidence. The loop becomes self-reinforcing.
How to Build the Flywheel: A Practical Roadmap
Phase One: Launch the Legacy Program
The first step is to establish your legacy society. This gives you a framework for recognizing donors who have made bequest intentions and a platform for communicating your legacy giving program to your community. You do not need a sophisticated program to start; simply a name, a brief description, and a personal touchpoint acknowledgment process will work.
From there, identify the donors who are most likely to participate. These are typically your most loyal, longest-supporting donors, such as your board members or donors who have given consistently for ten years or more, who volunteer, or who consistently attend events. Start having conversations, ask them about their connection to your organization, what they hope for its future, and what legacy means to them.
Set concrete goals for the number of legacy intents you want to secure in your first year. Even five to ten committed donors is a meaningful start that signals momentum and builds organizational confidence.
Phase Two: Build Momentum and Establish the Quasi-Endowment
Concurrent with or shortly after launching your legacy program, work with your board to establish the quasi-endowment. This requires several key governance documents: a board resolution creating the fund, an investment policy statement defining how the fund will be managed, an endowment management policy covering contributions and distributions, and a surplus/windfall policy clarifying which gifts flow automatically into the fund.
Do not wait until you have a large gift to make this move. You can add modest amounts to this fund which will compound over time. Establishing the structure first sends a powerful signal to donors, funders, and your community that your organization is committed to long-term growth.
Phase Three: Accelerate Growth and Expand and Integrate
Once you have both a legacy program and a quasi-endowment in place, the real acceleration begins. Now you have a stability story to tell. Use your quasi-endowment as proof of concept: here is evidence that we are investing in our future, that we are responsible stewards of donors’ generosity, that a legacy gift to us will be honored and protected.
Expand your planned giving program by introducing additional gift vehicles. Promote the tax and income benefits of charitable gift annuities to donors who want current income. Have conversations with donors who hold appreciated assets about more sophisticated vehicles.
Financial stability is a fundraising asset.
Common Pitfalls to Avoid
Over the years, I have seen organizations stumble in a number of ways. Here are the ones I most want you to watch out for:
Raiding the quasi-endowment for operations. This defeats the entire purpose of building it. If you dip into the principal every time there is a budget shortfall, you will never build the momentum the flywheel requires. Establish clear policies and hold firm.
Overcomplicating the planned giving program too early. Start with bequests. When you get comfortable with those conversations, add complexity only when you have the capacity to support it (remember, you need to be able to speak with donors about these gifts as well as close them).
Ignoring small or modest donors. Some of the largest bequests I have ever seen came from donors who gave $25 a year for decades. Never underestimate the legacy potential of a loyal donor.
Skipping stewardship. Planned giving donors need ongoing cultivation and connection just like any major donor. They have made a major commitment to your mission. Honor it with meaningful, personal stewardship. And remember, most of these gifts are revocable!
A Note to Board Members
If you are reading this as a board member, I want to speak to you directly. You have a unique and essential role in building the flywheel.
The quasi-endowment is created by board action. The investment policy, the spending policy, the commitment to protect the principal are all board commitments. Boards that lead by example where members make their own legacy commitments and speak openly about why are the ones that inspire their donors to do the same.
Your belief in your organization's future, expressed through your own philanthropy, is one of the most powerful fundraising tools you have. If you have not already made a legacy commitment to the organizations you serve, please consider doing so.
Small Organizations: You Belong in This Conversation
I want to be explicit about something, because I hear this concern often: this is not just for large organizations. Small nonprofits can and should build legacy programs and quasi-endowments.
You do not need a development department. You do not need a major gifts officer. You do not need a sophisticated database or a glossy brochure. You need a committed executive director or board leader, a small circle of loyal donors, and a willingness to have authentic conversations about what your mission means and what you want its future to look like.
I have worked with organizations with one-person development staff who have built deeply meaningful legacy programs that are transforming their financial health. The flywheel is available to you.
Your Next Steps
The most important thing you can do after reading this is not to do everything at once. It is to take small, consistent actions that compound into extraordinary results.
Here is where I suggest you start: convene a conversation with your leadership team or board about whether your organization has diversified revenue streams, and if not, what it would take to build them. From there, identify your most loyal donors and consider who might be ready for a legacy conversation. Draft a simple board resolution establishing a quasi-endowment, even if you seed it with a modest amount to start.
The legacy giving flywheel does not require a perfect launch. It requires a beginning.
About the Author
Lori Kranczer, J.D., CAP, is the Founder and CEO of Link Elevating Philanthropy and host of the Positive Impact Philanthropy podcast. With 25 years of experience creating and managing legacy giving and planned giving programs, Lori partners with nonprofits of all sizes to build sustainable philanthropic infrastructure that fuels lasting impact.
Connect with Lori:
Email: lori@linkphilanthropic.com
LinkedIn: linkedin.com/in/lorikranczer