In the dynamic realm of non-profit funding, organizations are continually exploring innovative strategies to achieve financial stability and long-term sustainability. One such emerging strategy is Charity-Owned Life Insurance (COLI). This financial tool can significantly benefit
non-profits by providing a sustainable stream of funds and offer donors a distinctive way to support their preferred causes.
COLI is a policy that a non-profit organization takes out on the life of a donor or the donor takes out on themselves. The organization owns the policy, pays the premiums or the donor pays it, and the nonprofit is designated as the beneficiary. Upon the donor’s passing, the non-profit receives the policy’s death benefit, which can be a substantial amount, often exceeding the total premiums paid over time.
Donors can ensure their legacy lives on through the impactful work of the non-profit. The death benefit from the life insurance policy can fund specific projects or general operations, making a lasting difference. Depending on the structure of the gift and the donor’s financial situation, there can be tax advantages, such as deductions for the value of the policy when it is transferred to the non-profit. Donors who may not have large sums of money available can still make a significant future contribution through life insurance, providing a way to give that aligns with their financial planning.
How do you get started? The first step is to work with professional experts such as financial advisors and insurance professionals who specialize in non-profit strategies to ensure your policies are structured correctly and donors are protected.
Once your policies are in place, develop marketing materials such as brochures, newsletters, a dedicated webpage and include language on the back of your mailing envelopes, to name a few. Remember, this strategy is a marathon, not a sprint. Therefore, engaging and educating donors should be an ongoing strategy. This can include hosting informational sessions with coffee and refreshments, podcasts, and sending out legacy giving campaigns at the end of each year.
In order for this program to be successful, you will need your board’s approval and blessing. Members of the board should be early legacy givers as well as the executive director. My philosophy is, “how can you ask someone to leave a legacy if you haven’t left one yourself?”
Several non-profits have successfully integrated COLI into their fundraising strategies. For instance, a local healthcare charity in Southwest Florida recently secured a COLI policy that is projected to provide a $1 million death benefit. This will significantly boost their endowment fund, ensuring they can continue to offer critical services to the community for years to come. COLI is a forward-thinking strategy that offers substantial benefits for both non-profits and donors.
By integrating COLI into your organization’s financial planning, you can create a sustainable source of funding that helps you grow and serve your mission more effectively. As with any financial tool, it is essential to seek professional advice and carefully consider how it fits into your overall strategy.
Want to learn more? email me at Tamika@growyournon-profit.com. Don’t forget to Like and Subscribe to my YouTube Channel, by scanning the QR Code in the upper right corner of this article so you don’t miss exclusive interviews about raising more money for your nonprofit.
