Bequests
Traditional bequests, the second most common type of charitable gift, provide legators with the knowledge that their philanthropy will be used beyond their lifetimes. However, bequests usually provide donors with limited recognition from the charitable donee since bequests are often revocable or conditional. If donors wish to see their philanthropy being used during their own lifetimes, other types of deferred gifts or outright gifts may be preferable.
Institutions usually encourage legators to make bequests with few restrictions, to give themselves the most flexibility in dealing with future priorities. For an outright bequest, some institutions suggest variations on the following:
I give to _______________, a ___________ non-profit organization, whose present address is [or with headquarters at] _______________, and its successors forever, the sum of $ ______ [or a description of property devised] [or a percentage of the estate], to be used in such manner as its Board of Directors determines.
A residuary bequest leaves an institution the remainder of an estate (if any exists by accident or design) after all specific legacies have been distributed. It can be incorporated into the above bequest form as follows:
... and its successors forever, all [or a specific percentage of] the residue and remainder of my estate, to be used in such manner ...
Institutions interested in building their endowments may be quite happy with the inclusion of such a phrase as “the income only to be used" or may encourage perpetual memorial funds as one way to insure their futures. An example of the Memorial Fund bequest form is as follows:
I give to __________, a __________ non-profit corporation, whose present address is [with headquarters at] _________ the sum of $______ to be known as the ______ Memorial Fund. The fund may be invested by ________Board of Directors as it deems advisable, either separately or commingled for investment purposes with other funds administered by the Board, the net earned income to be used in such manner as the Board determines [or for a specific purpose as described].
However, any restriction on the use of a bequest, even one as commonplace as an endowment, should be discussed with the intended donee. For example, a few organizations have bylaws that bar them from accepting endowments because they feel that their income should be spent in the present, on today's problems.
If it is advisable to notify an institution of an endowment, it is even more important to confer on less common restrictions. Unfortunately, many charitable bequests are written without consultation with—or even notification of— the named institution. What is to be done with a scholarship fund for the children of war veterans after two generations of peace? A common suggestion is to write a restricted bequest with a clause similar to the following:
... If at any time, in the judgment of the Board of Directors, it is impossible or impracticable because of a change of circumstances to carry out the foregoing purpose, ________ shall choose a purpose as near as is practicable to the foregoing purpose.
Ultimately, the donor should endow an organization that he has confidence will be able to deal with the future and its inevitable changes.