As a nonprofit leader or accounting professional, you’re constantly looking for strategies that increase funding without adding operational burden. Grants fluctuate, annual campaigns are competitive, and many donors want to give more, but do not always have liquid cash available. That gap is where asset-based giving becomes powerful.
One of the most overlooked assets in charitable planning is life insurance. Many individuals own policies they no longer need, no longer want, or no longer consider worth maintaining. Children become financially independent, businesses are sold, estate plans change, and premiums may increase over time. In many cases, policyholders surrender coverage or allow it to lapse, unaware that a policy can sometimes be repositioned into meaningful charitable funding.
Life insurance major gifts offer a structured way to convert qualifying policies into charitable impact. When handled correctly, this strategy can unlock significant funding for nonprofits, provide donors with a clear philanthropic pathway, and create a stronger, more modern planned giving conversation. For accounting professionals, it can be a valuable planning tool that supports clients seeking efficiency, legacy, and purpose.
In this guide, we’ll break down the benefits, the partial donation strategies donors may use, the step-by-step process, and why many organizations choose a turnkey partner rather than managing the complexity internally.
Benefits of Life Insurance Major Gifts
Life insurance major gifts can deliver meaningful advantages for donors and nonprofits when the process is structured properly.
- Potential for immediate impact
Traditional life insurance gifts are often structured as beneficiary gifts, meaning the nonprofit receives value only at the donor’s death. A major gift strategy can allow donors to act during life by transferring a qualifying policy as a charitable asset. This can move charitable funding forward in time and support the organization’s mission sooner rather than later. - Reduced premium burden
A common friction point with life insurance gifts is the ongoing premium obligation. In a major gift structure, the goal is typically to remove future premium pressure so neither the donor nor the nonprofit is forced into long-term premium management decisions. - Flexibility and donor control
Many donors want options. Life insurance major gifts can be structured so the donor may donate all or only a portion of the policy, depending on the carrier, the policy type, and what is permitted under the rules. This flexibility can make the decision easier, especially for donors who want to support a cause while still meeting personal financial goals. - A stronger, modern donor conversation
Offering life insurance major gifts signals sophistication and service. It gives nonprofits a compelling way to re-engage donors who may not be planning a cash gift, and it provides accounting and advisory professionals with a legitimate strategy to discuss when clients have policies that no longer fit their planning needs.
Partial Policy Donation Strategy
One of the most valuable aspects of life insurance major gifts is flexibility. Donors may be able to structure a partial gift in ways that align with both philanthropic goals and personal financial priorities.
Keeping part of the proceeds
In many cases, donors may be able to keep a portion of the proceeds and donate the rest. Conceptually, life insurance can be treated as a partial interest asset, meaning ownership or economic interest can be divided. Whether this is possible depends heavily on the carrier’s rules and the specific policy contract. When permitted, it can be an attractive best of both worlds approach: the donor supports the nonprofit while also preserving value for personal use.
Keeping part of the policy
Some policies may allow donors to reduce the policy, retain a portion, or restructure coverage so it better matches current needs. This can reduce premium burden and right-size coverage, while still supporting a charitable objective with the portion not retained. This strategy is not available in all cases and depends on carrier rules and policy design.
Applying to term policies
Term policies can sometimes be split contractually, depending on the carrier and policy terms. Donors may choose to donate a portion of coverage while keeping the rest. This can be a cost-effective way to support a nonprofit while maintaining coverage where still needed.
Additionally, term policies may become especially relevant when premiums are increasing, conversion windows are closing, or the policy is no longer required for family protection. A structured major gift approach can help donors redirect that policy toward a charitable outcome instead of letting it lapse with no benefit to anyone.
Life Insurance Major Gift Process
A disciplined process is essential. While each case is unique, successful life insurance major gifts generally follow these core steps:
- Fair Market Value Determination
The first step is a confidential review to estimate fair market value and evaluate eligibility. This gives donors and nonprofits clarity on whether a donation opportunity exists and what the potential outcome may be. It also helps set expectations early, before paperwork becomes extensive. - Acceptance and transfer decision
Once value and viability are understood, the donor decides whether to proceed, and if so, whether to transfer all or a portion of the policy where permitted. At this stage, documentation and carrier coordination become critical. Done correctly, this phase keeps timelines clean and prevents avoidable delays. - Liquidation oversight and reporting support
If the policy proceeds through the process, it may be liquidated through a structured approach designed to seek competitive value. This step typically includes documentation support for required reporting, including forms that may apply based on the structure of the transaction.
Doro Foundation partners with LS Hub to support a competitive, technology-enabled process that connects to a broad network of institutional buyers. The objective is to support fair market value outcomes and consistent execution while minimizing friction for donors and nonprofits.
- Grant delivery and gift acknowledgement support
After completion, proceeds are granted to the approved nonprofit. Doro Foundation supports gift acknowledgement documentation and provides assistance related to common charitable reporting forms for example forms associated with noncash charitable contributions, while encouraging donors to consult their own tax and legal advisors.
DIY vs. Doro
Nonprofits can attempt to manage life insurance gifts internally, but it often becomes resource-intensive quickly. Common internal responsibilities include maintaining accurate records of the gift, ensuring the gift aligns with donor intent and organizational policy, coordinating documentation and timelines, handling acknowledgements and donor communication, and ensuring internal oversight and responsible administration.
For many organizations, the bigger issue is not willingness, but capacity. Life insurance gifts involve details that are outside a typical development team’s daily operations. Without a dedicated process, nonprofits can experience delays, confusion, and donor drop-off.
Doro Foundation is designed to be a turnkey partner. We guide donors through fair market value review, manage documentation steps, coordinate the workflow, and support nonprofits through grant delivery. This reduces administrative burden, protects donor experience, and allows nonprofits to benefit from a sophisticated planned giving option without building an internal infrastructure.
Conclusion
Life insurance major gifts can be a powerful tool for nonprofits and accounting professionals seeking new ways to unlock funding and increase impact. With the right structure, donors can convert policies that no longer fit their needs into meaningful charitable support, and nonprofits can receive funding without inheriting unnecessary administrative complexity.
If your organization is exploring planned giving strategies, or if you advise clients who own life insurance that may no longer serve its original purpose, life insurance major gifts may be a solution worth evaluating. With a clear process and experienced guidance, an overlooked policy can become a meaningful legacy.
Important note
Doro Foundation does not provide tax or legal advice. Donors should consult their tax and legal advisors regarding deductions, reporting, and tax treatment.
