On the Record: Taking Out Life Insurance on Your Donors: A Gamble?

So, what’s in it for the charity?
The charitable organization will realize its donation when the insured party dies and the death benefit is paid. The advantage to the party selling the insurance is in the fees and commissions that will be paid on the sale of the policy.

However, if the projections of the promoter are too optimistic — if the insured individual lives beyond the expected time period or the costs of servicing the policy exceed the return — there might be little left for the charity at the end of the day.