We cover the basics of legacy giving and explain why charities are paying it increasing attention
In recent years, charities have started to increase their focus on legacy giving. The trend is perhaps unsurprising, considering that analysis from Legacy Foresight predicts a substantial rise in legacy giving over the next five years. Their analysis suggests that individuals will make an additional 26,000 bequests from wills by 2024, with an average value of £25,000.
Legacy giving looks more lucrative than ever in the charity sector. But what exactly is legacy giving? What steps can charities take to focus fundraising efforts on legacy giving? Can the charity sector use digital services to support their campaigns?
In simple terms, legacy giving is a planned donation that designates a part of an individual’s estate to a chosen charity. Legacy gifts are most often made through wills and trusts, by denoting the organisation that should receive the gift. Some people also use certain financial instruments, such as pooled income funds and annuities.
The process is easy to understand. The individual only needs to list the particular charity as the beneficiary of a bank statement or a pension account. The donation is made once the will is enacted, allowing the donor to create a lasting philanthropic legacy – hence the name.
Charities are starting to increase their focus on legacy giving. In October 2020, for example, WWF UK launched an online tribute fund website to help donors remember loved ones when giving to the charity. The site has been built using WPNC’s InMem platform. Earlier in 2020, Cancer Research UK ran a social media and TV campaign to encourage legacy giving.
But legacy giving remains a relatively untapped market. And the potential for revenue generation is substantial. According to the Office for National Statistics, for example, 11.8 million people in the UK were over 65 in 2016, representing 18% of the population. That figure is expected to increase to 20.4 million people by 2066.
But, according to Co-op Legal Services, 60% of adults do not have wills. That is particularly striking when you consider recent research from Remember a Charity. The research suggests that 35% of over-40s in the UK would ‘be happy to’ leave a gift to charity, but at present only 6% actually do.
That provides a massive opportunity for charities to raise revenue, as many people would be happy to leave a legacy gift but have simply not done so.
The charity sector can ensure that people embrace legacy giving through communication. Each charity, for example, could include gift sections on their website. They could provide additional information about legacy giving in newsletters, emails, social media, or any other platform they use to communicate with potential donors.
Charities can also communicate the importance and the value of legacy giving through meetings with supporters. They can have one-on-one meetings, explaining the long-term benefits of legacy giving. Charities can also organise virtual or in-person conferences on legacy giving, again demonstrating the value to a wider pool of potential donors.
Charities can also highlight certain benefits to donors that go beyond simply supporting a good cause. Legacy giving offers significant tax benefits, for example. The charitable donation does not count toward the taxable value of an individual’s estate. The donor can therefore cut the inheritance tax rate of the rest of their estate by leaving a percentage of their estate to charity.
Another perk of legacy giving that charities can accentuate is recognition. Charities can offer individuals symbolic gestures to recognise their donations. Consider plaques or inscriptions in relevant places, highlighting the generosity of the donor. Perhaps charities can offer a simple dedication or public thanks. Small acts will increase the appeal of legacy giving.
Charities can also highlight the ease of legacy giving through digital means. As mentioned earlier, nearly 60% of adults do not have wills. A number of digital will-writing services are currently available. Many of these digital will-writing tools are simple to use, with some claiming that they can create a digital will in fifteen minutes. Charities can bring digital wills to the attention of current supporters, some of whom may be willing to leave a legacy gift.
An example of the use of digital wills was a test campaign that Dignity in Dying released on Facebook, which offered followers a free digital will service through Farewill. The charity spent £5000 and generated legacy pledges worth an astonishing £220000. The move is perhaps the clearest demonstration of the revenue potentials of legacy giving.
The legacy giving market can offer arguably the best return of any fundraising channel, though it is often overlooked due to present bias. By focussing on legacy giving, charities can prioritise higher long-term gains by redirecting revenue from short-term gains, which may prove beneficial in the long run.