Dylan Burke: What motivates legacy giving?

People leave a gift in their will for a variety of reasons. With understanding these reasons the key to communicating effectively with supporters about legacies, Guardian Angel’s Dylan Burke takes a look at what drives legacy motivation more – philanthropic or financial reasons, as well as how people choose to give.

There are many reasons why people give to charity, but the way legacy teams see things, a gift in a will is the ultimate donation – someone’s swansong, their final gift, and for many their first and last chance to be a major giver.

But what do you think drives legacy motivation more –­ philanthropic or financial reasons?

Here in the UK, inheritance tax (IHT) relief applies when people leave 10% or more of their estate to charity. This reduces the rate of Inheritance Tax applicable to their entire estate from 40% to 36%, leaving more behind for their other beneficiaries. Recently this got me thinking – with that (potentially) acting as an incentive, how many of the legacy gifts made through Guardian Angel’s online will writing system are in this category?

The answer? 27%! That’s nearly a third. But that in turn means 73% of legacy gifts aren’t motivated by financial reasons (in terms of purely saving money on your inheritance tax). And that, for me, is even more amazing. 73% of people who leave a gift in their will to charity are doing it for purely philanthropic reasons. Not to save on their tax bills. Of course, it’s essential to stress that many of those leaving 10% or more also aren’t doing it purely for financial reasons either – it might just be an added bonus that it lowers the tax rate for them too. But for the 73% below that threshold, it’s purely an act of generosity to support a charity’s work after they’re gone.

This is a testament to the extraordinary work that so many organisations, including Remember A Charity with their annual awareness week, have been doing in years gone by, and will continue to do in the many years to come.

So legacy teams – keep up the fight!

And as a bonus fun fact for you – according to our data, on average 1 in every 219 people here leaves 100% of their estate to charity. Just wow.

How do people give?

So how do people tend to leave a gift? In the UK, there are broadly speaking two types of gift­­ – either residuary (a percentage – e.g. leaving 10% of your estate), or pecuniary (e.g. leaving a lump sum – such as £5000).

Interestingly, when it comes to income generated, 85% of legacy income year-on-year is from residuary gifts ­– even though they only make up 40% of total gifts left. The average residuary gift is around £60k (€70,000), yet the average pecuniary gift is around £4k (€4600) – it’s a big mismatch.

Therefore, whilst traditionally legacy marketing has revolved around what a pecuniary gift could achieve – e.g., ‘£550 could support 24 hours of hospice care’ or ‘£2500 supplies a new well for a village of 500 people’ ­– recent years have seen a big shift towards prompting for gifts left as percentages.

One of the best-known legacy consultants working internationally is Richard Radcliffe – he’s done considerable research and work on the ‘leave as little as 1%’ style campaigns that lean towards a residuary gift. Much of this is aimed at tackling the ‘but I have family’ excuse – in that by leaving 1% to charity, you still have 99% to leave to your loved ones.

However, building on that, more and more charities are focusing their marketing efforts now on residuary gifts but without suggesting a 1% gift. The reason behind this is that often people want to make a big impact through their gift and most who leave a percentage give much more than 1%. By prompting for 1%, there is a risk of significantly devaluing the potential legacy left.

But a word to the wise – whilst pecuniary gifts typically tend to be of lower value, it all adds up and they’re certainly not to be sniffed at. In the UK, lump sums come out of the estate first (so if there is money in the pot, the gift is pretty much guaranteed) and usually are considerably quicker and easier to see the income arrive with your finance team. It’s all well and good if someone has left 20% of their €2mn estate, but if it requires the selling of a house at a price all the stakeholders are happy with, it can take years…

What about elsewhere?

Of course, outside of the UK you might not have the same laws that apply here in terms of leaving gifts and tax savings. In Sweden for example, where there is no IHT, legacy giving is definitely all about philanthropy – and wanting to make an impact for the cause / causes closest to the person (with thanks to my friend Rebecka Winell at The Swedish Childhood Cancer Fund for enlightening me on that). Legacy marketing for countries in the same boat therefore should focus on communicating the impact that your charity makes (but not in the same way that a gift today might).

But even if your country’s tax laws don’t offer any kind of financial incentive for leaving a gift in a will ­– fear not, as our data suggests it’s not that important anyway… the most important thing is to proactively promote the idea of legacy giving, so that a supporter is aware that it’s possible and can then decide for themselves.

About Dylan Burke

Dylan Burke is head of charity partnerships at Guardian Angel, a free will service in the UK that covers online, telephone and face-to-face will writing services. As part of the online process, all users are prompted to consider leaving a gift in their will to charity with information also included about the potential tax benefits of leaving 10% or more to charity, as IHT relief. Burke has been working with the third sector for 3 years, having launched the free wills product in 2019 and in that time has established nearly 200 charity partnerships.

Picture by Andrea Piacquadio on Pexels