In January, Arts Fundraising & Philanthropy delivered our first ‘Introduction to Legacy Giving’ training day, with an engaged cohort of fundraisers from across the sector who promoted many conversations around the opportunities and challenges for this method of giving.
Legacies are gifts that an individual sets up whilst alive to take effect upon their death. Across the charity sector, legacies are an enormous source of income. In 2019, total legacy income in the UK was estimated to be between £3bn and £3.1bn, representing 28% of the total voluntary income of charities that actively fundraise from private sources, making it the biggest (in terms of amount raised) single voluntary income stream to charities. This income does not just go to household names – 26,000 small and medium charities have been named in wills since 2012.
Despite this enormous contribution of legacy income to overall fundraising, we can’t help but feel that legacy income is a somewhat missed opportunity for arts organisations. Often neglected due to a need for funding now, an awkwardness in talking about death with donors, or a difficulty in competing with the most established legacy schemes out there, arts organisations nationwide could be missing out on a huge source of income by not putting in place structures to support this giving:
The biggest gifts individuals make
Legacies are typically the largest gift an individual will make to charity, as they allow for philanthropy without affecting the donor’s standard of living. A recent survey found that 27% of donors aged over 40 had included a charity in their will. These gifts are partly philanthropic, but can also lead to a reduced inheritance tax burden on the estate of the donor.
Generational wealth distribution
We are approaching an unprecedented opportunity for legacy giving. Over the next 30 years, £5.5 trillion will be passed on in the UK - the largest wealth transference from one generation to another in history. This is largely due to societal shifts – with significant wealth accumulated by many in the Baby Boomer generation, and an increase in child-free donors. Studies have shown that legacy giving could double by 2045. In relation to Covid-19, the popularity of leaving legacies is predicted to rise following the crisis, with an increase of between 8,000 and 10,000 more bequests made over the next five years – a 1.2% to 1.6% rise.
Between 40 and 60% of legacies are written into wills without the charity knowing about them! Sometimes these legacies come with restrictions on spending, which when a surprise to the recipient charity can pose difficulties if the restrictions stipulated are not in line with current activities, values or capacity.
For arts organisations, these difficulties can also be seen with gifts in kind – such as new pieces for a collection – that do not come with resources for management or are not appropriate for long term conservation by the organisation. Facilitating conversations prior to a donor’s death can ensure that gifts are better targeted.
So what can we do as arts fundraisers to support this income stream?
Ask! 33% of individuals who put charities in their wills did so following a direct request from the charity. It can be difficult to know when and how to bring up legacy giving, so our top tip would be to think through every aspect of your process and message before you get started:
- When – there is lots of data out there on will-writing: the average age for writing a first will is 44, but 87% of legacies come from wills written or amended by those in their 70s and 80s. On average, High Net Worth Individuals make wills a decade earlier than regular donors, and a majority of will-writing is prompted by life events such as marriage, having children, or buying a house. Think about this data in the context of potential legacy donors for your organisation: when might be right to start these conversations, and when should you make a formal ask?
- Who – as with all fundraising, different donors will like hearing from different stakeholders across your organisation based on their motivations to give. However, a way to start the process can be to ask an individual who has committed to a legacy to lead the conversations. By making public that they have left a gift in their will, any awkwardness is reduced, and individuals may be more open in sharing their concerns and queries.
- What – as an arts organisation, what are you going to ask legacies to be directed towards? Will it be your educational work, your productions and programming, or your work nurturing artists? As you can never know when a legacy will be received, the legacy ask needs to be broader than typical requests, and you need to know that it is a programme area that your organisation will continue to deliver.
- Why – what will motivate potential donors to leave a legacy to your organisation over another? For arts organisations, motivation can often be nostalgia – if an individual has had happy memories at your venue over their lifetime, they will want to support your future. All messaging should bring together emotive stories and create a sense of belonging – individuals will leave legacies where they feel they are a part of something enduring.