Giving in an uncertain future

by
24 October 2014

How will the death of the baby-boomer generation affect legacy giving? And are younger generations less generous? Rachel Giles looks at the challenges ahead for charities and Church

DAVID BAIRD

Future ambitions: Children's Society supporters at a legacy event at the National Media Museum in Bradford

Future ambitions: Children's Society supporters at a legacy event at the National Media Museum in Bradford

A VITAL source of income for charities comes from legacies left in wills: the UK legacy market generates more than £2 billion a year. Only six per cent of people leave a legacy in their will, but this six per cent provides 13 per cent of all income to charities in the UK.

Death rates are lower now than they were a decade ago. In 2013, there were 21.9 per cent fewer male deaths in the UK, and 19.2 per cent fewer female deaths compared with 2003. Nevertheless, charities are not reporting that legacy giving has slowed.

The Children's Society receives about £7 million a year from legacy gifts (about a quarter of its income). The head of fund-raising and marketing, Simon Burne, says that the situation is positive. "At the moment, most charities are reporting at least stable levels of legacy giving, if not a slight growth." This is because, he says, the two main assets that people have - property and shares - are both rising in value again, meaning that estates are of greater value than they were in previous years.

The legacy marketing manager at Christian Aid, Alison Linwood, agrees that legacy giving is healthy. "We've seen legacy income nearly double from about 2006, when it was just over six per cent of our income. Last year, it was worth about £12.8 million."

Miss Linwood attributes this to more communication with supporters on legacies, and the charity has boosted its community fund-raising team (staff who go into churches to speak about the impact of legacies).

Legacies make up between five and ten per cent of Tearfund's income. The charity was founded in 1968, which makes it relatively young, the UK Director for Church and Supporter Relations, Andrew McCracken, says. "We have a relatively young average supporter; so we'd expect that, as those supporters grow older, our legacy income would generally trend upwards. . . I think that the age of the charity is a big factor."

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Demographic shifts are going to mean further opportunities for charities. From 2020, the "baby-boomer" generation - people who were born between 1946 and 1957 - will start to die in increasing numbers. This group represents 22 per cent of the population of the UK. From 2020 onwards, deaths will start to climb, peaking in around 2040.

A consultancy that analyses the legacies market, Legacy Foresight, ran a research project into the boomer generation on behalf of a consortium of UK charities in 2007, updating its results in 2010 and 2014. The findings were that the legacy market's value will grow to a value of £5.16 billion by 2050: more than twice what it is now.

SO, IS the golden age of legacy giving about to dawn? The director of Legacy Foresight, Meg Abdy, says that there are other factors to consider: namely, that "boomers" have become more cautious since the 2008 economic crash.

"We're a very small part of a global society, and it's much more risky than it used to be," she says. Boomers feel that their families' futures are "by no means predictable. . . That sense of needing to protect your family is still very strong in people's minds."

Many will, undoubtedly, want to help families pay for university fees, or get a foothold on the property ladder, through their wills. Charities are sensitive to this. Mr Burne says: "Whenever we [at the Children's Society] talk to anybody about legacies, we always say 'You must think about your family first. You mustn't leave them suffering as a result of your generosity.'"

Rising care costs for the boomer generation could potentially erode legacy gifts, too. If people are living longer, with high care costs, Mr Burne says, it is possible that, when they die, the amount of money left will be reduced, because assets will have been remortgaged or sold off. "So there's a risk, but it's difficult to quantify."

The director of Remember a Charity, Rob Cope, agrees, but says that the outlook for charities is still very good, overall: "The cohort is so big in terms of baby-boomers, we feel very confident that, actually, growth will still be quite significant, irrespective of those other factors."

Childless people currently represent more than half the legacies market by value, Ms Abdy says. A growing group of childless people (particularly women), dying from 2025 onwards, represents a significant future opportunity for charities (in 2025, childless women will represent 13 per cent of all deaths, rising to 17 per cent in 2050).

But Ms Linwood says that Christian Aid, for example, would not target a group such as this specifically, and would always discuss legacies as part of a more general ongoing conversation. "I'd be reluctant to say that, because somebody fits a certain categorisation, they deserve a very tailored message. It's more about having conversations with people, giving a sermon in church, and [having] a chat with people afterwards."

CHARITIES are not the only organisations to benefit from legacies. The Church of England receives more than 5000 legacies each year, worth about £44.2 million. How does it view the impending changes in society?

The legacy fund-raising officer at the Church of England, Eleanor Gill, says: "We are aware that people are living longer, and the cost of living is increasing, and we will always encourage individuals to remember their family first.

"But, no matter how large or small, each gift can make a significant impact on a church's mission and ministry. People have chosen to support the work of their church through legacy giving for hundreds of years, and I believe that they will continue to show that support."

Like many charities, the Church of England is talking more openly about the importance of making a will and leaving a legacy. "As a sector, we're communicating more effectively, and sharing stories where a legacy gift has made a real difference to our work," Ms Gill says.

But, as it grows, the legacies market will become increasingly competitive. Charities will need to work harder to encourage people to remember them in their wills, and new and younger supporters will become the legacy givers of the future.

TEARFUND is engaging with people in their twenties and thirties in ways that are not just about giving money, since people in that age-bracket often have less '"spare" income to give. They ask them to pray, campaign, and make lifestyle changes, for example through their online community "Rhythms", which encourages people to make small lifestyle changes every day, such as organising a clothes swap or picking up litter. "How we live influences how people in poverty live around the world," Mr McCracken says.

"It's a bit of a myth that younger people are less generous than older people," Simon Burne, of the Children's Society, says. Rather, they are generous in different ways. "While older people might be more loyal to an organisation, younger people are more loyal to a cause." This means that a young person might support a specific campaign, but not sign up as a regular giver. Charities need to negotiate this "fickleness".

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The way to do this is to communicate a much broader vision, Mr Burne says, rather than just ask for money: "It's about engaging people so that they believe and understand how we can best serve the most disadvantaged children and young people in Britain, and make a difference in their lives."

The viral community is important to younger supporters. As with the recent Ice Bucket Challenge (News, 5 September), people see campaigns on Facebook, or other initiatives on sites such as JustGiving, and want to be part of something much bigger.

GIVING in memoriam is set to grow, too, Ms Abdy says, "because of the rising death rate, and because charities themselves are becoming more conscious of it". Often, people will give in memoriam gifts at funerals if the person who has died was a volunteer for, or supporter of, a particular charity. Mr Cope says that this kind of giving can sometimes lead to a legacy gift further down the line.

"Fund-raising is evolving," Ms Gill says, "and there will always be new and innovative ways to support your favourite causes; but legacy giving will never be replaced, and it will certainly never be forgotten."

Many people put off making a will. Research done by Will Aid in 2013 suggests that, of the 50 million adults living in the UK, almost 28 million (56 per cent) do not have a will. The organisers of this month's Christian Legacy Week say that the percentage of Christians with a will stands much higher, at 80 per cent.

Ms Abdy believes that some people are delaying because of economic uncertainty. "They can't imagine what'll happen next week or next year, much less than in 20 years' time." Initiatives such as Remember a Charity in Your Will Week, and Will Aid's Make a Will Month (see box) are working to remedy this, besides the efforts of charities' legacy marketing managers.

There is huge potential for legacy giving to increase, Mr Cope says, if people take the time to make a will and plan ahead: "If you survey people, about 35 per cent of the UK would be happy to leave a charitable gift in their will, once they've taken care of their friends and family." There is "massive potential", he says, to help charities right now.

THERE are tax incentives, too. Since the 2011 budget, if at least ten per cent of your estate is left to charity, inheritance tax will be levied at 36 per cent of what is left rather than 40 per cent.

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But tax savings will never be the sole reason why someone leaves a legacy: will decisions are generally emotion- and value-driven. And, for Christians, Ms Linwood says, legacy giving has a spiritual dimension. "We know that everything we have doesn't belong to us: it's a gift from God. It's loving your neighbour. . . It's another way of extending that love that we have."

Daniel Jones, of Stewardship, one of seven charities behind Christian Legacy Week, says: "We all know how important it is to give time and money to good causes. While many of us can be pretty sure our gifts, given throughout our lives, have saved lives, we often overlook the opportunity for us to continue to do good after we have died.

"Christians, whether they leave a large or small gift to charity in their wills, can have a real impact, ensuring that the good work of Christian charities continues, and that the values of the donor continue beyond their lifetime."

 

www.childrenssociety.org.uk

www.christianaid.org.uk

www.tearfund.org

www.legacyforesight.co.uk

www.rememberacharity.org.uk

www.churchlegacy.org.uk

www.willaid.org.uk

www.christianlegacy.org.uk

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