The inspiration behind this article came from talks given at our June 2023 Masterclass by Kathryn Horsley and Dr Claire Routley from Legacy Futures, and Professor Russell James from Texas Tech University.
Over recent years, some charities have been fortunate enough to receive extra-large legacies of over £1m. These include WWF, Guide Dogs, Cats Protection and Cancer Research UK. And smaller charities too, such as Princess Alice Hospice and Leonard Cheshire.
Notable legators include Ray Dolby, inventor of surround sound, who gifted over £100m to Cambridge University, businessman Richard Cousins who left £41m to Oxfam, and Richard Colton whose nervousness of the sea compelled him to leave his two Ferraris to RNLI, amassing the charity £8m.
Extra-large gifts are enormously welcome, but almost impossible to predict, and the charities that have received them once can’t assume they will again. Such gifts are very rare – less than 1,000 per year. They make up only 2% of all bequests, although their impact is huge, accounting for 32% of total legacy income.
Understanding who leaves large bequests
What we do know is that wealthy people give differently and that legacy giving can be a very attractive way for ultra-high-net-worth individuals (UHNWI) to make a donation. They prefer to hold on to their wealth and are much more likely to make a legacy gift (which enables them to do this AND be charitable) than to transfer funds during their lifetime. People whose estate is worth under £2m on average leave a legacy gift worth twice the size of their annual giving. The average size of a legacy gift from someone whose estate is worth over £100m is 100 times their annual giving figure.
It’s also important for charities to accept that the larger the legacy, the more likely it is to come with specific wishes, such as restrictions around how the gift is spent. Limiting wishes can deter wealthier people.
Being confronted with mortality
The thought of our own demise can be discomforting, and research shows that some people cope by pursuing a lasting social impact (symbolic immortality). Importantly, when people – especially the wealthy – choose this route, they want their gift to resonate with their own life story.
A legacy is the ultimate and permanent expression of a person’s identity. Bringing in people’s life stories when talking about leaving a legacy gift makes it more powerful. The art of fundraising in the UHNWI space is successfully meshing a donor’s motivation with what the charity needs.
The time to talk
Wealthy people tend to live longer and wealth accumulation of the super wealthy continues to rise into old age, even up to age 98.
Remember, a legacy pledge is revocable and can go up or down. Data shows that 61% of people in their 80s and older who made a pledge indicated that just five years previous they had no plans to give such a gift. Whereas non-charitable wills were written about 10 years before death, charitable wills were made only around 5 years before death.
The pledge is only the beginning
A UHNWI’s initial pledge of a legacy gift should be viewed as the start of the process. After that, conversations are needed as to what the individual would like to accomplish with their gift. Sharing stories of what donors similar to them have achieved helps ensure the charity and the legator achieve maximum benefit.
Beware the ‘social norm’
Establishing a ‘social norm’ by asking people to leave just 1% of their estate to charity in their will is very effective at increasing participation numbers, but we need to be aware that there is a very real trade off with the value of the gift. Asking for a gift of a specific amount will increase participation at that level, no more, no less. Why give more, one may think, if this is the social norm?
Given that the average residuary gift in the UK is around 12%, we could significantly reduce overall legacy giving, by anchoring at 1%.
Avoiding a trade-off between participant numbers and size of gift
Of course, removing a low entry point of giving is risky too. A study with 10,000 donors found that increasing the suggested donations by 20%–40% reduces the probability of giving by approximately 15%[1].
Professor James advises a solution to this issue is by presenting multiple norms. Instead of asking for just one percent, we could offer a range, for example, 1%, 10% or 50%.
Here are Dr Routley’s top five tips for how charities can engage with UHNWIs
1. Understand different audiences
We’ve talked a lot about behaviours of UHNWI (those with investible assets of £5m+), but it’s worth considering baby boomers too, one of five of whom is a millionaire. By 2040, this cohort of the population will be the biggest driver of the legacy market, not just by population numbers, but also by their affluence and generous behaviour.
To grow the value of legacy giving by £0.5bn, we’d need 17,000 average bequests, but if the bequests received were £100k each, we’d only need 2,600. It may therefore be prudent to focus on the value rather than the quantity to grow overall legacy giving.
2. Create ambitious propositions
UHNWIs tend to have different mindsets from the masses, as they have seen in their lifetime what wealth can do. It has even been reported that some have complained about charities not being ambitious enough! Create suitable propositions to show they can make a real difference.
Ultimately, legacy donors want to make an impact with their giving, so help them visualise the difference their gift will make with a clear and compelling proposition.
3. Develop differentiated stewardship
Around half of legacy gifts are lost because would-be donors change their mind. There is a correlation between how much charities spend on stewardships and how many gifts they retain. People dislike generic comms and feeling like a number. Conversely, they enjoy personalisation and being treated like an individual. Donors want to know they matter.
4. Work with major donor fundraiser colleagues
This presents legacy fundraisers with the opportunity to court donors and nurture relationships, and can be hugely beneficial to the organisation, but there are barriers. Legacy fundraisers may fear cannibalising lifetime giving by requesting a legacy gift. And they may resist a discussion about death. But, if the discussion is reframed to be about life and what’s important to the donor, this fear can be allayed. When handled well, working with major donor colleagues can increase overall giving by 77%.
5. Explore blended giving
Combining lifetime giving with the pledge of a legacy gift can for many donors be the perfect solution. It means they can see the impact of their generosity, while knowing this will continue after their death. The blended option also gives them the advantage of being treated like a major donor while they’re alive.
Thank you to all our speakers and to everyone who took part.
[1] Reiley, D., & Samek, A. (2019). Round giving: A field experiment on suggested donation amounts in public‐television fundraising. Economic Inquiry, 57(2), 876-889.