New Guide to Legacy Fundraising

A new guide is published this week in a series of e-books about managing and fundraising for charities.

The Charity First Series, published by the Social Marketing Partnership, is a new range of practical guides to help charities - especially smaller organisations - to improve their game. The series tackles some important issues, such as legacy fundraising, prospect research and major gift fundraising. Further titles are planned for 2012.

Published at just £7.99 each, they are an affordable way for smaller organisations to access expertise in these areas.

The guides can be puchased as downloadable pdf's here:
http://www.spmfundessentials.org/titles/

No Will - No Legacy

A good friend of mine is currently enduring the nightmare of trying to sort out the affairs of an aged relative who has died intestate. It is the last thing she needs and is very frustrating, as the relative in question had been told by all around her to make a will but never did. Now she has left a mess to be unravelled and the corresponding expense of paying a solicitor to sort it out. To cap it all, my friend has got all the responsibility of registering the death and arranging a funeral, while distant relatives who cared little for the aunt, and were essentially estranged from her, are now showing great interest in their former relative's affairs.

So what do such situations tell us? Obviously it reinforces the need to make a will, not least for the sake of those left behind and to protect the value of the estate from legal fees. Secondly, making a will can reduce a lot of stress in families by determining who gets what and avoiding arguments (my friend has had to keep a detailed account of her expenses, which will certainly be strutinised by the aunt's beneficiaries). Finally of course, without a will there will be no charitable legacy. The irony is that the aunt was estranged from her sister and had not seen those who will inherit her estate for many years. A legacy to charity would arguably have been a much better choice for her, a charity and my friend.

Legacy fundraising practice used to involve reminding people to make a will and warning them of the consequences of not doing so, with a legacy request bolted on. Things have moved on a lot in the last 20 years and we know that most targets of legacy messages already have a will, even if it may need updating. However, I wonder if we have thrown the baby out with the bath water? Could there still be a place for warning people of the nightmares they are creating for relatives by not making a will (and of course in the process remind them that they can also remember their favourite charities)?

We should obviously not overdo the doom and gloom - legacy fundraising needs to be a positive business after all - but I do wonder if the odd salutory reminder can still focus the minds of recalcitrant prospects who do no one any favour by omitting to make a will?

Will Writers in Question

The Legal Services Ombudsman Adam Sampson has warned consumers against using unregulated providers of legal services such as will writers, because they are often not insured and provide no compensation if they get things wrong.

In contrast, solicitors are regulated by the Law Society and must also carry insurance to cover any claims made against them. Ultimately, they can be struck off if found guilty of malpractice, but of course they charge more.

The reasons people use will-writers are largely because they are cheaper than qualified solicitors and because they will make home visits to take instructions from clients (although of course many solicitors now do this too).

My gut feeling is that will-writers are used mainly by people who buy on price not quality (although admittedly this is something of a generalisation). Those with larger estates, including many of those in the market for a residuary legacy, are more likely to be people who use a family solicitor and not a will-writer.

So what is the implication of all this for legacy fundraising? The danger with the Ombudsman's report is that for some people it may create another barrier to leaving a legacy, which is not what any charity needs. If will-writers really are the subject of so many complaints, then perhaps campaigns should point people very firmly to using a solicitor?

The ideal scenario is probably where a solicitor is prepared to offer some discount or even a free will for your supporters. Then they get regulated advice, backed up by compensation if things go wrong, and hopefully will be grateful to your charity for helping them sort out their affairs. Certainly, there is less chance in these circumstances that the will is poorly drafted or invalid - probably a price worth paying to keep supporters happy and maintin the integrity of your campaign?

New Incentive for Legacy Donors

In this week's budget, the Chancellor has handed legacy fundraisers a gift by incentivising legacies as a form of donation.

Although he left the inheritance tax nil rate band frozen until April 2015 (which might be seen as mean spirited), he did announce that a reduced rate of inheritance tax (IHT) will apply where 10% or more of a deceased’s net estate (after deducting IHT exemptions, reliefs and the nil rate band) is left to charity. In those cases the current 40% rate will be reduced to 36%. The new rate will apply where death occurs on or after 6 April 2012.

What this means is that we as legacy fundraisers now have a new "donor motivator" to use in our campaigns.

The proposition is that "if you leave this charity a legacy of 10% of your estate, you will benefit from a 10% reduction in your inheritance tax rate".

Although this sounds better than it really is in financial terms (as 10% of the net estate after deductions will of course be more in cash terms than the reduction in IHT) it should still be a valuable incentive for those people motivated by a desire to pay less tax.

On its own, this move is unlikely to result in a huge growth in legacy giving, but it is nevertheless a useful addition to the legacy tool box and, for some people, should be enough to persuade them that a legacy is worth considering.

At a tactical level, it also gives legacy fundraisers another reason to talk to donors about legacies and to update them on the latest rules. We need to make the most of this opportunity!

Barriers to Legacy Fundraising Revealed

So here we have it - the reasons why so many small and medium sized charities miss out on legacies.

Our survey of 52 charities looked at what was stopping them from maximising legacies and found the two main reasons were a) lack of knowledge and understanding of what to do and b) lack of staff capacity to do it. In third place came a lack of strategic focus.

This was slightly surprising, given all the opportunities for training on legacies and the fact that there is so much information available these days. I had also expected the lack of strategic focus to play more of a role.

The lack of capacity is a harder problem to fix, especially when so many charities are struggling to stand still at the moment. Perhaps there is a link here to the third reason (lack of strategic focus)? If legacies were seen as a strategic priority, then maybe the staff capacity would be found, in lieu of other less profitable activities?

The learning from the survey is clear. The sector needs to make legacy education more of a priority and charities themselves need to address the capacity issue, either by reconfiguring their fundraising activities to include legacies or by seeking external support. The legacy opportunity is just too great to do nothing!

The full report on our survey can be read at:

www.wgconsulting.co.uk/news

Exposing the Barriers to Legacy Fundraising

In carrying out fundraising reviews over the years, I have come across numerous charities which have really not grasped the legacy opportunity. Yes, they may know that legacies can be good money and maybe receive the odd one, but somehow they never quite get round to planning and running a proper campaign. What is it with these people?

OK, I know that a lot of organisations are focussed on the short term at the moment, but they are probably the ones which focussed on the short term ten years ago. If they had made the investment in legacies then, they would now be enjoying great returns. The recession is just the latest excuse.

I am not talking here about those charities which have effective campaigns in place. They are clued up ones who already recognise the potential of legacies and are reaping the rewards. I am talking about those procrastinators who never get round to it or come up with a myriad of excuses why they should not do legacy fundraising.

Previously, I have come across a wide range of excuses, such as “our trustees don’t understand legacy fundraising” (so whose job is it to tell them then?) or “we don’t have the budget for legacies” (even though they have the budget for things that raise far less money pound for pound).

Other excuses include “we’ll get on to legacies once we have sorted X, Y and Z (usually a list of pet projects which) or “we don’t like the idea of asking people to leave us money in their will – it’s too sensitive an issue” (yet some hospices manage to do it very successfully). Some even won’t do legacy fundraising because they think it is high risk, just because it is a long term opportunity and they cannot measure success in hard cash in year one.

It’s time we nailed this once and for all. Let’s get these excuses out in the open where they can be properly debated. I have set up a survey in Survey Monkey and am inviting fundraisers to contribute their views and experiences. So come on folks, tell me how it is at your charity by visiting:

Click here to take survey

I will share the results of the survey and hope that, in the process, we can open up a proper debate and persuade a few more charities that investing in legacies really is worth the candle

Legacy pledges - friend or foe?

In recent years, asking donors to pledge a legacy to a charity has been going out of fashion and for good reasons. How is it then that some charities are still basing their campaigns on pledge seeking and being very successful?

At this week’s Legacy Fundraising conference, run by the Institute of Fundraising’s new West Midlands group, we had an interesting debate. I was presenting on legacy strategy and raised the issue of pledge seeking, explaining why it is increasingly frowned upon (a lot of people see it as intrusive and will not tell the charity of their intentions; using pledges received to monitor campaigns misses all those who will not disclose their intentions and therefore under-reports the impact of a campaign; typically half of legacies received are from people not even known by the recipient charity; some people see it as rather coercive and out of kilter with the current trend for drip fed, soft sell legacy work).

To my embarrassment then, my talk was followed by two other speakers, both from hospices, which make successful use of pledges to secure legacies, to monitor results and to predict future income. This was not lost on the audience who wanted to explore this issue further and rightly so.

Most interestingly for me was the case study from Acorns Children’s Hospice, which bases its legacy work fairly and squarely on pledge seeking and very successfully too. Its legacy income has grown spectacularly in recent years, so its approach has not put people off, nor has it caused problems in monitoring results. Far from it. So how do we explain this?

What struck me about the two case studies (the other was from Douggie Mac in Stoke) was that they were both from local hospices, with a high profile in their areas and considerable good will in their communities. The Douggie Mac approach was largely based on a will writing scheme, through which pledges were also sought.

The Acorns campaign, however, had sought to create a culture where it was normal and expected to leave a legacy and where supporters were asked directly to pledge putting a gift in their wills yet – the implication being that this was the done thing. Its trustees take a lead in this and Acorns has succeeded in creating a climate where legacy giving is a natural way of supporting the charity. In this context, it is easy to see that pledge seeking can work well as part of the fundraising process.

So in future, I will be careful not to write off pledge seeking as an outdated, “sales push” approach. In some circumstances, it can clearly work. I am still not convinced that it is right for all charities (and especially the small and medium start up campaigns that I get involved in). But maybe I’ll be a bit more careful about saying “never” again!