It’s now twenty-five years since our first legacy analysis project, and we are still learning new things about the sector every day

Over the past two decades, we have built up a vast set of data on will-making and legacy giving. The current Legacy Monitor programme launched in 2008, but our dataset goes back much further – for many large charity clients we have information on the number and value of legacies back to 2002. Also, our market model stretches right back to the early 1980s and looks forward to 2050! We use this data to help put our clients’ performance into context and to project future market trends.

If our work over the past twenty-five years has taught us anything, it’s that – when it comes to legacies, where the gap between inspiration (to leave a gift) and outcome (that gift paying out) can take years, even decades to play out – you need a long-term view.

It’s also important not to jump to conclusions, based on one set of charities, or one market.  So, we know that large, national legacy charities are different from smaller, local causes. For example, they tend to enjoy higher-valued bequests; perhaps because they receive a larger share of the estate. On the other hand – not surprisingly – smaller charities are seeing faster growth in income and bequest numbers and are very gradually gaining share from the big-name brands.

Likewise, our work in the Netherlands and now in Australia has taught us that what happens in one country may not apply in others. Sure, there are important underlying commonalities, but equally, there are vital differences too.

Is a new pattern emerging for residual bequests?

We are currently reviewing our long-term market forecasts in the light of our latest research into Boomer legacies. One pattern in our Monitor dataset intrigued and perplexed us. For many years, pecuniary (cash) gifts’ share of all the bequests received by our Consortium members was increasing; while the number of both pecuniary and residual legacies was growing over time, the number of cash gifts was growing faster.

This made intuitive sense to us. By investing in legacy marketing, British charities have encouraged more donors to leave a gift in their will. It’s relatively easy to convince engaged supporters to add a cash gift of £500, £1,000, or £5,000 to their will. It’s much harder to persuade those supporters – especially those with children – to leave a share of their estate.

So, from 2003 to 2013, the number of cash gifts outpaced residuals – all well and good. However, from 2014 the pattern was reversed, with residual gifts outpacing cash gifts. Why was that happening? Was it a trend or a blip?

To help us understand what was going on, we commissioned Smee & Ford to supply ten years of top-line data on all charitable wills and bequests across England, Wales and Scotland. We wanted to see if their sector-wide data showed the same patterns as our 80 Consortium[i] members. We also hoped to drill down in more detail to identify what lay beneath the numbers. We are grateful to Smee & Ford for letting us share this information more widely.

Is the share of residual gifts rising – and if so, why?

We were reassured to see that the broader Smee & Ford data (covering 2007 to 2017) confirmed our Legacy Monitor figures. From 2013 to 2017 the number of residual bequests in wills read by Smee & Ford has been growing by 2.2% p.a. while the number of cash gifts has risen by a much slower 0.8% p.a.; meaning that the share of residual gifts has increased.

Drilling down in more detail, we found that of the 37,000 charitable wills monitored by Smee & Ford in 2017, 48% contained only pecuniary gifts to charity, 35% were residual-only, 1% included purely effects (such as paintings, cars or jewellery), while the remaining 15% of wills contained a mixture of residual, pecuniary and effects bequests to charity.

There seems to be two main reasons for the more rapid growth in residual bequests. First, the number of residual-only wills has been rising (up 0.6% p.a.), while the number of pecuniary-only wills has remained flat. Second, and more significantly, the number of bequests per residual-only will is up from 2.8 to 3.0, while the average number in pecuniary-only wills is again flat at 2.4. Although an increase from 2.8 to 3 may not sound much, over 13,000 residual-only wills, the volume soon adds up!

These data suggest that residual legators are splitting their estate over a larger number of charities than before. There could be many reasons for this. It may be in response to more legacy asks from the charities they come across. We know that legacy fundraising is becoming far more competitive, as attendance at the IoF and ILM conferences will attest.  Smee & Ford’s 2017 Trends Update[ii] showed that over 10,000 charities benefited from gifts in wills in 2017 – and that this number is up by 10% since 2013.

Alternatively, it could be generational, with today’s legacy donors choosing to support a broader range of charities in their will, as they have throughout their lifetimes. We hope to test both these theories in our focus groups this spring.

Whatever the reason, while a higher number of charity beneficiaries sharing the estate residue helps to spread legacy incomes across the sector, it also reduces the average gift size received by each recipient.

Conversely, why aren’t we seeing pecuniary legators increasing the number of gifts they leave? Is it because a cash gift is a discretionary donation (which is competing with the needs of family and friends), while residual legacies are an obvious choice for those with no ‘natural heirs’ who need or deserve their money more?

Is there a new norm in charitable will-giving?

Interestingly, the Smee & Ford data highlighted another trend. The proportion of ‘mixed’ wills containing a variety of bequest types has risen from 14.6% in 2007 to 15.4% in 2017. These wills tend to contain a much higher number of charitable gifts, with an average of 6.2 bequests per will. In all, 29% of charitable bequests now come from one of these ‘mixed’ wills; and a third of all residual bequests are in mixed wills. Again, is this a trend or a blip? We need more time to work through the factors behind this trend – and we’d welcome your thoughts on what’s driving it.

What we have learned over the past twenty-five years is that there is always something new to explore when it comes to legacy giving, and that continues to intrigue and excite us!

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[i] Legacy Monitor benchmarks the income, number and value of legacies received by a consortium of charities, drawing directly from members’ legacy records. Our 80 members include 44 of the top 50 legacy brands and represents over 50% in value terms. Smee & Ford monitor probate court records across England, Wales and Scotland. They have comprehensive information on all charitable wills and the number and type of bequests contained in those wills. However, they have no way of knowing if those gifts eventually payout or how much the residual bequests are finally worth.

[ii] Legacy Trends 2017 Update – Discovering potential through data, Smee & Ford 2017