LEGACY GIVING: New Legacy Generation

Patrick McCurry

Brann decided to learn from other charities' mistakes: "We train all our recruiters at our lifeboat stations. We only operate in appropriate areas such as coastal towns." Brann believes that the most important factor in gaining legacies is to have built up a strong relationship and so he is in no rush to ask these new donors about legacies. However, he is confident that when the time does come the response will be good: "I used to be concerned about the future of legacies, but I'm not any more."

Baby-boomers will be the most affluent pensioners in history, and charities are battling to ensure they are not forgotten in future wills. But which charities are set to benefit, and how should they try to attract new legacies?

These are interesting times for the legacy market. The practice of leaving funds to a charity in wills has boomed over the past 20 years as a result of rocketing property and share prices. The UK legacy market is worth £1.5bn each year, with 5 per cent of those who die making gifts.

At the same time, the UK not-for-profit sector has undergone a transformation, embracing, among other changes, the concept of professional fundraising.

Direct mail, telephone fundraising, and even face-to-face donor recruitment, are now highly refined and carefully managed processes. Now the new generation of legacy revenue is attracting similar levels of attention from the professionals.

This is not simply because it is next on the list; it is also because the UK is witnessing seismic demographic changes that offer both unprecedented opportunities and threats to the charity legacy market.

In short, those born in the post-war, baby-boom years are entering their late fifties and beginning to make wills. As a group of pensioners they will be richer than any other in history and, over the next 20 years, the numbers of people dying in the UK will rise by roughly 30 per cent.

Charities have an opportunity to receive some proportion of this rising asset level disposed of in wills, although it is by no means certain.

A combination of poor pension provision, increasing healthcare costs and the demands of donors' children may erode assets. It is estimated that to retire at 60 the average person will need £1m. Increasingly, anyone making a pension will need to make tough choices between family and charity - whether to give a grandchild a deposit on their first home or leave money to a cherished charity.

The conundrum does not end there. As Richard Ratcliffe, chairman of legacy specialists Smee & Ford, argues, the flow of baby-boomers into probate solicitors' offices poses further questions for charities. "A 50 year-old who remembers the launch of Rainbow Warrior in 1972 will have an attachment to Greenpeace that puts it in a strong position with regards to legacies.

However, we don't know how loyal individuals will stay to those causes.

"Will a 50 year-old Greenpeace supporter become an 80 year-old RNLI supporter?

Since the average age at which people make a legacy is 68, charities like Greenpeace possibly have an incentive to get mentioned in wills before their supporters start turning towards charities that have more appeal in later years."

Even getting in early may not help, as most people tend to alter their wills several times before they die. Despite this uncertainty about the likely impact of the baby-boom generation, many charities believe there is considerable income potential in the legacy market, and it is becoming a focus for a growing number of smaller charities.

Mental health charity Sense is one such, as Michael Newsome, head of direct marketing and legacies, explains. "Very large and popular charities have seen disproportionate legacy income growth over the past decade.

The research team Legacy Foresight reported in 2002 that over the previous 10 years, very large charities saw their sector share grow by 6 to 66 per cent, while smaller charities saw a fall in legacy income of some 40 per cent. In the face of this we have had to redouble our efforts to talk to the people closest to us."

Other charities such as Battersea Dogs Home have begun advertising in legal, retirement and charity publications.

Norwood is another charity with an active legacy campaign. "As a Jewish charity we advertise in the Jewish press," says legacy manager Michael Ross. "We mail all the solicitors on our database so they are aware of us when advising their clients on drawing up a will. We produced a leaflet pointing out our need for legacy income and regularly mail key supporter groups with it. I'm always available to talk to anyone considering leaving us a legacy. We'll perform the Jewish funeral rites, known as Kaddish, and produce a memorial, if necessary. We're fortunate that the Jewish faith has a tradition of leaving legacies, and this has contributed to the fact that we raise around £1.8m a year, roughly 20 per cent of our total income."

Ross, while emphasising the importance of legacy income, identifies three common problems with it. Firstly, he spends a growing amount of time in legal wrangles. As they say, wherever there's a will, there's a relative, and Ross recalls one particularly unpleasant instance. "One man left an estate worth several thousand pounds with his daughter as executor, and a legacy of £5,000 to Norwood. The daughter refused to give us the money, and it took four years of legal wrangling for us to get it."

Secondly, legacy income is extremely unpredictable. The Muscular Dystrophy Campaign receives around 20 per cent of its income from legacies but, because it fluctuates so much, is now trying to reduce its dependence on it by increasing revenue from other sources.

The final problem is that it is almost impossible to measure the impact of legacy marketing activity. While outbound telephone fundraising produces an instant and precise measurement of return on investment, a charity might one day receive an anonymous legacy for millions of pounds that resulted from a mailer sent out years ago.

Furthermore, according to Ratcliffe, 95 per cent of legacies are given because the donor wants to repay a charity for its help. A sibling may have been cared for, or a cat may have provided comfort in loneliness, or cancer may be in remission. Contact from a charity asking for legacies has little impact either way.

In response, there are two schools of thought. On one hand, there is the approach of the British Red Cross, which actively promotes legacy-giving by approaching supporters through direct mail, telemarketing, events and face-to-face visits. On the other, as Julius Wolff-Ingham, head of fundraising and marketing for The Salvation Army argues: "Ultimately, people decide to leave a legacy because they want to help to meet a need that is important to them. They will choose charities that they feel have the stability and ability to deliver."

Both charities claim thriving legacy income streams and the sensible approach seems to be a mix of the two.

Proponents of a more robust approach to marketing legacy-giving point out that even those individuals with a high propensity to leave legacies need to be asked to do so. The Legacy Promotion Campaign was set up in October 2002 with the aim of increasing public awareness of the issue.

Now comprising 111 charities it has run a campaign entitled 'Remember a Charity'. This has involved press, radio, online and Tube adverts, and 300,000 mail-outs to charity supporters. It has also shared research with its members and sought to develop industry expertise through workshops and other knowledge-sharing opportunities. In October 2003, it celebrated its first anniversary with the fact that the number of people to include a charity in their will had risen from 3.3 per cent in December 2001 to 4.6 per cent.

It seems the key to legacy marketing is to ask, but to do so sensitively and to stop asking if the donor is uncomfortable with the request. Charities can also consider the language they use. 'Bequests' and 'legacies' intimidate people, while 'a gift in your will' is more readily accepted. Charities should also leverage more press coverage of large donations, especially in local papers that are read by the elderly.

Legacy-giving is also a considerable act of faith in that the donor has to trust the recipient to use their money wisely once they are no longer have any influence. For this reason, most agree that the single most important factor in attracting legacies is developing donor trust and confidence.

Relationship-building is vital and charities must demonstrate how they plan to make a difference in the long term.

As Paul Farthing, managing director of Target Direct and the man responsible for planning the LPC's awareness-raising campaign says: "The legacy market is changing fast and every charity needs to look closely at its brand, at how it interacts with every single one of its audiences. Older charities may need to refresh their image. Newer charities may need to start making donors aware of the need for legacy-giving. Every charity, though, needs to demonstrate the impact it is having, to prove that it is making a difference and to persuade donors that its work needs to continue for decades to come."

CASE STUDY - WWF

In 1986, the WWF received around £800,000 a year in legacies. Now it receives some £8.5m a year.

Sally Burrowes, now head of legacy, has been at the WWF since 1986 and believes that there are several reasons for this growth. "Mostly, I think we're seeing the result of wills made by members of the green movement of the early 1990s. Legacies made by that type of person are now being fulfilled."

While she does attribute the growth primarily to these external factors, she has continued to do what she can to maximise the return to the charity.

"We try to build a special relationship with legacy pledgers and retain 78 per cent as opposed to an industry norm around 50 per cent. We do a little bit of cold mailing but really prefer to ask established donors.

We produced an extensive advice booklet on issues surrounding wills and ended it with a little section on WWF."

While legacies continue to grow at WWF, Burrowes believes there is scope for more and so she is a whole-hearted supporter of the Legacy Promotion Campaign. "It's a very good idea for the sector to pool its resources and to try to increase the revenue we receive from this source."

CASE STUDY - RNLI

The RNLI receives between 60 and 70 per cent of its income from legacies and has traditionally benefited from the fact that its typical supporter is an ABC1 aged over 65. However, head of fundraising David Brann used to worry that each new legacy, while a much needed injection of cash, also represented the sad loss of another supporter. He was concerned that the organisation might eventually die out with its supporters. So, he embarked on a plan to attract younger donors.

He recalls: "I was amazed that less than 25 per cent of our donors used the sea for leisure purposes. This was a potential market, so we launched 'Offshore', a highly successful recruitment drive among leisure sailors.

We're about to sign up the 50,000th member, and they are mostly aged between 45 and 50. We've begun to write to them about legacies and are receiving a really encouraging response."

The RNLI is also using face-to-face fund-raising to attract younger supporters.

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