Including Legacies Under Wills

The effect of Covid-19 on charity fundraising

In our November 2020 Newsletter (which you can see here), we reported on some of the negative effects of Covid-19 on charities’ finances and operations. With a view to assisting charities to focus on how they might try to mitigate their problems and increase their chances of survival, we suggested some general strategies that they might consider.

However, we did not offer suggestions for how charities might generate fundraising income at levels enjoyed before March 2020 simply because, due to Covid-19 restrictions in place, it was not possible for charities to hold their usual in-person fundraising events or activities or to use face to face methods of fundraising. Running virtual events helped to an extent to bridge the income gap in the charity sector, but it was clear from a Charities Aid Foundation report in October 2020 that many charities suffered a big drop in donations in 2020.

Whilst there may be grants available from government or grant making charities to assist a charity’s finances, whether related to the impact of Covid or other types of grant, their availability to your charity may depend in practice on the particular nature and circumstances of your charity.

The Government is pursuing a “levelling up” agenda, but it appears from research that we are not going to see enough funding directed at charities, in particular because much of it will go to hard infrastructure projects (e.g. roads and buildings) whilst ignoring social issues.

These negative effects on many charities have certainly been bad news, but there was some good news. Whilst many charities lost out on donations, the level of donations to the charity sector as a whole appears to have risen significantly during the first half of 2020, and over the last few months it seems that the level of donations has remained stable and, in the circumstances, at a relatively good level. All being well, the second half of 2021 should see continued stability in the level of donations, and from mid-April onwards, as Covid-19 restrictions are reducing, charity shops can re-open and door to door, private site and street fundraising can resume, and we should also see in-person participation events returning, all of which will provide some much-needed fundraising opportunities .

This set us thinking about the fact that many individuals have been able and have chosen to continue to make substantial donations to the charity sector since the lockdown in March 2020. We surmise that there might be a number of factors at work, but in particular these three factors:

(1) Some donors may be motivated by their awareness that charities have suffered during the pandemic and that they need donations more than ever.

(2) Some individuals may be fortunate not to have suffered a loss of earnings or savings during the pandemic, and so have been able to make donations from their income or savings.

(3) Those in receipt of a reasonable level of income or with existing savings have not had many opportunities to spend on travel, entertainment or other things since March 2020 as they would normally have done before. Their outgoings fell from that date onwards and they were able to donate to charities as easily, if not more easily, than before March 2020.

Fundraising in the medium/long term

Leading on from these thoughts, we pose the question, what might charities do to tap into this potential source of fundraising income from individual supporters?

We tend to think of donations to charities in terms of lifetime donations by individuals (as opposed to donations given by them in a Will), and of course the thoughts outlined above only relate to donations from such donors. A decision by such a “living donor” to give a donation usually means that they then swiftly send a donation to a charity. The advantage of such immediate income to a charity from a living donor during the pandemic is obvious. However, whilst charities might be, during the pandemic, receiving such immediate donations to preserve cash flow, they also need to think and plan for income in the longer term.

Legacy Income for charities

In the medium to long term, charities should not overlook another potential source of donations, namely legacy income (i.e. a specific sum of money left to the charity by its supporters under their Wills).

Supporters’ willingness to leave legacies to charities may well be greater now than it was before March 2020.

The “target market” for legacy income should primarily be those who, despite the negative financial impact of Covid-19, have the means to leave a legacy to charity. Property prices and other investments have tended to hold up quite well generally during the pandemic, and if that remains the case, it will promote the giving of substantial legacies under Wills by charity supporters to provide a good source of funds for charities. Furthermore, despite the pandemic there are still a large number of individuals of all ages who are high earners (in employment or self-employed) with substantial assets, and “baby boomers” with substantial assets who are now retired or near retirement. In addition, demographic changes affecting death rates are likely to drive up the level of legacy incomes for charities.

The charity legacy documents

The Charity & Non-Profit portfolio includes sets of template wording to be included in a Will by a supporter wishing to give a legacy to a charity. These have recently been updated, and you can see them here . We suggest that you recommend use of this wording to your charity supporters.

New Legacies Guidance Note

In the new Guidance Note – Wording for Charity Legacies (which you can see here), we explain:

• the potential for, and the ins and outs of, raising charity income through supporters’ legacies given under their Wills.
• the reasons why you should recommend to your supporters that they use suitable legacy wording in their Wills.
• the dangers of not using suitable wording, as highlighted by the recent High Court case of Knipe. In that case, given the inadequate legacy wording used in the Will in that case, the court had to consider whether it would have to rule that the gift to the charities concerned would fail leaving them without a substantial donation.

The other charity fundraising template documents

There are many other template documents relating to various means for charities and their supporters to raise funds, including fundraising agreements, charity lotteries (fundraising raffles), charity grants, gift aid, commercial participation and sponsorship. You can see those in the Charity & Non-Profit portfolio here.