Some long-held views of fundraisers are challenged by new evidence from a study of Australian inheritance practices. Dr Christopher Baker, who conducted the research, and Ross Anderson reveal the key findings and explain their major implications for charity bequest managers.

The late Australian billionaire Paul Ramsay made history with the news last month that he had left more than $3 billion to his Paul Ramsay Foundation in Australia’s largest ever individual charity donation.

And over the next 20 years intergenerational wealth transfer of Australians over is predicted to exceed $600 billion. So where should organisations invest their bequest program resources to effectively encourage more people to include charitable gifts in their wills?

A new study of the latest probate data is a helpful guide as it reveals how older Australians are deciding to divide their estates and support charities. The Encouraging Charitable Bequests by Australians report, conducted through 2013, analyses probate data from 3,793 Australian estates processed in 2012 and from 2010 in Queensland.

The research has shone a light on some of fundraisers’ long-held beliefs and shown that some realities are not quite as previously thought.

 Myth #1 – Australians don’t have wills

The study revealed that 90% of people in the total sample of probated estates had made a will, compared with 10% who passed away intestate (without a valid will). The 10% without were mostly younger Australians. Also only 6% of the total net value of all estates came from intestate estates. So 94% of the assets distributed were via a will.

This indicates that activities promoting will-writing may not be the best use of charities’ time. Instead conversations with supporters need to highlight the opportunity for people to include charitable gifts when they are making, updating or re-writing their existing wills.

There is huge potential for future increases in the number of gifts in wills, as only 7.6% of final estates left charitable gifts:

Proportion of Final Estates that Included Charitable Bequests

The question that remains is how can charities be front-of-mind when a will is written or updated? Regular messages about charitable bequest gifts conveyed through a supporter’s lifetime are likely to help influence choices.

 Myth #2 – People change their wills at the last minute

It is often espoused that people change their will just before they pass away, so there is a risk of gifts to charities being removed “at the 11th hour”.

The research did show that older people change their wills, which is not surprising given the high likelihood of their loved ones dying or new family members being born. However, it also indicated there was a median gap of over seven years between the time a will was finalised and the person’s death (the ‘will gap’).

Of the wills that did not include charitable gifts, the median will gap was 10 years.  For those which included charitable gifts, the median will gap was four years and only around 31% were signed within 24 months of death.

In other words, most older Australians don’t tend to make last-minute changes to their wills, including those who leave a charitable bequest. The fact they are updating their wishes presents an opportunity if charities can keep engaging them during this period of their lives.

 Myth #3 – Solicitors currently influence choices

The research challenges the assumption that in the process of preparing people’s wills, solicitors are actively inspiring gifts to charity. Analysis showed charities in the sample were just as likely to receive a gift from someone who had prepared their own will as from a person who had used a professional advisor. So charities have the chance to inspire gifts irrespective of how wills are written. This raises the question: is stewardship of relationships with solicitors the best use of a charity’s bequest program resources?

Having said that, one promising avenue for solicitors to encourage giving in future has been demonstrated in recent research by the UK Government and the Remember a Charity campaign.

This showed gifts to charities trebled from 5% to 15% when solicitors used ‘social norming’ techniques during will instruction sessions. So a focus for charities could be encouraging solicitors to ask their wills clients this one simple question: “Many of my other clients have chosen to include gifts to their favourite charities in their wills, is that something you would like to do?”

Key study findings also confirmed earlier research

There are particular implications for charities from key study findings that confirmed earlier research by Christopher Baker and Michael Gilding into Victorian estates probated in 2006:

Fact #1 Older Australians leave bequests

The average age when people passed away and left their wealth to be distributed was 78 for men and 84 for women. More than 30% of the estates studied were from people aged over 90. Just 8% were 60 years old or younger. As average life expectancy climbs and older Australians get less able to donate cash gifts in their last years, charities need to ask whether they are equipped to maintain contact with bequest supporters who no longer donate to their direct mail appeals.

Fact #2 Final estates count most

‘Final estates’ are those estates distributed without a surviving spouse or partner (who normally would receive most of assets in a simple transfer). They provided 95% of the total value of charitable bequests in the study. The question for charities is: do you have a strong relationship with the final estate decision-maker? And are the gifts that supporters plan on including in their will contingent on certain conditions being fulfilled?

Fact #3 Having children limits giving

Only 4.5% of final estates with a surviving child or children included a charitable bequest, compared with over 30% of those without. Australian will-makers without children also left a much larger gift (a median of $21,000 compared with $2,000). Paul Ramsay, who recently left $3-plus billion to charity, is an example as he was unmarried and childless. So there is a great opportunity for charities to understand supporters’ family circumstances, and communicate with and inspire bequest support from those who don’t have children.

Fact #4 Residual gifts rule

Legacies made as a proportion of estate ‘residue’ – what is left after other wishes are fulfilled – delivered a much greater dollar value than pecuniary bequests – when a set amount is given: 

Average Value by Bequest Type

In the UK, tax legislation changes are inspiring people to consider leaving 90% to families and friends and 10% to divide among their favourite charities. Can Australian charities similarly inspire their supporters?

Limitations of the research

Probate data provides no insight into why older Australians have chosen to either support or overlook their favourite charities in their wills. It can’t fully capture information about the charitable practices of the wealthiest Australian households, where vehicles outside of the will are in place to support charities and fulfill philanthropic plans.

Dr Christopher Baker & Ross Anderson

Dr Christopher Baker undertook this probate study as a research fellow at the Asia-Pacific Centre for Social Investment & Philanthropy at Swinburne University Business School. He and Ross Anderson – who is Gifts in Wills Manager at the National Stroke Foundation and a board director of the Include a Charity campaign – collaborated to consider the implications of the research findings for bequest practitioners..

Download the full research report and executive summary at www.swinburne.edu.au/business/philanthropy/research/reports.htm

Encouraging Charitable Bequests by Australians was made possible by funding from the Fred P Archer Charitable Trust via The Trust Company (part of the Perpetual Group) and the Include a Charity campaign.

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