FINZ shares the results of a two-year study to benchmark and understand New Zealand gifts in wills.
Before channelling resources into securing a particular type of giving, it makes sense to understand the capacity and desire of the community to get behind it. Which is exactly what the Fundraising Institute of New Zealand (FINZ) did in their quest to encourage more New Zealanders to leave a gift in their will.
What unfolded was a two-year research project with the aim of understanding:
- The current rate of people including or actively considering a gift to charity in their will
- The unique factors at play in the New Zealand (NZ) context which influence people’s decision-making
Here we share the highlights from the research, including circumstances that make the NZ gifts in wills (GIW) space unique. The findings further the understanding of the behaviours, motivations, and the context of leaving a GIW in NZ – knowledge that is of immense value to the country’s nonprofit sector.
GIW current state analysis
A 2021 survey conducted for the report alongside broader research sources show that:
“In NZ, 45% of adults do not have a will and 1500 people a year die without a will.”
Of those who have made a will, the research indicates that 6% have already made provision for a GIW (‘confirmed’). There is a further 21% of the population either ‘definitely’ or ‘probably’ intending to leave a GIW (these two groups are defined as ‘intenders’).
The research’s 2021 survey showed an increase from 5% (2020 survey) to 6% of the public saying they had already made provision for a GIW with a further 20% (2021) and 21% (2020) likely to or seriously considering doing so.
Comparison to other countries
The 6% of the NZ public with wills who reported they had left a GIW is very similar to Canada. However, the figure is 11% in Australia where the ‘Include a Charity’ campaign has helped lift bequest provision from a 2016 level of 8%. The figure in Australia rises again to 29% among those who do not have any children.
The propensity to include a GIW does, unsurprisingly, increase with age. However, the 2021 survey identified that of those under the age of 45, more than 55% are prepared to consider leaving a GIW, despite 70% of under 35-year-olds and 54% of 35 – 44-year-olds in the sample not having made a will at the time of the survey.
Intent and proactiveness
Choosing to leave a bequest influences other will-making behaviour it seems. The 2021 survey shows that among those who confirmed having left a GIW, 49% had updated their will in the past two years – 28% within the past six months. A further 27% of those intending to leave a gift had also updated their will in the past two years. These figures are compared with 19% of the total survey population who had updated their will in the past two years, and 7% in the past six months.
In other words, those with a confirmed or intended charity GIW are likely to be the ones who are most diligent about keeping their will updated.
GIW = loyalty
The research indicated that those making a GIW are often amongst the most committed charity supporters. 49% of ‘confirmed’ bequestors, and 22% of ‘intenders’ in the 2021 survey self-described themselves as “very loyal – I stick with [the charity] whatever happens”.
Motivations and behaviours that drive will-making and GIW
Loved ones comes first
Top of mind for everyone making a will is to make provision for loved ones. The research shows that even people without direct descendants, consider (even if they end up rejecting) family and close individuals first when considering what to leave in their will. That is not necessarily a barrier to leaving a gift in their will to charity. Some interviewees in the research’s 2020 qualitative interviews indicated that the perceived comparative wealth of individual family members would influence either leaving a bequest, or a proportion of their estate to charity.
The COVID-19 effect
The timing of the research enabled observation of whether will-making/changing was influenced by the pandemic, with 23% of survey respondents indicating they had changed their will in the two years prior to November 2021. One in 10 had updated their will in the six months since May 2021. This echoes findings from international research that shows COVID-19’s threat to life prompted many people to more actively think about their future and provision for distribution of their assets.
The influence of religion
Despite the trend towards a more secular society in NZ, it appears that the impact of the values of giving instilled through religion (especially Christianity) remain embedded and ongoing.
Of those interviewed in the 2020 study who had left gifts in their will to charity, 60% identified as being religious to some extent or another, with 40% being regular church attendees. Only one interviewee identified as being without any religious beliefs.
Major life events
The findings from the research point to the 35 – 45-year age-group as the predominant cohort likely to be contemplating the need for or making their first will. This reflects the average age for purchasing a first home and/or becoming a parent.
Significant changes in personal circumstances, both financial or personal, have impact across a range of ages. These changes can be both negative, such as a personal or loved one’s health challenges, or positive ones, such as an inheritance, a beneficial house sale or the birth of grandchildren.
When will-making is not top of mind
In 2021, FINZ asked the 45% of survey respondents who had previously indicated they did not have a will why that was the case:
- 40% of them said the main reason was ‘they hadn’t got around to it yet’
- 20% did not think they have enough assets to make it worthwhile
- 25% said ‘I am not old enough to worry about it yet’
The research also shows that there is an apparent significant shift from a perception that ‘I’m not old enough’ to ‘I haven’t got around to it yet’ around the age of 35.
More concerning for GIW fundraisers is why older people don’t have a will – especially amongst the 65 and over group. Although the leading reason for this group is ‘I haven’t got around to it yet’ (58%), nearly a third of this oldest age group (32%), said ‘I don’t feel that I have enough assets to make it worthwhile’ which suggests that they will probably never make a will.
Overwhelmingly, the interviews revealed that people leaving GIW think in dollar terms rather than proportions of net estate. In fact, 80% of the 2021 survey respondents indicated that they far preferred to nominate a specified amount of money to be left to charities in their will.
This raises issues for the value of gifts defined now but realised in the future. A $10,000 gift provision made today will not be worth $10,000 in real terms in 30 or 40 years’ time.
“80% of the 2021 survey respondents indicated that they far preferred to nominate a specified amount of money to be left to charities in their will”.
The predominant reason given by interviewees for specifying an amount was that they want their chosen charity/ies to get at least the stipulated amount. They tend to believe that their estate will be worth much less by the time they die and don’t want their chosen charity/ies to be penalised . However, this may not be logical at a time where net household assets are increasing at a significant rate.
Market Influences on wealth and will decision-making
Total household net value in 2019 was NZ$1.445 trillion. November 2021 data shows that total net household wealth grew by 5.5% to $2.3 trillion in a period of 12 months. Furthermore, the net value of the richest 20% of households rose by $394,000 between 2015 and 2019, with that group accounting for 70% of the net worth of all households.
Given wealth appears to be on the rise, why are people taking such a conservative view of their end-of-life capital?
It comes down to behavioural economics and choice modelling in decision-making, which suggests that people generally suffer from ‘loss aversion’ where “losses loom larger than gains”. Hence people generally worry that their eventual net worth will be less than the present moment.
Interviewees also worried for the circumstances of future generations who may not be as wealthy due to the costs of an ageing population, rising cost of living and static wages. Many older individuals, particularly grandparents, are concerned that descendants will be reliant on the gifts they leave in their will.
The impact on ultimate net-worth of the costs and financing of aged-care residential services are not predictable in NZ. In Australia, residential care is a fixed cost against assets, which is calculated at the point someone enters aged-care residential services and is not subject to change no matter the length of time a person stays in care. This means people can reasonably foresee how much they will have available for distribution through their will.
In NZ, such predictability does not exist. Currently, the state will claim back the costs of residential care after a person dies. The claw-back depends upon the cumulative costs of care over the full period in which care is provided, capped at a base-line value of net-worth ($239,930 for an individual in 2021). The approach results in uncertainty and people find it challenging to envision what that might mean for their estate.
A note on family trusts
The research estimates that there are currently around 450,000 family trusts in NZ. The desk research (or ‘secondary research’ – the review of other peoples’ work) undertaken as part of the study suggest that NZ$1 trillion may be held in these trusts, reducing the remaining value of net household worth available for distribution to less than $500 billion in 2019 figures.
In the 2021 survey, 23% or respondents were trustees or beneficiaries of a family trust; a further 5% were considering establishing one; and 3% were considering being party to a charitable trust.
In short, the widespread use of family trusts to manage wealth, and the hold this places on funds, has a tremendous impact on NZ GIW.
Levels of GIW giving
A note for those measuring GIW
The mean value (all bequest income divided by the number of gifts received) is the easiest and most commonly method used to calculate the overall value of GIW. In NZ, various mean values are quoted but they generally fall within the range of NZ$50,000 – $70,000.
While that’s a useful figure when tracking the trends of bequest income received year-on-year, the mean value does not reflect the market. The median figure (calculated by listing all the gifts received ranked from highest to lowest in value and then identifying the value of the gift that sits exactly halfway through the list) tells you that the value of half the number of gifts received from wills will be above that figure and half will be below it. The median figure is a more accurate as it is not skewed by very large gifts.
What the NZ numbers show
The data sources used to establish median GIW level in NZ are laid out in the methodology section below. While these did not give FINZ the level of confidence to quote a definitive median figure, it is estimated to be around $5,000 per bequest. This figure may prove to be on the high side. Deeper analysis shows most bequests received by individual charities are under $5,000 (55%), with the most frequent amount under $2,000 (34%).
Using this analysis, the research shows that approximately 75% of bequests provide only 4% of the total GIW value while the 1% above $1 million provides 52% of total value.
In Australia, benchmarking facilitated by ive (and its predecessor Pareto Fundraising) calculated the median value (with a reliable degree of accuracy) at $10,000 in 2021.
Understanding which charities will receive GIW
The research tells us there is one overriding prerequisite when it comes to naming a charity as a beneficiary, and that is trust. And the higher the level of trust, the less likely donors are to care about the specifics of how their GIW is spent.
While ‘confirmed’ bequestors support many charities during an average year (donating to four or more, which is more than double the public who are neither ‘confirmed’ or ‘intending’), when it comes to their bequests:
- 32% have one charity in their will
- 49% have one or two charities in their will
- 25% have four or more charities in their will
The fact that ‘confirmed’ bequestors narrow their focus highlights the importance of standing out from the crowd when promoting your charity’s GIW program.
How ‘confirmed’ bequestors decide on making gifts
Just over half of survey respondents agreed with the statement ‘The gift(s) in my will are for a very specific purpose’, while more than one in three said they are not. However, 88% agreed that ‘Generally, I am happy for the gifts in my will to be used by the charity for what they define as the greatest need’. This will be encouraging for all nonprofits, many of whom struggle with the pursuit of untied gifts.
75% of respondents agreed that ‘I am comfortable with the charities knowing I have left a gift to them in my will’. This reflects high levels of trust across this group as we would expect.
When asked to identify their top causes from a list of options, the leading causes (‘I am most likely to support’) for ‘confirmed’ bequestors were:
- Animal charities – 18%
- Emergency services – 16%
- Hospices – 9%
- Health and medical research charities – 8%
- Education providers and schools – 8%
The responses from ‘intenders’ were slightly different, with top causes prioritised as follows:
- Mental health organisations
- NZ welfare charities
- Physical disability
- Environmental and conservation
- Overseas development and emergency relief
- Community foundations
The report suggests these cause preferences reflect a younger demographic of ‘intenders’ compared to ‘confirmed’ bequestors.
… we will provide a quick round up of the key findings and what they meant for GIW in NZ and beyond:
- 45% of NZ adults do not have a will…
- … although COVID-19 has caused an uptick in will-making.
- The propensity to include a GIW increases with age.
- If someone has made a GIW to your charity, they are likely to be a very loyal supporter – so show them the love!
- People with religious beliefs are more likely to leave a GIW so consider asking about this in donor surveys.
- Buying a home and becoming a parent are strong predictors of will-making so consider if you can obtain this information in donor surveys as well.
- 80% of 2021 survey respondents indicated that they far preferred to nominate a specified amount of money rather than proportion of their estate, which is problematic for the future value of the gift. Charities will do well to educate their supporters about the benefits of leaving a set percentage of their estate.
- People have a very conservative and often unnecessarily pessimistic view of what their assets will be at the end of their life – this is due to rising cost of living, but also because of unpredictability of aged-care cost in NZ.
- There are 450,000 family trusts in NZ, which hold a large percentage of high-net-worth wealth. This reduces the amount of funds available for GIW.
- Median is better than mean when measuring GIW value!
- 55% of bequests received by NZ charities are under $5,000.
- The higher the level of charity trust, the less likely donors are to care about the specifics of how their GIW is spent.
- 49% of confirmed bequestors are leaving a GIW to one or two charities – in other words, your nonprofit needs to find a way to shine so that it is one of the chosen few.
- Animal charities top the list for (older)‘confirmed’ bequestors and mental health organisations are first pick for (younger) ‘intenders’.
Whatever the nature of your cause, and whether you operate in NZ or elsewhere, keep these points and tips in mind:
- GIW are not complete unknowns – looking at the bequest history of your organisation and that of similar NFPs in benchmarking surveys will allow you to apply median (and mean) values that help you predict future GIW income
- Find out information about donors that helps you understand their capacity and propensity to leave a gift in their will
- Do everything you can to build trust between your nonprofit and the donor because the more trust there is, the more likely they are to leave you a GIW and to make it untied;
- Competition for GIW is fierce, with the majority of confirmed bequestors leaving a gift to only one or two charities. Use this knowledge to deliver the very best GIW and stewardship programs you can.
The FINZ research consisted of three parts:
- A review of recent research data available internationally from other markets including the identification of potentially common motivation, attitudes, and other influencing factors.
- Two rounds of quantitative survey research (2020 and 2021) with the NZ public, and qualitative interviews with donors to better understand motivations, constraints and other influencing factors present in (and potentially unique to) NZ.
- Desk research into known gifting patterns, the legal and estate planning frameworks within NZ, and the dynamics and impact of the wider cultural environment.
The international research reviews, qualitative in-depth interviews and quantitative public surveys were conducted by Australia-based fundraising and marketing agency More Strategic between May 2020 and December 2021.
In the qualitative interviews, donors who were either known to be considering or had committed to making GIW to charity were recruited. 19 such donors were interviewed and included a balanced age, gender, and geographic mix. Supporting the initial study by recruiting these donors for the purposes of the interviews were: SPCA, Heart Foundation, Cancer Society of NZ, Fred Hollows Foundation, UNICEF, Greenpeace Aotearoa, Starship Foundation, and the University of Auckland.
For the 2020 quantitative public survey FINZ funded questions on a public survey run with a representative sample of 2147 adults in NZ with a slight skew towards donors. More Strategic conducted a second survey in late 2021 to dig further into the questions raised from the first survey. The survey was run with a representative sample of 1056 members of the NZ general public, again with a slight skew towards donors.
The desk research was conducted by Project Periscope. Data sources were numerous and included:
- Charities Services database
- Perpetual Guardian bequest client data
- Statistics New Zealand
- Fundraising Institute Australia (FIA)
- Legacy Foresight, UK
The total research period spans July 2021 to March 2022 and was funded by Perpetual Guardian.
Read the full report here.