Legacy giving: Golden goose or lame duck?

INCREASING THE FLOW OF CAPITAL FOR GOOD - INVESTING AND GIVING

Boy with a Goose (oil on panel) by Cuyp, Jacob Gerritsz (1594-1651). © Kadriorg
Magazine article

Legacies are potentially the ‘golden goose’ for arts organisations says fundraising specialist David Dixon in his response to the DCMS Action Plan.

Yet new research from cultural sector think tank Arts Quarter published in partnership with Legacy Foresight, supports the long held view that, still, too little emphasis is given to legacy fundraising within arts organisations – and that they are missing a potentially rich seam of income.

John Nicholls, managing partner of Arts Quarter, commenting on the findings of the survey, says: “The levels of success reported by those arts organisations who are actively pursuing legacy fundraising, along with the impressive performance of many organisations in the wider charitable community, both suggest that legacies offer good potential to arts organisations in the longer term.

“Thanks to a combination of the prospect of a recovering economy and the large and affluent baby boomer generation entering their ‘third-age’, the medium-term outlook for total legacy giving is good. Arts organisations are well placed to benefit from this surge in income, providing they can communicate their need effectively in what will become an increasingly competitive market.”

Currently, money from gifts in wills is worth around £2bn a year to British charities with legacies accounting for 5.6% of total income for the wider charitable sector, including the arts. In comparison, legacy giving specifically to the cultural sector remains low, says the new survey.

According to a recent Arts & Business survey, legacies account for around 10% of private investment in the arts (compared to 13% of voluntary income for general charities) and just 1% of total income.

Research from Smee & Ford, that provides legacy fundraising expertise to charities, shows that only around 5% of those who die leave a gift to charity in their wills. However, its executive chairman Richard Radcliffe says: “When we meet donors, volunteers and other charity stakeholders, in focus groups  – and I have met over 14,000 – up to 60% say they would leave a gift in their Will if asked in the right way.”

Nicholls offers a number of reasons for why the potential of legacies is as yet unfulfilled.

Firstly, he says there is a capacity and an immediacy issue around asking: “In the current climate there is a need for arts organisation to raise money in the short term to take care of revenue costs. Most organisations see legacy giving as ‘another thing to do’ in an already overstretched operation. They don’t feel they have the resources to deliver a legacy campaign, particularly as legacies are long-term and unpredictable in nature, and charities feel there are other, more immediate, priorities on which concentrate, such as applying for grants.”

The research shows almost half of the organisations pursuing legacies (46%) had made no discrete staffing provision of any kind – looking to resource their legacy activities as a modest adjunct to a current role within their fundraising or marketing resource.

Those who employed a fundraiser dedicated to legacy giving saw a marked increase in income.

But Nicholls says that for a modest level of investment much return could be achieved. “Fundraisers should take every opportunity to raise the issue of planned giving; in one-to-one conversations with individual donors and through the marketing they already do. They need to be mindful of these opportunities.”

The Arts Quarter research shows that just 38% of respondents actively promote the idea of legacy giving among their supporters. The most common reasons were: lack of capacity (27%), more pressing priorities (21%), and a perceived lack of expertise (18%).

Perhaps more surprising is that 21% of arts organisations admitted that they had “never thought of working on this”.

The research also shows that older and bigger organisations are more successful in engaging their supporters in legacy giving. Over three quarters of respondents founded before 1950 had received gifts in wills over the past three years, with 37% of them enjoying annual legacy income of £50,000 a year or more. Over three quarters of these older organisations actively promote legacy giving to their supporters.

The larger the organisation, the more likely they are to consider legacies an essential element of their future strategy. 70% of respondents with income over £5m a year and 57% of organisations with income of £1-5m a year considered it extremely/very/important to their organisation over the next five years.

Among the smallest charities surveyed, the story was very different. Only 5% of respondents conducted any form of legacy promotion. Apart from lack of capacity, the main reason given was lack of awareness, with 41% of respondents admitting that they had “never thought of working on this”.

Arts organisations set up since 1981 do particularly badly in attracting legacies, with only 12% of responding organisations currently encouraging their stakeholders to leave gifts in their wills, and only 19% of them receiving any legacies in the past three years. Around 27% of respondent organisations founded after 1981 stated that they have never thought of promoting legacy giving.

Nicholls says the appeal for legacy donors of older, larger institutions is their more visible brands, their reputations and their ‘bricks and mortar’ presence.

Legacy donors want to believe their donations will be invested in perpetuity. There is a perception among donors that newer organisations are more transient, though the organisations themselves would not agree. Work needs to be done by smaller, newer organisations, working in digital medias without a strong physical presence, on building trust and communicating their long-term values and vision to donors – it will be interesting to see how newer organisations address this issue.”

The research reveals that some art forms are more popular among legacy givers than others, in part due to fundraising efforts.

Respondents involved in music and opera were most likely to have received legacies, with 80% of them receiving gifts in wills over the past three years. 18% of these organisations attracted more than £100,000 a year in legacy income. This good performance is echoed in the legacy fundraising activities of this group, with 69% actively encouraging stakeholders and members of the public to leave gifts in wills.

43% of those organisations within the theatre community surveyed had received gifts in wills over the past three years. In this case, the number of legacies received and their value was relatively low. None of the organisations surveyed had attracted more than 10 bequests over the past three years, and 71% of them received £25,000 or less a year in legacy income. Just a third of theatres actively promote legacy giving to their supporters at this time, with lack of capacity and conflicting priorities the main reason for not investing.

Only 37% of the museums and galleries surveyed have received any gifts in wills over the past three years. Here, performance was polarised, with one large, national body receiving over £0.5m a year in legacy income. 36% of museums and galleries currently promote legacy giving – lack of capacity and perceived lack of expertise were the main reasons for not participating. 47% of respondents considered legacies to be extremely/very/important to their organisation over the next five years.

Despite the current low levels of legacy fundraising, half of all the arts organisations surveyed reported that legacy income will be important to their organisation in the next five years. A quarter described it as ‘very’ or ‘extremely important’.

The research shows that where there is a will, there may be a way to increase donations. The DCMS Action Plan has an ambition for the UK to become the first country in the world in which it becomes the norm to leave 10% or more of one’s legacy to charity, but increased capacity within fundraising departments and the building of strong donor relations are crucial if the golden goose is not to remain a lame duck.