Legacies for Charities

What is a Legacy? 

A legacy, or bequest from a donor’s will is one of the more traditional methods of giving to charity and it remains an important one – UK Charities alone receive an estimated £2bn from legacies each year.
 
There are four main types of gift commonly left to a charity in a will:
 
  • Pecuniary Gift – this is a sum of money left to a charity in a will
  • Residuary Gift – this is a gift of the remainder of an estate after all other beneficiaries have been provided for
  • Specific Request – this is a gift of a named item – for example, a painting
  • Contingent benefit – this is a gift that is dependent on other factors, such as the donor outliving all other beneficiaries
 
 
 

How do they work?

 
Legacies are left through the donor's will or simply by a declaration to the executors with instructions as to how and to which charity the bequest is to be distributed. It is not enough for donors to just inform family or friends that they would like a gift to your charity after their death. They will need to make a will if they do not have one, or add a codicil (a short amendment) to their existing will that mentions the type of gift and the name of the charities that they would like to benefit from it.
 

What are the benefits to the donor/their estate?

 
Legacies to UK, EU, Norwegian or Icelandic charities are exempt from inheritance tax (which at the time of writing is 40%), so it may help reduce the amount of tax payable if the estate is over the exempt threshold. At the time of writing (201/12), the inheritance tax threshold is fixed for another 3 years at £325,000 for an individual or £650,000 for married couples or civil partnerships. Up to date information on tax rates and thresholds can be found here.
 
From April 2012, a reduced rate of inheritance tax of 36 per cent for estates leaving 10 per cent or more to charity will be introduced, as announced in the 2011 Budget.
 

What are the benefits to my charity?

 
To the voluntary sector as a whole, the annual income created by legacies forms 15% of all voluntary income received by British charities. Legacy fundraising is a very cost effective way for charities to raise funds and has the potential to create a huge income stream for the charity.
 

Are there any issues that we should be aware of?

 
Legacy fundraising can be a sensitive and contentious subject. Therefore a fundraiser needs to ensure that they have acted appropriately and not exerted any undue pressure on potential donors. A fundraiser should not give legal advice and should recommend that a potential legator (donor) seeks independent advice.
 
For more information about Legacy Fundraising, please see the relevant IoF website page here.
 

Can anyone support us with our Legacy Fundraising?

 
Remember a Charity is a consortium of 200 charities that exists to increase the number of charitable legacies and make leaving charitable bequests a social norm in the UK. RAC are hosted by the Institute of Fundraising and use multiple forms of communications and PR to represent a diversity of causes and organisations. For more information, please visit their website.
 

Can Charities only accept gifts of money?

 
No. Charities are often happy to receive any gift from donors, and this could be property, land, shares, or specific items such as paintings, jewellery and furniture. Any gift that you are able to make will make a significant difference to a charity’s ability to help its beneficiaries.