Barriers to Legacy Fundraising

Findings of a survey conducted by Wootton George Consulting during August and September 2010.

Background

Over many years in working with charities on fundraising strategies, we had identified that a frequently under-exploited area was that of charitable legacies. This was particularly the case with small and medium sized charities, despite the evidence that they too can raise legacy funds, if they get it right and are prepared to invest even modest resources.

While clients were often keen to invest in other areas, such as trusts, corporates or cash appeals, legacies were frequently left out of the mix altogether, or given a low priority. This is despite the high return on investment (typically 50:1), the strong average values (currently around £35,000 for a residuary legacy and £4,000 for a cash gift), along with the sheer scale of legacy giving in the UK, currently around £1.9 billion per year.

Why then do charities not invest in legacies as they arguably should and what are the specific barriers holding them back? Anecdotally, we had evidence to suggest that pressure to demonstrate a quick return, together with the resulting short termism, was the main factor, perhaps augmented by risk aversion to investing money in what was clearly a longer term opportunity. While not totally debunking this evidence, the survey results were surprising.

Key Findings

We found that the key reasons for legacy inertia were firstly a lack of knowledge among charity staff about legacy fundraising, followed by a lack of staff capacity to take it on. A short term fundraising focus and lack of strategic view came in third place. However, there was a clear inter-relationship between the main factors, as explained below.

The implications for the charity sector are the clear need for additional training and information on legacy fundraising and a requirement for organisations to review staff roles to identify how capacity can be created to capitalise on the legacy opportunity. This might include giving a lower priority to other areas of fundraising (i.e. a change of strategy) or an investment in additional capacity (either internal or external).

Survey Composition

52 charities completed the survey. These were a mix of causes, with a predominance of small to medium sized charities, as would be expected, because larger charities are normally more proactive in seeking legacies. However, there was no attempt in the survey methodology to categorise responses by size of charity specifically.

Participants were asked 8 questions relating to current income from legacies, awareness of legacy facts, current promotion and perceived barriers to seeking legacies in their organisations, as well as their views on what it would take to give legacies a higher priority at their charity.

Altogether, 75% of the sample already received legacies, but only 43% actually sought them. In other words, 32% of respondent organisations received legacies without even asking for them, which would appear to demonstrate the potential to achieve more, if they were more proactive.

Surprisingly, 43% of the sample did not promote legacies at all, even though many of the charities represented already received legacy income. This may demonstrate a view among some that legacies are essentially windfall donations. Or it may just underline the key findings that many organisations either do not know how to promote legacies or just do not have the capacity to do so.

Lack of Awareness

Awareness levels of basic legacy fundraising facts were low. Nearly half of respondents were unaware of average legacy values and typical returns on investment (which can be a key driver in the decision to seek legacies). In other words, almost half of respondents did not know the basic facts. This shows a clear need for additional educational work in the sector.

Use of Legacy Funds

When asked how their organisations would spend additional legacy income, the highest group responding (40%) said they would spend it on service delivery and 18% said would reduce their operating deficit, demonstrating the current pressure to raise short term cash. Indeed, the need to raise funds for the present and next financial years is a contributory barrier (although not the main one) to seeking legacies, given the long term nature of legacy fundraising.

Key Barriers and Future Stimuli

When asked what the main barriers for their organisation were to raising more legacies, the top three responses were as follows:

1. Lack of knowledge (20%)
2. No capacity to do it (16%)
3. Short term focus of organisation (14%)

(Interestingly, no respondents said that legacy fundraising was seen as too risky in their organisation, despite its long term nature).

However, these responses were slightly contradicted by answers to next question. What would it take to address legacies more effectively?

1. More capacity (24%)
2. A more strategic approach (22%)
3. More information or training (20%)

The same 3 issues emerge, but in slightly different levels of priority. In practice, there is clearly a need for more information and training about legacy fundraising (even about the basics), combined with a need for more capacity within charities to promote legacies. Arguably, of course, if charities took a more strategic approach and prioritised legacies over other areas with lower returns on investment, this would answer the capacity issue. In the current climate, however, with its strong emphasis on short term needs, this is probably unrealistic.

Fundraising Capacity

Respondents were asked how they would address the capacity issue if they were to be more proactive. Interestingly, by far the largest response at 45% said the task would fall to existing in-house staff. However, for this to happen, the findings suggest these staff would need to stop doing other work to create the capacity for it, as well as probably needing training on legacy fundraising practice.

Interestingly, 21% of the sample said they would address the capacity issue by seeking external support. This suggests a key role for consultants. Unsurprisingly perhaps, only 9% said they would appoint an in-house legacy officer.

Further Insights

The survey gave respondents the chance to add additional comments, which give further insights into the issues raised. Several of these are worth quoting, as they sum up the overall response to the survey:

"We don't know where to start"

"As a sole fundraiser, I would need another pair of hands, but finances and attitudes do not permit this."

"(We have a) short term focus; the legacy opportunity is not understood."

Conclusions

While this survey involved only a small sample size and was not a detailed academic study, it nevertheless provides a useful snapshot of where small and medium charities are in relationship to legacy fundraising. The basic findings are clear and demonstrate a need for more education in the sector about the importance and practice of legacy fundraising. This is a message that sector training and umbrella bodies could usefully take on board.

Similarly, the need for a strategic view of fundraising is an educational issue, but one that needs to reach out to trustees of charities and senior managers, not just fundraising departments. This is a harder nut to crack. Initiatives such as the IoF's drive to get more fundraisers on charity boards may help here.

The most intractable issue of course is that of hard pressed charities finding the capacity to develop legacy fundraising. In a recession and with budgets under pressure, this is a more difficult problem to solve. However, for those organisations which recognise the legacy opportunity and manage to do so, the rewards will be great.