How can charities predict legacy income?

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How can charities predict legacy income?

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How can legacy fundraisers better predict and model future legacy income for their charity? Our sector experts give their best tips for managing this challenging area.

Amanda Pearson, national legacy & recognition giving manager, Alzheimer’s Society

To be topical, it’s a game of two halves. Your legacy admin team must have the correct processes in place for how they work, capturing the correct information from the notifications and making sure it’s entered on the legacy database – in our case First Class. This is then supported by legacy marketing figures – how many leads and pledges are in the pipeline. Once you have this information, it will inform your forecasting for the future – and much more. Without it, you are dependent only on the forecasting services offered by several companies. While these are undoubtedly useful, however good (or not so good) the figures are, having your own information helps to confirm what they are saying, which is reassuring to the trustees and senior management team, as well as yourself!

Adam Buckles, legacy programme manager, The Brooke

Data, data, data! Have I said that enough? If you don’t have any data, you can’t predict next week, let alone next year. Start with your supporter database, and work out your charities legacy profile. How old are individuals when they leave a gift to your charity? How long is it between them writing their will and you receiving the legacy? Then, look at your financial data. What are your average values across the different types of legacies? What is the average over, say, five years? All of these bits of information will help you to start filling in the gaps when you receive a notification, and also when and what return you might likely see from any marketing you are planning.

Claire Routley, independent consultant, Legacy Fundraising

Using simple averages to predict legacy income can be misleading. Most charities find that the Pareto principle applies to their legacy income: a small percentage of their legacy gifts account for a large percentage of their legacy income. This can be both a blessing and a curse; even one or two large legacies can significantly increase – or decrease – income against original forecasts. Importantly, therefore, charities need to learn how to live with this uncertainty. They need to be aware of their dependence on these large gifts and have procedures in place, firstly, to raise red flags as early as possible when there might be a deficit (for example, when there are no large gifts in the pipeline), and secondly, to utilise reserves or decrease spending accordingly.

Janet Snedden, data strategist & CEO of marketing analytics agency, MetaMetrics

There’s a saying that “the only thing right about a forecast is that it’s wrong”. To improve the usefulness of forecasting, from an organisational perspective it’s helpful to frame a forecast in the same way the paths of hurricanes are displayed – i.e., with wide margins of possibility. Yet few do this. Why? Because in order to construct a powerful forecast, you need to fully understand the key drivers of performance; and for legacy gifting, these are unlikely to be simple, linear relationships. So, stop oversimplifying, and start deploying more advanced techniques to uncover the more complex influences on legacy income – including branding and marketing events, as well as past supporter behaviour and demographics.

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