Legacy management is evolving

Legacy management is evolving

Legacy management is evolving

Regulatory changes, legal challenges and the Baby Boomer generation are all helping shift the direction of legacy fundraising. Now is the time to learn our lessons and prepare for a better future

By Chris Millward


The last 18 months have seen the fundraising sector come under increasing scrutiny. Headlines have been damning, the spotlight is harsh, and changes are afoot across the board, although how those changes might and should affect the management of legacies is less clear than in other areas.

 

The new Fundraising Regulator, headed up by Stephen Dunmore, is now responsible for taking on and delivering the recommendations made in Sir Stuart Etherington’s review. However, as Mr Dunmore explained at the Institute of Legacy Management’s (ILM) Annual Conference in May, legacy administration will not sit within the regulator’s remit. Instead, Mr Dunmore encouraged the ILM and its members to feed into the review of the existing Codes of Practice that the Fundraising Regulator will be taking on from the Institute of Fundraising later this year, which we’ll be keen to do.

 

Being prepared for an increase in legacy dispute

The regulatory changes aren’t the only shifts occurring. The Court of Appeal’s decision in July 2015 to award £143,000 to the daughter of a
Mrs Jackson, despite her will stating that her entire estate was to be left to three charities (the RSPB, Blue Cross and RSPCA), generated huge debate. 

The ILM welcomed the decision of the Supreme Court, in March this year, to give permission to the charities to appeal the decision.

We feel strongly that, when someone includes a legacy in their will, they fully expect their wishes to be honoured, and our responsibility as legacy professionals lies in fulfilling those wishes.

This case has been in and out of the courts for nearly a decade, and we hope a final ruling will be made soon. But whatever happens next, we should be prepared for the process so far to lead to an increase in challenges to legacies in estates, given the questions it has raised about testamentary freedom.

 

Helping minimise the risks of a legal challenge

While some of this will be beyond our control, there are certainly lessons we can learn in the short term to help the charities we work for minimise the risk of these challenges. For example, charities can request further narrative from donors, emphasising their wishes in terms of their charitable gifts, and expressing these in positive terms. 


We can also advise donors, wherever possible, to ensure that the executors they appoint fully understand their affairs and wishes in relation to their charitable gifts, and encourage them to safeguard the impact of their gift by considering a percentage of their estate, rather than a fixed amount. 

Similarly, we can help donors understand the difficulties caused by conditions that are too specific, as these may increase the likelihood of a gift failing.   

 

Baby Boomers and the expected surge in gifts in wills


While we deal with regulatory change and legal challenges we are also preparing for a long-anticipated surge in the number of gifts left in wills. According to legacy sector analysts Legacy Foresight, legacy gifts are expected to contribute £13.3bn to the sector over the next five years.

 

The Baby Boomer generation, with high levels of disposable income, raised on marketing, brands and consumption, are expected to leave more gifts than those before them. They are also likely to make more than one visit to their solicitors to amend their wills, so they exert a great deal of influence and will be attracting a lot of focus.

 

These are savvy, informed individuals who may place greater restrictions on their gifts and more specific instructions for their administration and use. Legacy professionals need to be ready to respond, in order to protect and build trust in the organisations they work for, despite the headlines.   

 

Achieving potential and creating a positive legacy experience

 

These shifts provide all of us working in legacy management with an important and timely opportunity to reflect on the ways we work, the value we add, and the potential we can offer through our proud professionalism as we strive to ensure that every charitable legacy gift achieves its greatest potential.

 

We’re already seeing the fruits of many people’s labours. In 2013-14, legacy income grew by 8% to over £2.2bn, despite a 1% decline in the overall death rate, according to Smee & Ford. Although the data is still being compiled for 2015, income is expected to grow once again.

 

The proportion of people who say they’ve included charitable legacies in their wills is now at 17% – the highest level since Remember A Charity began monitoring in 2002. But we have to make sure that gifts are honoured, that wishes are fulfilled, and that the experience for those left dealing with them – bereaved family members, and trusted and valued solicitors – is a positive one.

 

A new set of good practice guidelines

 That’s why, a year after joining the ILM as chief executive, and with 10 years’ experience in the sector, I’m excited that we are embarking on the development of a new set of good practice guidance for legacy professionals.

 

Our members have always strived to attain the highest of standards. They are acutely aware of the sensitive circumstances within which they work, and tread a careful line undertaking their duties on behalf of their trustees while keeping within the stringent legal framework which governs our profession.

 

And yet, given the wider context and informed by my discussions in the last 12 months, it’s an opportune time to establish good practice guidance by which we believe our profession should operate. Many of the sessions at our conference in May picked up on this theme, and provided food for thought in terms of potential content, including:

 

  • The relationship between charities and solicitors

    There is
    talk of a decline in trust between these two camps. Whether this decline is real or perceived, it poses a real risk to the successful fulfilment of final wishes. We need to get to the bottom of it, and take steps to address it, particularly as research by Smee & Ford shows that if solicitors can convert just 1% of non-charitable estates to charitable, another £78 million would be raised for charities each year. 

 

  • Communicating with executors

    We must, as a profession, have a clear and consistent standard for the way we communicate with the executors of charitable estates, ensuring we do so in the most appropriate, personalised way.  

 

  • How we work together as charities

    Understanding,
    consistency and efficiency within charity teams, spanning the wider fundraising and finance functions, are crucial to successful fulfilment and to safeguarding our reputations under the bright spotlight of heightened scrutiny.

 

  • Governance-level responsibilities

    We also need to understand how charities and their trustees can and should respond to the changing landscape in order to safeguard legacy gifts through challenging times.

 

  • Income recognition

    There are many points to consider around income recognition and the effective management of legacy gifts in a way that accounts for audit requirements, organisational need and the need for sensitive day-to-day management of such gifts.

 

We’ll be undertaking a project over the summer to look at this, and I hope the guidance that results will build a shared and shareable picture of professionalism in legacy management, and establish greater trust, cohesion, and value for the sector.

 

I’d love to hear readers’ views on these points, and in general, how legacy professionals can best support a successful legacy fundraising pipeline from start to finish, so please do get in touch via ceo@legacymanagement.org.uk.

 

Chris Millward is chief executive of the Institute of Legacy Management.

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