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Philippine Vernes

Private Client Manager, Philanthropy

Charities Aid Foundation

Make a lasting impact with a gift in your Will

Despite the economic and social uncertainties caused by the global Coronavirus pandemic, legacy income is growing fast, and has the power to shape the world around us. Gifts in Wills have become a key part of the UK giving landscape and raise £3.4 billion annually, accounting for 16% of all fundraised income for UK charities. Since the last recession in 2008, individual giving has stayed constant whilst legacy income has doubled, and it is expected to double yet again in real terms by 2050. Yet gifts in Wills are still generally seen as being one of the most difficult asks to make to major donors by charities due to the sensitivity of the topic.

As we recover from the impacts of the pandemic and enter into the biggest generational transfer of wealth in history, it is vital that donors understand the impact that gifts in Wills can have on accelerating progress in society towards a fair and sustainable future for all. Below we emphasise the important role these gifts can play within an individual’s philanthropic strategy and the advantages they bring.  


The ultimate expression of support

For many donors, leaving a gift in their Will is the ultimate expression of a lifetime of support. One of the most rewarding things about making a gift in a Will, is that it often means a donor can make a far more substantial donation than they ever could during their lifetime.

By working with their chosen beneficiaries, donors can identify the best way to make a gift that will support the long-term vision of the charity and allow them to continue to make an impact after their lifetime. In 2020, a generous legacy facilitated by CAF of £277,000 from the estate of Jean Williams, went to support a number of cutting-edge studies into macular disease, which affects nearly 1.5 million people and is the biggest cause of sight loss in the UK. Susan Downes, Professor of Ophthalmology and Consultant Ophthalmic Surgeon at Oxford, says: “We are so grateful for the Jean Williams donation. This will have such a huge impact on our ability to carry out research into the causes and treatments for inherited macular disease.” Leaving a legacy is a personal decision and has the power to deepen a donor’s connection with their chosen causes. The contribution to the charity is much more than a financial transaction, rather it is a reflection of the donor’s values and an investment into the organisation’s ability to continue its work for future generations.


A vital resource for the future

Leaving a legacy is a powerful way to support a charity’s mission and provide them with the resources required for future planning and resilience. This has never been more evident than during the past eighteen months when charities were hit particularly hard, with staff furloughs and lockdown restrictions reducing fundraising opportunities dramatically. Whilst many fundraising channels and activities ceased as a result of the coronavirus outbreak, unrestricted gifts in Wills sustained vital charitable activities across the UK and proved a resilient stream throughout the pandemic, albeit with some delays to the probate process. To find out more about what makes a charity resilient, take a look at CAF’s Resilience programme and the characteristics that show an organisation has the potential to be resilient.

When choosing to leave a legacy of a considerable amount, it is recommended to sit-down with the beneficiary organisation in order to understand their funding needs and gaps, as well as their ambitions for the future, in order to future-proof the legacy and ensure that it best serves the interests of the charity. This enables donors to engage emotionally with the impact of their generosity during their lifetime, whilst allowing beneficiaries to input to the strategic application of the funds in the future.

Where a donor has specific restrictions they would like to impose on their legacy, it is advised to work with the chosen charities to hear about their vision for the future and discuss specific projects and plans that the donation could help bring to fruition.  

On the other hand, unrestricted gifts in Wills allow charities to address requirements as they arise. The needs of a community and the challenges different cause areas and groups face evolve over time. Legacy gifts are by definition deployed after a person’s lifetime and are therefore well-suited to unrestricted funding as they are not tied to a need at a particular point in time. An unrestricted bequest allows the charity to deploy the donor’s future investment for greatest impact, rather than having it restricted to a specific project which may no longer be a priority.


Tax benefits

Tax advantages are an important consideration when writing a Will and can make a considerable difference to the beneficiaries of an estate. Gifts left in Wills to UK Charities are free from inheritance tax, meaning they are removed from the value of a donor’s estate before tax is calculated. In addition to the value of the gift being tax free, charitable gifts can reduce the amount of inheritance tax paid on the remainder of a taxable estate. Since 6 April 2012, if 10% or more of the taxable estate is gifted to charity, the rest of the estate benefits from a reduction in the Inheritance Tax rate from 40% to 36%.

With proper planning and advice, gifts in Wills are an ideal way to make a difference to the causes donors care about the most, whilst having a positive impact on the remainder of their estate. As James von Simson TEP, Investment Director, Tilney Smith & Williamson highlights: “While charitable giving is often an intensely personal act and tax is rarely a consideration, the real power of legacy gifts in your Will is not the reduced rate of inheritance tax applied to the estate but how this leverages up the impact. For example, on a £1m estate a £100,000 gift to charity only ‘costs’ the beneficiaries £24,000”.

Donors should always consult a dedicated professional tax advisor to seek independent advice if they are looking to reduce their inheritance tax through charitable legacies. The precise way an estate will be charged will be dependent on personal circumstances, such as gifts to charities, inheritance tax bands, executors, asset locations, and other matters.


Create a lasting legacy with CAF

Creating a charitable legacy through CAF is simple and flexible for donors and can form a key part of a philanthropic giving strategy. CAF facilitates over £20,000,000 in legacy grants to charities all over the world every year. Our experience means that donors can leave a legacy, safe in the knowledge that CAF, as an independent third party, will handle the process sensitively as it has been doing for over 90 years.

If you would like more information or to discuss leaving a Charitable Legacy, please contact your Private Client Manager or our dedicated Legacy team by email.