Many charities have survived the pandemic thanks only to donations left in wills. ‘Nudge’ research led by Professor Sarah Smith has been key to securing £billions for good causes through these gifts.
By Michelle Kilfoyle.
In September 2013, 6,502 solicitors across the UK received a letter from the Minister for Civil Society, Nick Hurd. Writing on behalf of charities, Hurd urged the solicitors to talk to their clients about leaving money to charity when writing their wills. “You can help increase the likelihood of a gift being left by simply asking the question,” he advised.
This approach to fundraising was a new one for charities, a sector beset by a long-term fall in income. With charitable gifts in wills averaging £12,000 each, any rise in donation rates was sure to bring generous amounts of cash for good causes.
‘Simply asking’ for a bequest during a routine conversation may seem an extraordinarily easy way of raising money. However, the tactic had proven highly effective in research led by Sarah Smith of the University of Bristol’s School of Economics. It was this research that provided the evidence-base for Hurd’s request, and many other campaigns to come, and which brought long-term change that helped charities withstand the blows of recent history.
A shrinking set of UK charitable donors
Smith has a long track record in studying charitable donations. Who donates? Why? How much do they give, and could they give more? She uses her findings to support charities.
Back in 2010, Smith knew that fresh ways to encourage giving were needed when she saw the results of her study on the UK’s donor population.
Fewer and fewer people were giving money to charity: the proportion of households who donate had fallen from 32% in 1978 to 28% in 2006. What’s more, the share of donations from the over-65s had gone from 25% to 35%.
The power of nudges for fundraising
The findings worried not only charities but also the then-Coalition Government in light of its Big Society agenda. Working closely with PhD student, Michael Sanders, Smith looked for solutions to dwindling donations in behavioural insights. Popularly known as ‘nudges’, behavioural insights are simple prompts that change people’s behaviour.
Smith and Sanders had forged a strong partnership with Remember a Charity, an organisation who campaign for more legacy giving (leaving donations in wills) and who were the masterminds behind Hurd’s letter to solicitors.
Together with Remember a Charity, the researchers conducted experiments to see whether nudges could tempt more will-writers to leave gifts to charity.
“The findings were very powerful,” says Smith. A simple reminder to leave money to charities doubled the number of will-makers who did so, a trial with Co-op Legal Services’ call-centre staff revealed. The proportion went up by another 50% when staff added an emotional prompt: asking callers which causes they were passionate about.
“That’s the thing about nudging,” Smith continues. “It’s simple, it’s easy, it’s just a few words, but it’s really powerful.”
New fundraising ideas
Remember a Charity put the findings into practice with immense success, both in the 2013 letter to solicitors and in many other campaigns since, including a repeat letter in 2015.
Legacy giving is now far more integral to the will-writing process. In 2019, a record 68% of UK solicitors discussed charitable bequests with their clients, compared with 58% in 2012. At the same time, the share of will-writers who left gifts rose from 11% to 15%. This translates into nearly 9,000 more people and around an extra £107 million each year.
These changes are “without doubt, thanks to the significant role of Smith’s research,” Remember a Charity’s Director, Rob Cope, confirms.
Shaping UK inheritance tax
Smith’s research gave a further – and more sizeable – boost to UK charities when it helped protect a tax exemption for bequests.
The exemption was under question in The Office for Tax Simplification’s 2018 enquiry into inheritance tax. But Smith’s research showed that the exemption was an important trigger for solicitors to discuss bequests with clients. It also estimated that around one-third of qualifying estates (wills with wealth above the £350,000 inheritance tax threshold) include a bequest that only happens due to the exemption.
This evidence was “instrumental” in Remember a Charity’s campaign to preserve the exemption, Cope explains. “Had it been removed, the effects on charities and the causes they support would have been devastating.” Charities stood to lose around £500 million every year, bringing the cumulative value of Smith’s research into the billions.
A lifeline during the pandemic
Legacy donations became even more vital during the toughest stretches of the pandemic, when other income streams dried up. “Many good causes have only been able to continue their work thanks to gifts in wills,” Cope further explains.
Smith admits to being “amazed” by the research’s impacts. These also include the UK Government’s Behavioural Insights Team (BIT) putting philanthropy on their long-term agenda.
For Smith, the work is also a prime example of how Economics, as a social science, holds a mirror up to society and finds solutions to what’s revealed. “We collaborated with stakeholders, did valuable research and created social change,” she says. “I’m incredibly proud of this.”
See more from Professor Sarah Smith including recent publications.
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