Charities' income hit by downturn

Money Talk
By Stephen George
Chairman, Remember A Charity

Legacies add to the income charities receive from collections

At the best of times, talking about your will can be an uncomfortable topic.

But right now, during one of the toughest financial periods the UK has seen, we all have the opportunity to make our last wishes matter to others.

Money left to charities in wills forms the economic foundation of the voluntary sector

It amounts to more than £1.9bn every year, 30 times the sum raised by Comic Relief.

But there is a problem. The latest data shows that such legacy income fell by £66m in the last three months of 2008.

And a recent report by the Smith Institute concluded that we may see a further loss of between £150m and £200m in 2009, as house prices and share values tumble.

Greater demand

The hard facts are that in an economic downturn, charities see an even greater demand on their services.

FIVE TIPS

Talk it through with family

Write a new will

Use a codicil to change an existing will

Consider the Inheritance Tax threshold

Leave what you think is appropriate

Yet without this vital income, many charities would struggle. Others would simply not exist.

So is there anything that can be done to help charities in the future? The answer is a resounding yes.

Right now, just 7% of people leave a gift to charity in their will.

If it were increased to just 11%, that would reverse the fall in charity income and help deliver an extra £1bn each year of funding for charities.

Remember A Charity - a group of over 140 charities working together - has launched a campaign to make leaving a gift to charity in your will a normal thing to do.

In general, people have three main concerns:

How can I leave a gift in my will and also look after friends and family?
I will never have enough money to leave a legacy
People like me don't leave legacies - they are for the very rich or slightly mad!"

But when asked, one in three say that they would be happy to leave a small gift to charity in their will after having looked after family and friends.

The truth is that after looking after family and friends first, a small share of whatever is left can make a real difference to charities and the invaluable work they do.

Leaving a gift to charity in a will needs to become the norm, rather than the exception, if charities are to weather this economic storm and survive and prosper in the long run.

Talk it through

So what's my advice to people thinking of leaving a charitable donation in their will?

Stephen George is chairman of Remember a Charity

If you have any concerns, talk it through with your family. Help them understand your reasons for giving and that they are your priority.

The simplest way to include a charity in your will is to write a new one. Once a new will is written, it makes any wills made by that person in the past void. You can make a new will with a will-writing professional.

Alternatively, you can make an addition to a will that has already been made - known as a codicil. This is all quite straightforward, but if you choose to use an addition in this way, then be careful.

When you cancel a will which contains a codicil, the codicil does not get cancelled automatically.

Inheritance tax

Think about inheritance tax.

If you think your estate may be over the threshold, currently set at £325,000 for 2009/10, a gift to charity can be a good way to reduce the amount subject to inheritance tax.

Leave what you think is appropriate. It can be as large or as small as you like - a small percentage of whatever is left after you have taken care of family is one way that many choose to do.

Whatever the amount, you can be assured it will help some very deserving charities around the UK.

Last weekend saw the funeral of Jade Goody. Details of Jade's will, as reported in the media, revealed that after she had made provision for her children, she went on to remember a number of charities.

We may not all have Jade's wealth, but we all have the same opportunity to make a difference in just the same way.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.