This post written by Christopher Baker, Asia-Pacific Centre for Social Investment and Philanthropy
Just on 12 months ago, a campaign was launched under the banner of Include a Charity. This marked a significant development in the history of co-operation amongst charitable organisations in this country. The campaign now involves some 140 of Australia’s leading charities, urging Australians to leave a charitable bequest in their wills. While Australians take a pride in the way in which we contribute to charity collections and respond to natural disasters, very few of us have any understanding about how many of us leave a bequest in our wills. I suggest that many Australians would be surprised at just how few us do set aside anything from our estates for the charities we have often supported through out our lives.
To understand bequest giving it makes sense to look at general charitable giving during our lifetimes. The measurement of charitable giving in Australia however is not strong. The most comprehensive effort to gather quantitative information on giving in Australia was undertaken at the instigation of the Federal Government in 2004/2005. The resultant ‘Giving Australia’ Report (2005), estimated that in the twelve months to the end of January 2005, nearly 9 in 10 adult Australians (87%) had given money to at least one nonprofit organisation. It is this level of participation in charitable giving that resulted last year in the World Giving Index rating Australia amongst the most ‘giving’ countries in the world.
The World Giving Index does not look at bequests, so for the best available information on that we need to return to the ‘Giving Australia’ Report whose own survey estimates that 58% of adults in this country have a will and that 7.5% of those have included a bequest in that will. This means less than 4.5% of adult Australians reported including a gift to charity on their death.
A similar pattern emerged from a study I undertook at Swinburne University of Technology which looked at some 1,800 Victorian probate files processed in 2006. (Probate is the legal process required for transfer of intestate and willed estate assets from the deceased to the beneficiaries, where required. About half of all estates require probate.) This study found that approximately 5% of the estates examined included a charitable bequest*.
While it is both fair and reasonable that individuals should look after the needs of their family first, there is a very big gap between 87% of us giving something to charity each year, and the 5% who then leave something to charity in our will. Most leave everything to family, and more specifically to the children. This seems to occur irrespective of need. One example illustrates this point very well. A Melbourne widow aged 91 left her rather large estate of $10m to her three children, aged 71, 69 and 65. The executor of the will was the son, a retired barrister from a very wealthy suburb. The circumstances of the two daughters were not addressed in the probate file. The estate was split evenly between the three children.
How an individual distributes their estate is of course a matter of personal choice. Nevertheless, in this example had the woman left 1% of her estate as a charitable bequest, the resultant one hundred thousand dollars could have been of considerable benefit for the charity or charities concerned and the impact on the children’s share would have been negligible. Had she left 10% of the estate as a charitable bequest, the benefit to the included charities would have been tenfold; and the share left to each of the children would have been reduced from approximately $3.3m each to $3.0m.
The Swinburne study and the example above indicate that most of us settle quite simply for the default option: leave everything to the kids. Of course people provide for their children, as they should. For many, there is also a capacity to allocate a small share of their estate to a charity or charities that they value and may have supported throughout their lives. Not everyone has the capacity to leave a bequest, but many do.
What a welcome initiative it has been to see so many Australian charities coming together on the ‘Include a Charity’ initiative. The focus of the campaign is inclusive; it is encouraging Australians not to give to charity at the expense of family, but simply to include something for charity where that is a feasible and reasonable option. Many charities depend heavily on gifted funds, both regular gifts and bequests. In practice charities are in competition with one another for our charitable dollars. It is therefore quite significant that more than one hundred charities have joined forces to encourage Australians first and foremost to at least consider including a charity in their will. The initiative is not about which charity to choose, but about taking the generosity we show during our lifetimes towards charities and to extending that generosity to including a charity in our wills. Attitudinal and associated behavioural change is neither quick nor easy to achieve. The ‘Include a Charity’ is a constructive and collaborative initiative and one to be lauded.
Dr Christopher Baker is a Research Fellow at the Asia-Pacific Centre for Social Investment and Philanthropy, in the Faculty of Business and Enterprise at Swinburne University of Technology. His current research interests include charitable giving from personal estates, diaspora giving patterns, and high net worth philanthropy. E: email@example.com
* Baker, C & Gilding, M (2012), ‘Inheritance in Australia: Family and charitable distributions from personal estates’, Australian Journal of Social Issues, vol. 46, no. 3, pp. 273-289.
Mar. 29, 2012
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