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Unlocking charitable bequests

Very few Australians provide for charities in their wills, despite being generous givers in life, a new report has found.

“70% of adult Australians make a charitable donation during the course of a year. That’s great. When it comes to our wills, the situation changes dramatically,” report author Christopher Baker told the Funding Centre.

Dr Baker, a research fellow in Swinburne University’s Asia-Pacific Centre for Social Investment & Philanthropy said the majority of Australians left their estate to their spouse in full.

The sole remaining partner then tended to split the final estate equally between the couple’s children – regardless of the kids’ differing ages or needs, he said.

“We all do the same thing. We don’t think about, we don’t talk about it, we just do the same thing,” Dr Baker said.

A 2005 survey, Giving Australia, by the Department of Family and Community Service, found that nearly 70% of adult Australians made a charitable donation each year.

Despite this, only 7.5% of final estates included a bequest to a charity or other not-for-profit.

Estates without children were significantly more likely to make a charitable bequest, the 2005 report found.

Dr Baker’s report, Encouraging Charitable Bequests by Australians, found that a number of factors influenced bequests aside from prevailing will-making norms.

These included social influence on giving behaviour and government policy.

“When there is a reason to deviate from this very strong norm, we do,” Dr Baker said. “If there is a special need or circumstance, such as a disabled child, we do not simply divide up the estate equally between the kids. If we can see a reason to do so, we vary. This is promising for charities.”

Social influence, in particular, has been shown to affect charitable giving behaviour.

A recent UK study cited in the report used will-writers to show that individuals who were “nudged” to include a charitable bequest were three times more likely to do so than those who were not.

“Making a decision to include a charitable bequest is often associated with self-reflection on life history and mortality, and the desire to be remembered beyond the grave,” Dr Baker's report says.

Currently, there is no tax incentive to include a charitable bequest from an Australian estate.

This is not the case in the US, where such incentives have been shown to increase charitable bequest giving.

“Like most behaviour, charitable giving is influenced by incentives,” Dr Baker's report says. “In Australia, there is a tangible lack of incentives.”

While acknowledging that it would be difficult to introduce an estate tax in Australia, the report encourages the government to further explore tax options and promote community discussion.

Dr Baker says he has worked with Include A Charity – a collaborative project by 140 Australian charities that wants to change the way that Australians think about giving in their wills – since releasing the report.

He says the key to increasing bequests for charities and not-for-profits is providing better information about the benefits to potential givers.

This includes “rational information” about the needs of the organisation, the reputation of the organisation, where the funds would go and the long-term differences they would make, he says.

Read the full report here.