australian gifts in wills 2040 - september 2019 · 80 members – £1.5bn income – 54,000...

Australian gifts in wills 2040

INCLUDE A CHARITY WEEKSeptember 2019


Greetings from London!

Legacy Foresight

Benchmarking, researching and forecasting

legacy and in-memory giving


80 members – £1.5bn income – 54,000 bequests

Legacy Foresight

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2319 20 21

32 31

3842

5153

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7678

83 8380

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1994 1998 2000 2002 2004 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Legacy Monitor launched

Number of members


Project aims

• To analyse recent trends in bequest income

• To explore the long-term outlook for bequest income


What drives bequest incomes?



of fundraising income, Pareto Fundraising


p.a. growth, 2008 - 2018, Pareto Fundraising


of fundraising spend, More Strategic


% of final estates including a charitable gift, Swinburne Business School

Analysing bequest incomes


Bequest income = No of bequests x average bequest values

(Splitting out residual, pecuniary and other bequests)

Drivers of bequest numbers


Drivers of bequest values


The five (really) key drivers

Deaths

Child-free people

House prices

Share prices

Charity marketing


UK: 7% of gifts = over half of income


Legacy Monitor 2017

Pecuniary

Smaller residual

(<£100k)

Larger residual

(>£100k) Other

% bequests 53% 34% 7% 6%

% income 8% 31% 54% 7%

Income and notifications by bequest type

Property accounts for 2/3 of household wealth

Superannuation account12%

Property assets64%

Other assets24%

Assets held by Australian 75+s, 2017/18


ABS Statistics, 2017-18 Survey of Income and Housing, excludes liabilities


% of final estates with no children including a charitable gift, Swinburne Business School

Key sources explored

More Strategic

Bequest data sourced through charity accounts: reported income only

41 charities: $370m p.a. bequest income (2015 – 2017)

Time period covered from 2008 to 2017 but some patchy data

Missing data points were estimated

Pareto Fundraising

Bequest data sourced from Pareto’s benchmarking programme: number of bequests/average values/total income

80 charities: $300m p.a. bequest income (2015 – 2017)

Time period covered from 2006 to 2018: robust data from 2011 to 2018

Used Pareto Benchmarking reports from 2016 & 2017 to splice together the earlier trend


A similar trend across both sources

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Bequest income, $m

More Strategic

Pareto


More Strategic, Pareto

Pareto5 year growth

11.0% p.a.10 year growth

10.1% p.a.

Healthy growth in average bequest values…

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Average bequest value, $’000, 2011-2018


Pareto Fundraising Benchmarking

Underlying average growth

2011-20187.5% p.a.

…but number of bequests fairly flat recently

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Average number of bequests, ‘000s, 2011-2018



Gradual increase in deaths since 1998

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Deaths, 000s, 1998-2018


ABS statistics

10 year growth

2008-20181.4% p.a.

10 year growth

1998-20081.0% p.a.

Bequests per 1,000 deaths remains flat

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Average bequests per 1,000 deaths, 2011-2018



A very different pattern in the UK!

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Bequests per 1,000 deaths, UK legacy market, 1988 - 2018

RAC launched


Legacy Foresight UK Market Model

4%of deaths result in

charitable will

6%of deaths result in

charitable will

Our forecasts


A reminder: the five key drivers


Deaths

Child-free people

House prices

Share prices

Charity marketing

Deaths to rise by 60% 2020 – 2040

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Projected deaths by cohort, ‘000s, 2020-2050

Later generations

Gen Z

Gen Y

Gen X

Baby Boomers

Builders

Pre 1925


Boomers currently 20% of population

Pre 19250.3%

Builders7.2%

Boomers19.8%

Gen X19.2%

Gen Y21.9%

Gen Z20.3%

Later generations11.5%

% population by cohort, 2018


ABS statistics

Baby Boomers vs Builders

Wealthier

Boomers have the

highest levels of

assets, both

financial and

property

Larger

superannuation

pots

HealthierOrigin andfaith

Bettereducated

Living longer, 3+ years for females and 4+ for males

Males narrowing life expectancy gap

Less likely to be Christian, more likely to have no religious affiliation

Wide cultural diversity – over a third born outside Australia

Twice as likely to be educated to degree level and beyond

ABS statistics, Census 2011 and 2016


Boomers wealthier than builders for all assets

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Mean household wealth, $’000s, 2017-18

Superannuation account

Other assets

Property assets


ABS statistics, 2017–18 Survey of Income and Housing, excludes liabilities

Boomer bequest donors expect …


Tangibility

Transparency

Control

“ I want to picture the difference my money will

make.”

“ I want to know that my money’s being used

well, not getting lost in the system”

“ I want to my wishes to be taken into account,

even when I’m not around”

% child-free climbs from boomers onwards…

6%

8%

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12%

14%

16%

18%

Be

fore

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% childfree women by year of birth, pre 1927-1971


ABS Census 2011

A rise in child-free deaths from mid 2020’s

8%

9%

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Projected % of 60+ women dying child-free, 2007-2040


Legacy Foresight, ABS Census 2011

House prices very buoyant until 2017


Australian Bureau of Statistics, Oxford Economics

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Mean price of residential dwelling, $000s, 1988 – 2018

Average

Growth

5.4%2008-2018

Average

growth p.a.

9.2%1998-2008

NSW and Victoria hit hardest by house price falls


3.5%1.4%

-0.5%-1.9% -2.2%

-5.0%

-9.7% -10.3%-12%

-8%

-4%

0%

4%

8%

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% change in average house price by state, March 2019 vs March 2018

Price drops seen as blip not trend



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House price

growth

-7.9%2018-2019

Long term, growth forecasts remain positive



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Average

Growth

5.0%2030-2040

Average

growth p.a.

4.1%2018-2030

Average

Growth

5.4%2008-2018

Share prices slowed significantly after crunch


Oxford Economics

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S&P/ASX 200 Index, 1998=100, 1998 – 2018

Average

growth p.a.

3.1%2008-2018

Average

growth p.a.

8.0%1998-2008

Long term slowdown across the developed world


Oxford Economics

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S&P/ASX 200, 1998=100, 1998 – 2018

Average

Growth

2.7%2030-2040

Average

growth p.a.

4.5%2018-2030

Average

growth p.a.

3.1%2008-2018

We predict a short-term income drop


Pareto, Legacy Foresight

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Real bequest income, $m, 2008 – 2040

Growth

2018-2019

4.3%

Growth

2019-2020

-2.0%

Growth

2020-2021

1.3%

Our long term income forecasts

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Bequest income forecasts, 2018 – 2040, $m

Historic income

Current prices

Constant 2018prices


Pareto Fundraising, Legacy Foresight

Real

growth

4.1%p.a.

Nominal

growth

6.5%p.a.


Bequest income to 2040, in real terms


Bequest numbers growth to 2040

Pessimistic scenario: uncertain economic times

• The current house price correction is more severe than currently expected, leading to a 15% reduction in prices during 2019

• Increased global trade tensions escalate to a full-blown trade-war over the period 2020-2030, accompanied by a less welcoming domestic agenda towards migration that halves net migration to Australia

• Both lead to further drops in house prices and share prices over the period.


Oxford Economics, Legacy Foresight

Optimistic scenario: marketing impacts accelerate

• We assume that the underlying tendency for people to leave a charitable gift in their will increases in line with the trend we’ve seen in the UK.


The scenarios compared


Pareto, Legacy Foresight

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Real bequest income, $m, 2008 – 2040

Historic income

Central forecast

Pessimistic forecast

Optimistic forecast

Ave. growth

Optimistic

4.5%p.a.

Ave growth

Central

4.1%p.a.

Ave. growth

Pessimistic

3.7%p.a.

= 2.6x in 2040

= 2.3x in 2040

= 2.1x in 2040

Conclusions and challenges


Conclusions

• The outlook for the Australian gifts in wills sector is very positive – thanks to underlying demographic and economic factors, real incomes will more than double over the next twenty years

• The impressive growth rates seen over the past decade have been boosted by Australia’s strong economic performance, impacting on the value of property and financial assets

• Looking ahead, that economic performance is likely to be more muted, due to chronic uncertainties in the global economy

• Instead, it’s numbers of bequests, driven by rising death rates (the boomer generation) and an increase in the number of child-free people dying which will underpin growth


Challenges

• The challenge for bequest fundraisers is to raise the ‘propensity’ of all donors – including those with children and less wealthy households – to leave a gift to charity in their will.

• The role of Include A Charity is crucial to the long-term future of gifts in wills –working alongside individual charity members to raise public awareness of the potential and value of leaving a charitable gift

• Understanding the motivations and attitudes of the large, affluent and diverse baby boomer generation (now in their 50s and 60s) will be key to ensuring that channels and messaging have the maximum impact

• To support strategic development, bequest fundraisers need access to more consistent, comprehensive information on legacy income and bequests by type


Thank you

www.legacyforesight.co.uk @talkinglegacies @talkinginmemory

Meg Abdy

Development Director

[email protected]

australian gifts in wills 2040 - september 2019 · 80 members – £1.5bn income – 54,000...

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