Many charities never see the money left to them, the
research has found.
Image: iStockphoto

Charities are losing out on bequests meant for them because more families are contesting wills following death, according to a new study by a Queensland University of Technology academic.

The latest report by The Australian Centre for Philanthropy and Nonprofit Studies at QUT, funded by financial management company Perpetual, found that Australian laws are favouring the family when it comes to challenges to gifts to charity in loved ones' estates.

Even when bequest intentions for charities seemed clear and amounts involved relatively modest, the charity may lose out - of 47 contested cases studied, 33 charities lost more than half the amount originally designated to them.

Centre Director Professor Myles McGregor-Lowndes, who conducted the study, said the best way for people to avoid having bequests to charity eroded was to provide adequately for their dependants in wills, and be informed by appropriate legal advice.

Another option was to donate the money before they die, or even establish a foundation that will enable donations to continue over time.

"There has been a large increase in recent years of disputes by family members who expected to receive more from the will and in the vast majority of these cases, the charity ends up with a fraction of the amount originally bequeathed," Professor McGregor-Lowndes said

"It is perhaps surprising that most of the time, family members are successful in receiving the part of the estate earmarked for charities and even in cases where offspring had been estranged for years, they dispute the will."

Contrary to common stereotypes, the study found many bequestors are not lone, wealthy individuals, but strong believers in a cause, or a particular organisation, that had been supporting the charity during their lives.

Suprisingly, individuals with an annual household income of under $52,000 per annum were significantly more likely to have included a charity in their will than those on higher incomes.

The report found many charities relied heavily on will bequests to keep their doors open or to enable programs to reach more people in the community.

"Studies have shown that in planned giving, such as bequests or committing to repeat donations, people tend to outlay more financially than with impulse or one-off giving," Professor McGregor-Lowndes said.

Losing such individuals' support through will disputes can have a detrimental effect on the work of the charity.

"What is causing distress is that we are not talking about situations where charities have badgered people for money; cases involve people in sound mind making a voluntary bequest, and their wishes are not being adhered to," Professor McGregor-Lowndes said

He said the prospect of high legal costs deterred many charities from defending cases and, apart from this, they were reluctant to put up an aggressive fight for funds.

"By nature, charities are grateful for any bequests they do receive and they want it to be a genuinely voluntary gift, but they are highly concerned that money should go where it was intended to," he said.