The gift that keeps on giving: Leaving charitable gifts in your will

Some people like to make charitable gifts while they are alive and in the financial position to do so, so that they can see the impact of their gift and feel good about supporting causes close to their heart.

Others prefer to wait until after they have passed to donate, when the demands on their resources, or uncertainty as to their financial stability while living, are no longer a concern. 

There are many different ways to create a charitable legacy either during your lifetime or under your will, being a gift that keeps on giving long after you are gone.

Give directly to a named charity

The simplest way to give is by leaving a certain sum or percentage of your estate to a named charity (or charities) in your Will. You can:

• specify how the charity should use the funds – e.g. for the rescue and rehabilitation of animals in a specific region, or the creation of a scholarship for specific educational purposes; or
• Leave the funds to the charity for it to use in the general work it does to achieve its charitable purposes – i.e. the charity gets to decide where the need is greatest in the charity’s activities at that time (e.g. directing some funds to the projects they have on the go and other funds to the running costs of the charity).

Your legal adviser can assist with the structure of the bequest, to ensure that it is able to continue if, for example, the charity has ceased to exist (by directing the funds to a charity with a similar purpose), or if the specific purpose simply isn’t possible to achieve (e.g. a research scholarship where no one is doing research in that area any more). 

Charitable trust

Where someone is thinking about making a significant charitable bequest, they might consider establishing their own charitable trust, perhaps in memory of a loved one or for a cause which has impacted them greatly during their lifetime.  This can be an impactful way to achieve your charitable goals – however specialist advice is required to assess whether forming a charitable trust is the right approach, for example taking account of factors such as:

• Multiple other charities already existing in the space and whether one more would struggle or thrive;
• The ongoing costs, compliance, governance and administration burdens that can arise.  

Community Endowment Funds

Another possible way of leaving funds for charitable purposes in your Will is by utilising one of New Zealand’s many community foundations that operate endowment funds that are used to support local community causes.

Community foundations have not-for-profit status, with endowment funds professionally invested and the income produced then used towards the charitable purposes the fund is working to achieve (e.g. by gifts to local charities). Alternatively, there is an ability for customers to set up a sub-trust under the endowment fund where the sub-trust supports a specific charitable purpose only.  It simplifies the process by having one entity do the investment and distribution work for many people, and makes the most of contributions by allowing funds to continue working in perpetuity.

Should this option be of interest to you, contact your local community fund to see what endowment funds they have already established and the charitable causes they support through regular distributions, or to discuss whether the creation of your own sub-trust via the foundation suits your particular goals better.

Your will should then be updated with your legal adviser to direct funds to the general endowment fund under the community foundation, or to the specific sub-trust set up with the foundation. 

Local community funds

There are a number of community funds throughout New Zealand including:

Other factors to consider

It is important to discharge your moral obligations to family members under the Family Protection Act, and to fulfil promises made so that a claim isn’t made against your estate under the Law Reform (Testamentary Promises) Act. A claim under either Act could result in your charitable intentions not being achieved.  Click here to see our article on claims against estates.

Next Steps

If charitable giving is something you would like to incorporate in your Will, contact our Private Client team for further advice on your options and assistance in the process.

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.