Charities are urging the Minister for Finance, Paschal Donohoe, to sanction a three point deduction in the rate on inheritance tax charged to families where money is allocated for good causes in a will.
As of now, people pay inheritance tax at 33 per cent of the value they receive above certain tax-free thresholds.
My Legacy, an umbrella group representing over 90 Irish charities, say that lowering this rate to 30 per cent in cases where 10 per cent of assets in a will are left to charity could be transformational for the charity sector while also benefiting people in receipt of an inheritance.
As of now, legacy giving or charitable gifts in wills account for just 3 per cent of the overall income of charities in Ireland. My Legacy chairman Niall O’Sullivan says that could treble by 2050 if financial incentives were introduced in the budget.
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“Currently, legacy giving in the UK, where tax incentives are in place, generates £4.5 billion (€5.2 billion) annually. That’s almost 60 times the €90 million in Ireland, despite the UK economy being just over 10 times larger,” Mr O’Sullivan says.
The UK offers a four percentage point deduction in tax to 36 per cent on estates where 10 per cent goes to charity. Solicitors and tax advisers in the UK also routinely raise the issue with clients when they are planning their wills, something that solicitors, at least, over here are not encouraged to do.
My Legacy is urging the Minister to act in the upcoming budget to lower the rate to incentivise charitable giving.
Doing so would also increase public awareness on the importance of having a will, it says. Only 27 per cent of Irish adults have a will and, without a will, there is no way to leave a bequest to a charity.
Mr O’Sullivan says charities in Ireland have, until now, not been as assiduous in promoting legacies as their UK peers but around 400 charitable entities currently benefit from giving in wills.
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Of these, around one-third are either churches or church-related charities with the rest spread across national and local charities. St Vincent de Paul is currently the biggest recipient of legacy income.
“For some charities, it is transformational,” says Mr O’Sullivan, noting that when people do leave money in their wills in Ireland, they tend to be more generous than in the UK, with the average bequest coming in at €27,000.
However My Legacy, which represents charities ranging from Concern and Alone to the Irish Cancer Society, the ISPCA and Barretstown, says that “even an amount of a few hundred euro can be worth a lot to charity”.
Linda Smith, head of Women’s Aid’s 24-hour national freephone helpline services, says legacy income is critical for charities like Women’s Aid.
Many years ago, a generous legacy allowed the charity to acquire its first premises where it could meet women in need face-to-face in a secure and comfortable environment.
More recently, though State funding finances its staffing, legacy income has allowed it conduct research that informs campaigns and the direction of its services.
“The demands on our services are ever-increasing,” she said, in an environment where there was “less of a taboo about discussing issues of abuse rather than suffering in silence”.
“Since Covid, the conversation about domestic abuse has been more upfront,” she said, encouraging more women to come forward. The numbers reporting physical, economic and sexual abuse on its helpline services has doubled in the past two or three years, with helpline traffic overall up 17 per cent last year alone.
In a survey conducted last year for My Legacy Month, which falls in September, 35 per cent of respondents said they would consider a bequest to charity if there was a tax break available “so we know there is appetite there”, Mr O’Sullivan said.
“Similarly, tax incentives would encourage professional advisers to discuss philanthropy with clients.”
