Legal and financial complexity is deterring many wealthy families from leaving money to charity in their wills, despite a growing desire for philanthropy, according to Rathbones.

Its study of high net worth (HNW) families found that 42 per cent saw legal and financial complexity as the primary challenge preventing them from including charitable giving in their estate plans.

Almost the same proportion (39 per cent) cited a lack of knowledge about non-profit options, while 26 per cent said they were unsure where to begin.

Rathbones highlighted that HNW individuals face various bureaucracy when giving to charity in the UK, including tax considerations, correctly structuring donations and foundations, and ensuring governance and compliance adheres to charity law, alongside balancing philanthropic goals with family inheritance and legacy planning.

Its study indicated that these challenges could be affecting HNW individuals’ philanthropic intentions.

"The charity sector is facing a perfect storm: rising demand for services, economic uncertainty, and intense competition for donations,” said Rathbones head of charities distribution, Gemma Gooch.

“Legacy giving is a vital lifeline for charities, yet our study shows many HNW individuals are held back by complexity and a lack of guidance.

“By making it easier for donors to integrate philanthropy into their estate planning, we can help secure long-term funding for the causes that sustain our communities."

Philanthropic planning

Despite the hurdles, 53 per cent of respondents had increased their charitable donations over the past two years, while 66 per cent expected to give more in the next two years.

Nearly two thirds (62 per cent) had included a charitable gift in their will, averaging £233,000, and 83 per cent of those without a will planned to write one including a charitable gift within three years.

Philanthropy can be tax-efficient, as the inheritance tax rate falls from 40 per cent to 36 per cent if at least 10 per cent of a net estate is donated to charity.

However, a fifth of HNW families were unaware of this. Once they were aware, 84 per cent said they would consider leaving 10 per cent of their estate to charity.

Seven in 10 HNW families said they planned to speak to their financial adviser about charitable giving in the next five years, while 51 per cent had already done so.

One in 10 had already planned to leave non-cash assets to charity, while a further 82 per cent said they were likely to do so.

“We’re seeing more families recognising that with the right advice, they can reduce their tax exposure, protect their loved ones, and make a meaningful difference to the causes they care about,” commented Rathbones financial planner, Rebecca Williams.

“The challenge is that too many still feel uncertain about how to start. Professional guidance is essential, to turn good intentions into effective, lasting legacies."

To facilitate charitable giving, Rathbones is launching its Donor Advised Funds (DAF), which it said was a flexible, tax-efficient solution that enabled clients to donate and support charitable causes.

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