FORECASTER EXPECTS SHORT-TERM LEVELLING OFF OF LEGACY INCOME

[LOOKING TO THE FUTURE, the Legacy Market Outlook 2023-2027 from Legacy Foresight – part of the Legacy Futures group – predicts that average annual income from charitable bequests will remain stable at around £3.9bn for the next few years before returning to growth.

The report factors in current legacy trends, projected number of deaths and the most likely economic conditions, together with estate administration issues, to predict the number and value of future charitable bequests.

Announcing the publication of the report, Legacy Foresight said: “This latest forecast estimates that UK legacy income reached a record £3.85bn in 2022, buoyed by a strong bounce back after the COVID-related impacts on the probate system. Looking ahead, we forecast legacy income to remain resilient over the coming years, maintaining at around this level despite ongoing economic challenges.

“It shows that a subdued economic environment, driven by an expected drop in house prices and share price volatility, is likely to drive reductions in the average value of residual gifts over the next couple of years, which will limit growth.

“However, the expansion of probate staff numbers at HMCTS, combined with the longterm upwards trend in the number of deaths, is likely to boost bequest numbers to around 145,000 per year over the next five years. As a result, these two factors will balance against each other to result in annual legacy income remaining relatively stable for the next few years.”

Economist Jon Franklin explained: “Despite the economic headwinds it is unlikely that legacy income will fall dramatically in coming years. The long-term upward trend in the number of deaths will lead to increases in the number of gifts, which will largely offset the impact of anticipated falls in house prices.“

Ashley Rowthorn, group CEO of Legacy Futures, added: “While the forecast remains promising, this is not a time for complacency. The charity legacy market is becoming increasingly competitive with more organisations entering this space and, despite the volume of legacies increasing, the average gift value is likely to decrease, at least in the short term. Charities will need to understand market conditions, how these are affecting their supporters and be relevant in their fundraising to secure legacy income for the future.“

The ageing population means deaths are expected to continue rising on a long-term upward trend over the next five years, the report says.

In its pessimistic scenario Legacy Foresight highlights the risk that legacy income could fall by around 5% over the next couple of years; however, it does not anticipate significant declines. That means legacies should remain a relatively resilient source of income for charities during what is likely to be a challenging period for fundraising.

Commenting on the findings, Lucinda Frostick of Remember A Charity said:

“This forecast conveys the resilience of the legacy market, providing stability for charities and significant income even in the toughest of times.

“Appetite for legacy giving remains high and, even for those who are tightening their purse strings, it’s proving to be an increasingly attractive option to make a sizeable impact without immediate financial outlay.” q