Legacies closely tied to impact on economy

Income from legacies could fall sharply this year to the tune of 15% according to Legacy Foresight.

The consortium has revised its five year forecast due to the pandemic, estimating that the crisis could hit charities’ legacy income by anything from 1% to 15%.

Between April and June, the consortium of 82 charities said it received 9,000 fewer notifications compared to pre-pandemic forecasts.

The economic crisis is also likely to impact house prices, which could result in a drop in the average value of residual bequests of between 3% and 5%.

While the central estimate sees legacy income decreasing by 8% this year, Legacy Foresight said that a high degree of uncertainty remains, and that “the pessimistic scenario is also a highly plausible outcome” considering that the pandemic could have a second wave.

Legacy income is still expected to grow in the long term, from £3.4bn in 2019 to £3.5bn-£3.9bn in 2024.

UK charities could receive between 5,000 and 11,000 more bequests over the next five years because of the additional deaths caused by Covid-19.

Jon Franklin, economist at Legacy Foresight, said: “Our scenarios suggest that legacy income could fall by between 1% and 15% this year, reflecting the worsening economic environment and potential delays in the sale of property assets caused by a slow-moving market.

“Analysis from the Legacy Monitor showed cash income remained resilient, thanks to legacy administration teams’ speed to adapt during lockdown; this is reflected in our more optimistic outlook for legacy income over the rest of the year.

“As delays unwind and income starts to flow from the anticipated increase in bequests, it is likely that income could rise quite rapidly in 2021 and 2022.”

Legacy Foresight offers benchmarking, forecasting, research and consultancy services to charity clients.

Since its first project in 1994 it has worked with over 200 charities, including the top 20 UK fundraising brands.