Despite economic uncertainty legacy giving is forecast to maintain resilience

New data estimates that charity income from UK legacy giving reached £3.85bn in 2022. 

Charity income from gifts in wills is forecast to remain resilient over the coming years, continuing at around this level, despite ongoing economic challenges.  

The Spring analysis Legacy Market Outlook 2023-2027 from Legacy Foresight presents the latest forecast for the UK charity legacy market, reflecting updates to scenarios for the national economy, current numbers of deaths and related administrative processes since its previous quarterly forecast in October 2022.

Insight is based on data from the charity sector’s Legacy Monitor Consortium, combined with current economic and social trends to create an in-depth analysis of the charity legacy sector.  

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.   

However, an announced expansion of probate staff numbers at HM Courts & Tribunals Service, combined with the long-term 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, annual legacy income is expected to remain stable for the next few years with a long-term upward growth trajectory. 

Jon Franklin, Economist at Legacy Foresight – the research and analysis arm of the Legacy Futures Group, says: “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 at Legacy Futures, adds: “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 UK saw 656,000 deaths over the 12 months to the end of December – 1.2% higher than the 646,000 previously predicted by Office of National Statistics.

The ageing population means deaths are expected to continue rising on a long-term upward trend over the next five years. By 2027, annual rates are likely to be similar to the levels seen during the pandemic.  

In Legacy Foresight’s central scenario, recovery in the probate backlog along with rising deaths could see bequest numbers reach around 145,000 per year over the forecast period. This is approximately 11% higher than the 131,000 bequests per year seen on average between 2018 and 2022.   

Economic challenges will see average values stagnate as the average value of residual gifts has driven an average growth of around 2.8% per year over the last decade. However, the subdued economic environment is likely to drive reductions over the next couple of years. I

The forecast expects average values to fall by around 3% between 2022 and 2024.

Its pessimistic case suggests that this decline could be as much as 7% however, should there be more substantial falls in house prices.  

 Remember A Charity director, Lucinda Frostick comments: “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.”  

Additionally, and looking at big picture economic pressures on the charity sector, it should be noted that higher costs are likely to mean that real spending power will fall too, by 4% to 13% between 2022 and 2024, with a central estimate of an 8% decline.