The average annual income from charitable gifts in wills in the UK is predicted to rise by 26% over the next five years, according to Legacy Foresight.
Its Legacy Market Outlook 2022-2026 factors in 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 in the UK.
In its central scenario, legacy income is expected to bring in an average of £4.2 billion per year for charities from 2022 to 2026 – a 26% increase on the average income from the preceding five years.
Explaining, Jon Franklin, Economist at Legacy Foresight – the research and analysis arm of the Legacy Futures Group, said:
“There are several factors that will influence the legacy market over the coming years, not least the potential impact of the crisis in Ukraine on the stock market and elevated death rates linked to covid. But the underlying drivers of legacies remain robust and even in our most pessimistic scenario we expect to see considerable growth both in the number and value of legacy donations for charities.”
UK deaths dropped well below their 2020 peak of 689,000 to 666,000 in 2021. However, last year’s figures were still 10% higher than during the pre-pandemic years of 2015-2019. Projections from the Office of National Statistics suggest the number of deaths will remain slightly elevated in 2022, before returning to a more gradual long-term upward trend.
“Usually we see a close relationship between the number of deaths and bequests, but that hasn’t translated here – and that’s largely due to delays in the estate administration processes. This is not just at probate, but the backlog in registering deaths, preparing estates and IHT processing too.
“While the timings and extent of this shortfall is uncertain, there may well be another 30-40,000 bequests in the system. So, we’re expecting to see some element of catch-up as more of these work their way through the system and that could be a welcome boost for charities.”
Over the next five years, Legacy Foresight predicts that charities will see an average of 134,000-137,000 bequests per year.
Impact of house and share prices
In terms of legacy values, the key economic drivers of house and share prices are anticipated to continue to perform relatively well, although the crisis in Ukraine creates some uncertainty. These underlying economic conditions support growth in the value of residual bequests, which is expected to rise by around 13% over the five-year period.
While the central outlook predicts average annual legacy income of £4.2 billion, pessimistic and optimistic alternative scenarios see that income ranging between £4.0 billion to £4.4 billion a year (growth of 21-30%).
Commenting on the findings, Rob Cope, Director of Remember A Charity, said:
“The UK public is hugely generous when it comes to gifts in wills and this growth really will be vital for so many fundraising organisations in the years ahead.
“But with more and more charities moving into the market, fundraisers will need to ensure that legacies are firmly on the radar of their own supporter base and across their communication channels if they are to maximise that growth. This means continuing to champion the message and conveying just how important that income will be in supporting their mission for generations to come.”