Charity legacy income expected to remain resilient despite economic crisis
Melanie May | 1 November 2022 | News
Legacies are expected to remain a resilient source of income during the economic crisis with income forecast to reach a record £4bn by the end of 2022, a YOY increase of 14% on 2021.
The figures come from Legacy Foresight’s (part of Legacy Futures) latest Market Briefing Report, which covers key trends in the British charity legacy market this year and expectations for the future.
Legacy Foresight expects the economic environment to dampen growth over the next two years, with overall legacy income to remain static at around £4bn over 2023 and 2024 before returning to growth and reaching a value of £4.4bn by 2027.
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Commenting, Jon Franklin, Economist at Legacy Foresight, said:
“The turbulence of the last twelve months with the war in Ukraine, cost of living crisis and rising inflation has caused many charities to be concerned about the future of income. Although in the near term we are more cautious about the outlook for legacy income over the next five years, we expect negative impacts to be short lived, and to see a return to growth after 2024, driven by rising bequest numbers and a steadying of the housing market.”
Short-term risk from housing market downturn
The biggest risk to legacy incomes in the near-term is likely to be the predicted downturn in the housing market. With this expected to fall by 12%-14% over the next two years, Legacy Foresight estimates a fall in average bequest values of around 3% in the same period. After 2024 however, the housing market is expected to return to growth with average values expected to follow.
Higher projected death rate to partially offset impact
Legacy Foresight also expects the short-term impact of the housing market downturn to be offset to a degree by an increase in deaths, with recent death projections from the Office for National Statistics forecasting that there will be almost 700,000 annual deaths by 2030, compared to 640,000 in 2022. Due to the ageing UK baby boomer generation, it means annual death rates will exceed those experienced during the pandemic years. This will have a knock-on effect on bequest numbers, which are expected to be 11% higher in the period 2023-2027 than in the previous five years.
Looking further ahead, the future for the legacy market is still positive, with the size, wealth, and lifestyles of the baby boomer generation meaning incomes are expected to double in real terms by 2050.
Commenting on the findings, Lucinda Frostick, Director of Remember A Charity, said:
“In troubled times, the steady bedrock of legacy income is all the more crucial. This forecast highlights just how important it is that we continue to work together to keep legacies front-of-mind for supporters, and within charities too. The value of legacy donations may well take a hit in the short-term, but if the focus remains on stewarding supporter relationships and delivering sensitive, inspiring legacy fundraising, the outlook for longer-term growth is considerable and income from gifts in Wills really will be a lifeline for an increasing number of charities.”
Institute of Legacy Management Chief Executive, Matthew Lagden added:
“At the ILM we know that with the wider economy struggling, legacy income is more important than ever for the charity sector. Obviously if the housing market struggles, this will have an impact on legacy income, but we are delighted to see that the hard work done by the whole sector in promoting legacies is continuing to bear fruit with increasing bequest numbers.
“These generous donations will enable charities to continue the amazing work they do across the country and further afield. Much of this work simply wouldn’t be possible without the gifts left to them in wills.”
The insight is based on data from the Legacy Monitor Consortium, which monitors data from over 80 charities, representing half of the UK charity legacy income market, combined with big picture economic and social trends to create an in-depth analysis of the legacy sector.
About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.