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UK charities’ income from legacies grew around 6.5% in 2022/23, although there are warnings of a slowdown in future growth, due to the country’s housing market.
The latest Legacy Monitor, from the UK consultancy Legacy Foresight, says that an estimated 140,000 legacy gifts were made in the year to March 2023, which likely means that total income reached £4bn (€3.5bn) for the first time. Long-term average growth in the sector has been 4.5% per annum.
The researchers behind the report expect total income to reach £6bn by 2050.
The report says that the last couple of years of strong growth were “primarily driven by a very buoyant housing market in the post-Covid years of 2021 and 2022”, but that a drop in house prices means it is now likely growth will pause.
Falling prices mean that the average value of a gift decreases, and also that it takes more time to sell houses, meaning that it takes longer for money to reach charities after the death of a legacy donor.
Legacy Foresight says that this may create a dip in total legacy income of around 5% between now and 2025/26, before long-term growth returns. The report also notes that more and more charities, including smaller charities, are getting involved with legacy fundraising, meaning that the market is becoming “increasingly competitive”.
Kathryn Horsley, Director of Insight at Legacy Foresight, says:
“While a fall in legacy income isn’t good news, it’s worth noting that this reduction is fairly small and comes at a time when other forms of fundraised income are under even more pressure due to donors feeling the squeeze of the cost-of-living crisis. Given this, legacy income will remain a resilient source of income during the challenging next few years.”
Meanwhile, ongoing delays in the UK’s probate system are also slowing the passage of legacy donations.
Legacy Foresight estimates that around £900m is currently caught in a backlog of around 70,000 cases, which began in 2019 as a result of a new IT system at His Majesty’s Courts and Tribunals Service (HMCTS).
As deaths continue to rise – from around 650,000 in each of the past two years, to an estimated 800,000 per year by 2050 – there are concerns of further delays in the system. The Legacy Monitor says that HMCTS is aware of the problem and “trying to take steps to address it”, but concludes:
“There will have to be significant improvements just to keep up with the rising applications, never mind clearing the backlog already there.”
Picture by Annie Spratt on Unsplash