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Legacies in the UK are expected to remain a resilient source of income for nonprofits during the economic crisis, with income forecast to reach a record £4bn by the end of 2022. This marks a year-on-year 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 in the UK over the next two years, with overall legacy income remaining static at around £4bn over 2023 and 2024. It should then return to growth with Legacy Foresight anticipating it reaching £4.4bn by 2027.
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.”
Legacy Foresight expects to see a predicted downturn in the housing market impacting average legacy gift values in the short term. With the housing market expected to fall by 12%-14% over the next two years, Legacy Foresight estimates this will lead to a fall in average bequest values of around 3% in the same period. After 2024, the housing market should return to growth, followed by average values.
It believes the impact of the housing market downturn should be offset to some degree by a rising death rate. Recent death projections from the UK’s Office for National Statistics forecasts almost 700,000 annual deaths in the UK by 2030, compared to 640,000 in 2022. This is due to the ageing UK baby boomer generation and means annual rates will exceed those experienced during the pandemic years. It will have a knock-on effect on bequest numbers, which are expected to be 11% higher in the period 2023-2027 than they were 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.”
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.