Latest Brexit News Means Legacy Income Will Rise Significantly

The UK legacy market is predicted to increase by nearly £600 million by 2024 following the latest Brexit decision.

According to the leading analysts of legacy fundraising, Legacy Foresight has confirmed that we will see a significant rise for legacy incomes in the next five years, even though there was a 2% drop in income in 2018. The findings are based on the recent decision to extend the Brexit deadline to 31st January 2020 and to hold a general election on 12th December 2019.

Legacy Foresight are forecasting that UK charity bequeaths in Wills are projected to grow from £3.2 billion in 2019 to £3.8 billion in 2024. Growth rates over the five years will average 3.3% per year – similar to those seen in the aftermath of the Brexit referendum in June 2016, but slower than the pre-referendum period, when annual growth was 4.1% per year.

The analysts expect 2020 to remain relatively subdued with annual income growth of around 2%. However, the period 2021-2024 is expected to see stronger growth in key economic variables, combined with an underlying rise in the number of deaths, to generate legacy income growth of nearly 4% per annum.

Legacy Foresight’s model of the UK legacy market uses historical trends in charitable giving and forecast death rates to estimate the number of charitable gifts that will be left in the future. It then predicts the value of these gifts based on projected movements in key economic drivers such as house prices and share prices.

Chris Farmelo, Technical Director at Legacy Foresight, says: 

“More than 85% of the £3.1 billion of income received by UK charities from gifts in wills in 2018 was from “residual gifts” – a share of an individuals’ estate when they die. The value of these gifts is directly dependent on the value of assets that people typically own such as houses, stocks and shares and other financial investments.

“The recent weak performance of the economy has had an impact on the value of these key assets. For example, house prices in the South East were 2% lower in July 2019 than they were in July 2018. However, it is expected that if a deal can be agreed in parliament on the shape of the UK’s future relationship with the EU then the value of gifts left to charities in individuals’ wills will be boosted by the expected strengthening of housing and financial markets as a result of the resolution of Brexit uncertainty.”

Legacy Foresight’s projections for these key economic variables are provided by Oxford Economics whose core scenario in September 2019 assumed that the EU would grant an extension to the Brexit deadline and that this would result in a general election that would ultimately lead to a deal with the EU being agreed early in 2020.

Chris Farmelo adds: 

“We should highlight that, although latest developments are in line with our core scenarios for legacy income, there still remains significant risks relating to the outcome of the general election, along with global trade tensions and geopolitical pressures. In today’s uncertain times, it is vital to continue to monitor developments in the wider economy and consider the impact that they could have on the value of gifts left to charity.”

Last week, Legacy Foresight, in advance of the launch of its report Giving Tomorrow: Legacy and In-Memory 2045’ at the Institute of Fundraising‘s Legacy Fundraising conference in London, investigated the future of legacy and in-memory giving sector revealing that charitable bequeaths and in memory giving will double in 25 years.

Matthew Lagden, CEO of the Institute of Legacy Management said they were “delighted to read Legacy Foresight’s latest analysis of the likely future growth of legacy income.”

Matthew comments: “Both their estimate that legacy income would grow to about £3.8bn by 2024 and their longer term estimate that legacy and in-memoriam giving would double over the next 25 years is fantastic news for the many charities across the UK that benefit from legacies left by generous supporters. It confirms what we have always known, that British people are some of the most generous in the world, and that thanks to the generosity of the public and the support of the Wills and Probate community, legacy giving is going from strength to strength. It also shows the value of charities and the probate industry working together to ensure that every generous donor’s gift achieves its maximum impact.

“Legacy Foresight has an excellent track record for monitoring and predicting what will happen to legacy income, both for individual charities and the market as a whole, and many organisations including ILM use their forecasts to plan their activities. Although the uncertain times we have been living through make their task harder, their message today gives us confidence that the future is bright for legacy income.”

Rob Cope, Director of Remember A Charity adds:

“House and share prices are undoubtedly subduing legacy market values. While a deal may help to strengthen market values in the short-term, donor behaviour remains key to driving long-term legacy growth. The UK will see the biggest transfer of wealth from generation to generation over the next decade. If the legacy market is to continue to grow, the charity sector must continue to inspire supporters – reminding them why a gift to their favourite causes will make a difference for generations to come.”

Dan Garrett, CEO of Farewill further adds:

“We are expecting to see a significant rise in the amount left to charities through legacy donations over the course of the next ten years or so, not only due to the rising value of estates but also stemming from an increase in the proportion of residual gifts left in Wills. Many people still don’t know that these gifts are possible when estate planning, leaving legacy donations out of their Wills. This sector is obviously unaffected by economic conditions in terms of the donations made but offers growth in legacy income above and beyond small fluctuations derived from house price variation. We encourage anyone writing a will to consider leaving a legacy donation, which so far has proved enormously successful, increasing donations from the average of £3300 to around £24,000 per will.”

 

 

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