Legacy Income Shows Signs Of Positivity

Following the coronavirus pandemic, in April charities were advised to prepare for a fall in legacy income. However, now further forecasts have been made, and have provided a glimmer of hope with regards to legacy giving.

Legacy Foresight looked at a variety of economic, demographic and administrative information to make its predictions. The performance they say in these three areas have been mixed, but have improved since their previous forecasts in April.

Over the five year forecast period legacy incomes are expected to grow, reaching £3.6bn to £3.8bn by 2024.

Cash legacy income could shrink by between 4% and 23% in 2020. The impact on accrued income is likely to be less severe, although this will be dependent on the accruals policies of individual charities.

The average value of residual bequests is likely to drop by between 3% and 7% in 2020 due to the impact of the crisis on house prices and share prices.

Charities and other organisations involved in the administrative processing of estates have adapted relatively quickly to the crisis, so delays on the arrival of bequest notifications should be fairly limited.

However, there is still potential for the flow of cash income to be disrupted by increases in the length of time taken to sell property assets in a subdued property market

Jon Franklin, economist at Legacy Foresight, says:

“Our scenarios now suggest that legacy cash income could fall by between 4% and 23% in 2020, reflecting the economic environment as well as the delays in the sale of property assets from estates caused by a slow-moving housing market. However, as administrative delays unwind and income starts to flow from the anticipated increase in bequests, it’s likely that income could rise quite rapidly during 2021 and 2022.”

Franklin adds:

“We recently analysed cash legacy income from 12 Legacy Monitor charities in the first six weeks of lockdown. Across the sample, like for like cash income was down by 18% on 2019. Although this fall is significant, it’s not as severe as expected, which is heartening news for legacy managers and finance directors. We expect the situation to improve over the coming months, as charities continue to adapt their systems for collecting cash and recording bequest numbers in the new environment.”

Matthew Lagden, CEO of the Institute of Legacy Management, says:

“There is no question that that last two months have been exceptionally difficult, both for our members and for the probate profession as a whole, but it is heartening to see that the ability of the sector to adapt and overcome these difficulties means that income may not be as depressed as we originally feared. It is even more heartening to see that the prospects for legacy income over the next five years remain buoyant.”

Rob Cope, Director of Remember A Charity, says:

“Voluntary income will often come in peaks and troughs, but this year has been more uncertain than ever. Despite the challenges to estate values, it’s legacy income that has sustained many charities and frontline services throughout the crisis. This long-term income stream will become all the more important in the months and years ahead.

“The pandemic has made it exceptionally challenging for charities to raise the topic of legacy giving with supporters at a time when mortality is very much front of mind. But by working together, we have the opportunity to convey the importance of gifts in Wills collectively and secure vital charitable services now and long into the future.”

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