Income from legacies and gifts in wills are expected to rise by 2.7 per cent per annum over the next five years to over £3bn, according to Legacy Foresight’s latest market forecast.
According to the latest market modelling from Legacy Foresight, the income raised through legacies is set to be worth £3.26bn to the charity sector a year, an increase of 2.7 per cent per year, by 2021.
Despite this increase, Legacy Foresight said that uncertainty created by Brexit meant that legacy market growth is actually expected to be much slower in the next five years, compared to the five years leading up to the vote in 2016.
Legacy Foresight’s market forecast suggests that, having taken into account rising inflation over the next five years, income growth from legacies may actually be less than 1 per cent per annum.
Chris Farmelo, director at Legacy Foresight, said “The good news is that we do not expect to see a return to the situation following the global financial crisis in 2008 when sector incomes fell and then stagnated. In fact, the number of bequests received by UK charities is predicted to rise over the coming years, due to the climbing death rate.
“However, the value of those bequests will grow much more slowly than of late, due to the uncertain economic situation. From 2017 to 2021 the average residual bequest (now worth around £46,600) will grow by just 1.3 per cent p.a., compared to 2.8 per cent p.a. over the five years 2012 to 2016”.
Legacy Foresight said it had based its latest projections, including variations, based “purely on alternative economic scenarios surrounding Brexit” leaving the “assumptions on underlying demographic and social factors” left unchanged.
The scenario predicting a 2.7 per cent per annum market growth is the “central” scenario for the sector. The pessimistic scenario, which “assumes a ‘poor’ Brexit deal”, forecasts legacy market growth of just 0.9 per cent over the next five years. Legacy Foresight’s “optimistic” scenario – which “assumes a far better Brexit deal” being brokered – suggests income growth of more than 4 per cent per annum until 2021.
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Legacy Foresight said that a ‘poor’ Brexit deal could leave legacy fundraising in the UK £500m worse off in 2021, than if the UK negotiates a ‘very good’ Brexit deal.
Rob Cope, director of Remember a Charity, said: “These potential scenarios from Legacy Foresight are hugely insightful and will help charities to plan for a range of eventualities as the impact of Brexit unfolds. While there might be little the sector can do to influence the wider economy, we can however continue to work together to grow legacy income by normalising charitable giving in wills.
“Only by helping charities make more noise about legacies and their impact, can we ensure that legacy giving will become an even more important income stream to the sector for decades to come.”