Charities’ legacy income is expected to decrease even more this year than previously forecast, by up to 27%.
Legacy consortium Legacy Foresight has revised its projections to account for the severity of the coronavirus crisis.
While legacy income was originally expected to grow in 2020, in March the organisation predicted it could drop by up to 9% compared to the year before as a result of the crisis. It is now projecting a more significant decrease, between 8% and 27%.
The new estimate takes into account a worsened economic outlook, which translates into lower gift values, together with a higher number of deaths and worse-than-expected administrative challenges.
Legacy Foresight said: “Emerging anecdotal evidence suggests that the impact on solicitors, charities and government departments' capacity to process charitable bequests is more severe than previously assumed.”
It found that between 5% and 10% of bequests that would have been notified in 2020 could be delayed. It also expects average gift value to decrease by between 2% and 4%.
Despite this year’s decline, Legacy Foresight is expecting legacy income to bounce back in 2021. In the long term, it still forecasts an increase over the 2019-2024 period, projecting a rise from around £3.2bn in 2019 to £3.7bn-£3.8bn in 2024.
However, this is up to 5% less than its original forecasts.
In the five-year period, the pandemic is also expected to cause an increase in the overall number of bequests. It estimates this increase to be between 0.5% and 0.8%.
Jon Franklin, economist at Legacy Foresight, said: “These forecasts show a more dramatic decline in legacy income, especially over the coming year. But despite the enormous uncertainty and significant negative impact in the short term, it’s important to recognise that legacy incomes are still expected to grow over the next five years.”