Legacy income could decrease by up to 9% this year because of the coronavirus crisis, according to Legacy Foresight.
The legacy consortium has revised its five-year forecast to account for the pandemic and accompanying restrictions, and says it expects legacy income to fall between 3% and 9% in 2020.
Worsening of the overall economic outlook is expected to impact share and house prices and drive down the value of legacy gifts. The lockdown also comes with a series of administrative challenges, both for the services charities rely on to process legacy gifts and for the property market.
In the long term, Legacy Foresight still expects the legacy market to grow from today’s £3.2bn to between £3.7bn and £3.8bn in 2024. This is between 1.6% and 4.5% less than previously projected.
Legacy Foresight also said that the number of UK deaths varies significantly each year, impacting the number of bequests charities receive, and that “Covid-19 has the potential to add significantly to this volatility throughout 2020 and 2021”. This was also a key factor the consortium considered in its forecast.
Legacy income ‘switched off mid flow’
Legacy experts say that while it is hard to predict what impact the current crisis will have on legacy income, especially in the long term, it is likely that in the short term this income stream will decrease significantly.
Jon Franklin, economist at Legacy Foresight, said: “While there is a high degree of uncertainty related to any projection for how the current situation in the UK could evolve over the coming months, these forecasts set out to support charities in assessing what this could mean for their legacy incomes.
“The scenarios outline a plausible range of outcomes but, on balance, we believe that outcomes towards the lower end of the income range are most likely. We will monitor developments relating to Covid-19, the economy and estate administration processes in particular over the coming weeks.”
Rob Cope, director of Remember A Charity, said: “The coronavirus is likely to have a significant impact on each and every charity. For those that rely on legacy income, we are seeing not only a major threat to future income, but that the current flow of income from gifts in wills has effectively been switched off mid flow. The sale of property, stocks and shares are all in limbo, with social distancing making it all the more challenging for estates to be finalised and legacy gifts from being passed on to charities named in wills.
“At the same time, the sector is seeing a huge surge in public demand for charitable wills. Although it’s an incredibly challenging time, if we continue to see charities doing what they do best – supporting their communities (beneficiaries and donors alike) – they will be in the best possible position to recover, working together to inspire the nation to ensure charities’ work lives on by leaving a gift in their will.”