Focus on NHS could make legacy market harder for other charities

19 May 2020 News

The current focus on giving to NHS charities could increase competition in the legacy market and make things harder for other charities, a legacy expert has said.

Rob Cope, director of the Remember A Charity consortium, told a conference organised by the Institute of Legacy Management that NHS charities could “put greater pressure” on the legacy market.

He said that this could make it more difficult for other charities to increase legacy giving, meaning it is more important than ever to grow the market as a whole.

He said: “The charity legacy market has broadened considerably in recent years, with arts, cultural and environmental charities now being named in wills much more than before. Of course, it’s NHS charities that are front of mind right now. This potentially means greater competition and that other charities will have to work even harder to get their message through.
“With huge funding shortfalls predicted for charities this year, it’s all the more important that we work collaboratively to keep growing the market and inspire supporters to leave a gift in their will.”

He added that charities might now want to resume their legacy fundraising activities and engage with new donors.

“Charities have rightly focused on nurturing supporter relationships in recent weeks, but we’re in a very different place for legacy fundraising to where we were even just a month ago. With the realisation that Covid-19 could well be around for months or even years to come, we have to consider this our new normal.

“Ultimately, if charities are to be able to continue their work, they have to be able to fundraise and that includes communicating the importance of legacies sensitively and clearly.”

While the increased number of deaths due to Covid-19 could lead to a higher number of legacy gifts, their value is expected to go down because of the economic consequences of lockdown.

Legacy Foresight estimates that legacy giving could fall by up to a quarter in 2020, but expects the market to bounce back in 2021 and to keep growing in the long term. It forecasts that the legacy market will go from around £3.2bn in 2019 to £3.7bn-£3.8bn in 2024.

Increase in ex-gratia payments

Another potential consequence of Covid-19 on legacies is an increase in requests for ex-gratia payments, a law firm told the conference. 

Ex-gratia payments are made when a charity feels that it has a moral obligation to give part of a donor’s legacy to a family member or friend, even though it is not legally required to do so. This may be the case if, for example, the donor had expressed a clear intention to change their will but did not have the time or occasion to do so.

Charities are required to get permission from the Charity Commission to grant ex-gratia payments .

Law firm Bates Wells said that charities are likely to see requests for this kind of arrangement increase because people may find it harder to change their will if they are self-isolating.  

The firm said that charities should be prepared for this and show a degree of flexibility in what evidence proving a donor's intention they can accept. However, they should still only grant legitimate requests.

Leticia Jennings, partner at Bates Wells, said: “As personal incomes continue to be squeezed due to the impact of Covid-19 and the lockdown, charities should be alert to a potential surge in requests for ex gratia payments.

“But the law hasn’t changed – charities should still request evidence, do their due diligence and only make legitimate payments.”

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