Across the country, charities are facing an urgent funding crisis with many already having to close their doors or shut down vital services as fundraising options become increasingly limited. Fundraisers may well have been thinking that legacy income – a long-term ask – would at least continue to flow. Yet, gifts in Wills have been hit hard and here’s why.
Charities that rely on legacies are facing a double whammy when it comes to income loss. It’s not just that it’s a difficult time for them to go out and ask for gifts in Wills (while potential legacy supporters are living in fear of losing lives and loved ones), but that cash flow has come to a grinding halt.
Charitable estates on ice
Supporters’ legacy gifts are tied up in estates that are unlikely to be processed for months or more. The situation won’t last forever and legacy income will rise in the long-term, but the challenge is that charities and their beneficiaries urgently need cash now. The longer they have to wait, the greater the impact on frontline services.
One of the largest and most successful legacy charities told me just the other day that their legacy income for the past three weeks was less than half their projected level for this time of year. Similarly, in-bound legacy administration activity was far below the norm. While the legacy market is highly susceptible to large peaks and troughs, similar reports echo across the sector.
Charitable estates are frozen in time, with several factors at play. Solicitors, estate agents and financial advisers – like us all – are working to limited capacity, with legal documents needing witnessing, all of which is near impossible to progress without face-to-face contact.
The housing market – which is often the most significant part of an estate - has come to a near standstill, with estate agents and potential buyers homebound and the British Association of Removers advising that house moves are cancelled or postponed. Even those in the middle of exchange are unable to complete, stalling sales for everyone across the housing chain.
What’s more, both the property and stock market have suffered major losses, with the FTSE 100 having fallen 25% in the last quarter. Not only does this mean that people don’t want to sell, but that the value of those estates and therefore residual legacy income is much reduced.
Of course, the situation is temporary – legacy gifts will be processed. However, the devastating news of lives being lost daily will inevitably increase the backlog of estates due to pass through probate, adding to the pressure on legal advisers and, of course, charities’ legacy administration teams.
It’s the inability to access legacy cash at a time when charities need it most that’s such a huge concern for the sector and makes it all the more important that the chancellor provides a significant emergency funding package.
Surge in will-writing
But the legacy cloud does come with a shimmer of silver-lining. Recent weeks have seen a massive surge in will-writing, with charities reporting increases of up to 500% in online will-writing enquiries. And, when you consider that so many charities are pulling back on their legacy campaigns right now, this is testament to fundraisers’ stewardship of donors and their sensitivity in communicating legacies over the long-term.
The challenge – particularly with so many charities currently having a limited workforce and limited legal advice – is how to keep on top of the level of enquiries. Certainly, it will help to ensure that relevant legacy giving information is featured prominently on charity websites, but it’s also important to ensure that everyone in the organisation understands how important bequests are and how to handle such queries, particularly when staff and volunteers will be picking up calls and emails from home. This might include putting potential legators in touch with reputable will-writing partners and encouraging them to discuss their intentions with their family and friends, mitigating the risk of dispute further down the line.
Ultimately, legacies have always been about the long-term picture. Last week’s predictions from Legacy Forecast suggest that income from gifts in will may fall by up to 9% this year, but that longer-term growth continues to look healthy. Indeed, once we are through the worst of this, I believe that legacies will return to being the biggest source of voluntary income and will play a major role in helping charities recover. So, legacies should continue to be front and centre of any long-term fundraising strategy.
Charities that focus on delivering high levels of supporter and beneficiary care at a time when its most needed will likely emerge even more deeply valued and ready to benefit from gifts in Wills. And while there is little we can do to un-freeze the legacy market in the throes of Covid-19, we can work together to ensure that the sector is in the best possible place for recovery.
Rob Cope is director of Remember a Charity