Annual legacy income set to exceed £4bn over next five years

The average annual income for charities from legacies is set to increase by more than a quarter (26%) and be worth more than £4bn a year over the next five years.

According to researchers Legacy Foresight legacy annual legacy income is expected to be £4.2bn a year from 2022 and 2026.

Factors in the increase include Covid related deaths in recent years and the value of house and share prices. However, the researchers say that the crisis in Ukraine “creates some uncertainty”.

“There are several factors that will influence the legacy market over the coming years, not least the potential impact of the crisis in Ukraine on the stock market and elevated death rates linked to Covid,” said Legacy Foresight economist Jon Franklin.

“But the underlying drivers of legacies remain robust and even in our most pessimistic scenario we expect to see considerable growth both in the number and value of legacy donations for charities.”

Researchers most pessimistic estimate of annual legacy income is £4bn, with the most optimistic at £4.4bn and an increase of 30%.

Legacy Foresight estimates that charitable bequests will reach between 134,000 and 137,000 a year. This is based on official death rate projections that show that the number of deaths amid the Covid health crisis will remain high this year before “returning to a more gradual long-term upward trend”.

The number if UK deaths peaked in the first year of the pandemic at 689,000. This reduced in 2021 to 666,000 but is still 10% higher than the five years before the pandemic.

“Usually, we see a close relationship between the number of deaths and bequests, but that hasn’t translated here – and that’s largely due to delays in the estate administration processes,” added Franklin.

“This is not just at probate, but the backlog in registering deaths, preparing estates and IHT (inheritance tax) processing too.”

Remember A Charity director Rob Cope said the predicted growth “will be vital for so many fundraising organisations in the years ahead”.

He added: “But with more and more charities moving into the market, fundraisers will need to ensure that legacies are firmly on the radar of their own supporter base and across their communication channels if they are to maximise that growth.

“This means continuing to champion the message and conveying just how important that income will be in supporting their mission for generations to come.”