Legacy income for UK charities rose by 1.3% to £4.1bn in 2023-24, according to a new report by analyst Legacy Foresight.
The latest Legacy Market Review says that slow growth in the market last year was due to a lower-than-expected death rate and continued probate delays.
It predicts that legacy income will remain flat over the next three years due to “subdued housing growth and stable death rates” but still exceed £10bn per year by 2050.
Legacy Foresight said that despite a modest increase from 2022-23 and slower growth in recent years, legacy income remains resilient.
“This performance, though below the long-term growth trends, remains a major contribution to the charitable sector, particularly in light of ongoing economic and political challenges,” it said.
Legacy income in the charity sector has more than quadrupled in value in the last three decades, from £900m in 1993.
Reduced backlog but fewer bequests
The report shows that total legacy income in 2023-24 came from around 142,000 bequests, a 1% decrease on the previous year due to the ongoing issues at the probate service and a lower-than-expected death rate.
Regarding the probate delays, it says that the HM Courts & Tribunals Service “has processed more grants than it has had applications” for the most recent three quarters, with the current estimated backlog at 33,000 cases.
“The good news is that we’re seeing charities receiving a higher number of bequests, so there’s evidence that the backlog is unwinding.
“However, the numbers charities are receiving are lower than we’d have expected based on the amount of backlog that has cleared, and it’s unclear at present why that might be.”
The report finds that there has been a minimal increase in the average bequest value, which now stands at £28,900 and is slightly above its 2021-22 peak of £28,000.
This, however, is significantly below the long-term annual average growth of 3.1% since recording began in 1994.
Legacy income expected to exceed £10bn by 2050
The report predicts that legacy income will hover around £4.1bn per year over the next three years before returning to growth in 2027-28.
“While the cost-of-living challenges have eased versus the height of the crisis, inflation is still higher than the long-term average and costs are still increasing,” it says.
“Therefore, charities will find the volume of services or charity activities they’re able to support with the same money declines.
“When we remove the impact of inflation from our central case, we see the real value of legacy incomes fall by over 6% between 2023-24 and 2026-27, putting further pressures on charity budgets.”
In the long term, the forecast is “very positive as we start to see the large numbers of affluent baby boomers becoming the majority of legators”, the report adds.
It anticipates that this demographic, who is more affluent than its predecessors and more likely to leave a charity bequest, will drive huge growth.
“We project legacy income to reach over £10bn by 2050,” it says.
Long-term outlook ‘brighter than ever’
Ashley Rowthorn, chief executive of Legacy Futures, said: “The long-term outlook for legacy income is brighter than it has ever been, yet short-term challenges persist.
“While legacy income remains stable, inflation is impacting charities’ purchasing power, tightening budgets and cash flow.
“Charities must stay informed of the external drivers of legacy income to understand market influences on their performance and to plan effectively.
“The time is now; investing in legacy fundraising today will allow charities the time to build and secure a lasting income stream into the future as the market develops and grows — a strategy that will help them navigate economic uncertainties and sustain impact for decades.”
Lucinda Frostick, director of Remember A Charity, said: “Legacies are an increasingly vital income stream for a growing number of charities, strengthening resilience and sustaining charitable work through challenging economic times.
“This is a reflection of the dedicated focus given to legacies over the years, both within charities individually and in working collectively.
“As we look to the future and consider the anticipated growth of the legacy market, it shows how crucial legacy fundraising will be to ensure a thriving charity sector and charitable services for years to come.”
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