Legacy income could fall by up to 9 per cent this year as a result of the coronavirus pandemic, according to the charity consortium Legacy Foresight.
Legacy Foresight’s updated legacy market forecasts estimate a likely fall of between 3 and 9 per cent over the next year, although it still expects legacy income to grow over the next five years.
The pandemic will have an impact on the value of bequests, the forecast says, because bequest values are driven by economic factors such as house prices, share prices and GDP growth rates, all of which have been pushed down by coronavirus.
The death rate might also become more volatile over the next year as a result of Covid-19, and illness and restrictions could mean that the administrative process through which charities claim bequests might be slowed down.
Charity legacy income currently sits at £3.2bn a year, according to Legacy Foresight, and is expected to rise by between 14 and 19 per cent to between £3.7bn and £3.8bn by 2024.
But this will be between 1.6 and 4.5 per cent lower than Legacy Foresight’s previous projection, made in February 2020, before the impact of coronavirus was being felt fully in the UK.
Jon Franklin, an 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.”
Franklin said that, although the prediction for the immediate fall in income would range from 3 to 9 per cent, he believed the bigger drop was the “most likely”.
Rob Cope, director of the Remember A Charity legacy consortium, said the coronavirus was likely to have a significant impact on every charity.
“For those that rely on legacy income, we are seeing not only a major threat to future income, but also that the current income from gifts in wills has effectively been switched off mid flow,” he said.
“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 gifts in their wills.”