Charitable legacies to plunge
Legacy income for charities could fall by more than a quarter this year because of the pandemic, forecasters suggest
According to research firm LegacyForesight, charity income that is derived from legacies left in wills could fall by up to 27 per cent in 2020.
A month ago at the end of March, the firm published its five-year forecast predicting only a 9 per cent fall on the previous year.
It has now updated its forecast taking into account the latest information and the deterioration in factors such as covid-19 related deaths, economic projections and administrative delays.
However, the firm expected the negative impact to be short-lived, forecasting only a 5 per cent decline on pre-covid-19 estimates of legacy income from 2021 to 2024
It said the short-term decline will reflect the economic impact of covid-19 and a “pessimistic outlook for house prices and share prices”.
There will also be delays in “receiving notifications and sale of assets from estates caused by the disruption to administrative processes” during the lockdown.
The company envisaged that as delays in administering deceased estates “unwind and income starts to flow from the anticipated increase in bequests” income could rapidly rise during 2021 and 2022.
A rise in income would also reflect the significant increase in the numbers of deaths as a result of the pandemic.
Last year, £3.2bn worth of legacies was left to the charitable sector in wills, mostly derived from residuary estates.
As a result of the pandemic, the charitable sector was dealt a financial blow with the closure of charity shops, the ban on mass gatherings including charitable events such as the London marathon and delays in probate administration.
Last month, chancellor Rishi Sunak announced a financial rescue package for charities operating in the UK.
The fund included £360m in grants to frontline charities and £370m for small local charities, but the chancellor warned that not all charities would survive the financial impact of the pandemic.