Charities’ “actual spending capacity” from legacy funds is set to fall by more than 6% over the next three years, according to latest research.

A fall in the death rate, decreasing value of homes in many parts of the UK, and inflation are set to hit the value of legacy until 2026/27, says consultancy Legacy Futures in its latest legacy market review.

This will add “pressure on charities to optimise resources and manage cash flow carefully”, it warns.

After this period the consultancy is forecasting “substantial growth” from 2027/28. Anticipated growth in house prices is a key factor in this prediction as is a rise in the death rate.

“The long-term outlook for legacy income is brighter than it has ever been, yet short-term challenges persist,” said Legacy Futures chief executive Ashley Rowthorn.

“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 research, which is based on data from 80 charities that make up around half the legacy market, found that legacy income reached £4.1bn in 2023/24, “a modest 1.3% increase from the previous year”.

Over 2023/24 the death rate was “lower than expected” at 643,000, compared to 681,500 the previous year.

Last year house prices grew by only 0.4%, “significantly” down on the long-term annual average of 3.1% over the last 30 year, says Legacy Futures.

Some months in 2024 have already seen the average value of homes dip, according to property website Home.co.uk. It’s latest Asking Price Index shows the value of property fell by 0.3% between October and November this year.

Probate delays continue but are easing, found Legacy Futures. While in August 2023 the backlog in pending bequests was 70,000, this has now fallen to 33,000.

Lucinda Frostick, director of the charity sector Remember a Charity legacy campaign added: “Legacies are an increasingly vital income stream for a growing number of charities, strengthening resilience and sustaining charitable work through challenging economic times.

“This reflects 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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