One of the primary challenges faced by legacy managers is to ensure they receive sufficient investment and support from senior management. The next challenge is to manage expectations on when their charity will receive the return on this investment.

As every legacy manager knows, legacy income can be extremely volatile from one year to the next; even for the largest charities. Due to this inherent short-term volatility, we always encourage clients to think about how the potential flows of legacy income will average out over a three to five-year period and not focus too closely on single year predictions. However, in practice, we appreciate that’s often more easily said than done. The key is finding a way to communicate the level of uncertainty, particularly at present.

Legacy Foresight’s recent market forecasts (November 2020) have highlighted that there is potential for incomes to recover well this year. Still, this recovery is highly dependent on HM Court and Tribunals Service (HMCTS) resolving the probate issues which dogged 2019 and 2020. If we assume that HMCTS catch up with their backlog, and process the current high levels of deaths, then 2021 could see bequests peak at record levels. However, if the probate delays continue, then we could well face yet another underwhelming year.

When communicating to your management team, we would suggest developing two or three alternative scenarios showing what will happen if HMCTS recover from their very poor 2019 and 2020, compared to the scenario faced if the probate delays continue.

It is also important to consider what those different scenarios mean for legacy administration resources; for example, would your organisation need some interim support to process a potential boom in legacies and if so, is that included in the budget?

The communication of the forecasts really matters. If you can avoid it, try not to send through a spreadsheet of numbers without having the chance to talk through the story behind it. These forecasts may well inform important decisions within organisations, and it’s vital that those making the decisions have a shared understanding of the assumptions and risks behind them. Different charities will have different risk appetites for their forecasts, depending on how flexible expenditure is within the year, their level of reserves and, frankly, the personalities of those involved. If senior management is fully primed on how cautious or optimistic the various scenarios are, they can make an informed judgement on which forecast to use.

Legacy Foresight is highly experienced in developing income forecasts for charities, but often our most important role is actually in creating an opportunity to build the awareness of senior managers who are sometimes less familiar with the day-to-day dynamics of the legacy market. As an independent third party we can help explain the fundamentals behind what drives legacy income, the issues currently facing the market more broadly and the uncertainty around any individual forecast – these factors are often more important than the numbers themselves.  If there’s anything we can help you with then, please get in touch.

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