Since the proposed introduction of the ‘Fundraising Preference Service’ (or the FPS as it’s become known) in 2015, fundraisers have been asking about the potential impact on charitable income of all kinds – including legacies.

Initially, fears across the sector were heightened based on the possibility of ‘opt-in’ marketing preferences being applied which would have posed huge challenges for charities to ‘re-qualify’ their databases. However, these fears have been somewhat allayed by the latest policy proposals (August 2016), which outline that an opt-out service will be implemented, allowing various degrees of control over contact preferences.

People who choose to sign up to the FPS will have the ability to press a ‘large red button’ to stop all fundraising communications, or a ‘small red button’ which allows individuals to specify the charities they don’t wish to hear from, ensuring that that they only get the fundraising communications they want and need. Importantly, charities with existing relationships can contact a donor to clarify if registration is intended to cover them. Registration will last for a period of two years and the regulations will apply only to fundraising communications, from organisations spending over £100,000 per year on fundraising.

Using our long-term forecasting model of the UK legacy market we have developed an ‘opt-out’ scenario to estimate the likely impact of the FPS on legacy incomes. The good news is that our projections suggest the impact on legacy incomes over the next 20 years will be pretty minimal.

Although this may seem counter-intuitive, our optimism is driven by three main reasons. Firstly, the very long lag between someone writing a charitable gift into their will and their eventual death (we’re estimating that many of those signing up to the FPS will be under 60 years old and will not die for another 20 – 30 years on average). Secondly, we believe that the people who are open to leaving a charitable gift are less likely to opt out of charity communications than other, less engaged donors. These are loyal charity supporters who, while they may be reluctant to receive cold approaches and may decide to support fewer causes, will still give to their ‘chosen’ charities. We’ve also assumed that a small number of people who opt out of marketing communications will still go on to leave a bequest. And last, but by no means least, since over half of all charitable legators are ‘unknown’ to the charities they leave a bequest to (or at least cannot be found on their databases), they cannot be affected by any change in direct marketing rules.

Now to the numbers; our analysis suggests that by 2026, the introduction of the FPS will have a minimal effect on legacy income – cumulatively, it’s likely to be down by just £150m in today’s monetary on our base market forecast.

In the following 10 years to 2036, we predict that the impact will be greater, with income likely to be down by £1.21bn. While this sounds like an alarming figure, in the face of a fast-growing market, it does not represent a major concern. Predicted death rates and increases in the proportion of those dying with a charitable will mean that the total value of legacy giving between now and 2036 will exceed £80bn!

The significance of the unknown or ‘invisible legators’ is an area that Legacy Foresight is going to be investigating further in 2017. If you’d like to receive more information on this project, click here.

There will be an updated report from the Fundraising Regulator by the end of the year with the FPS likely to launch in Spring 2017. Our analysis will be updated if new information becomes available that is likely to impact the legacy market in particular.

If you’d like to hear more like this from Legacy Foresight and our industry peers, please click here.