Philanthropy

Philanthropy
Huge Wave In Charitable Giving Still Coming
Richard C. Morais, 10.02.09, 03:32 PM EDT
Below the dire headlines, the largest transfer of wealth in history continues.

The following is an excerpt from the article.
With the trillions in real estate and stock market wealth that has been lost over the last two years, it is easy to lose sight of a trend that is continuing below the surface of the turmoil: the largest intergenerational transfer of wealth in our nation's history.
"The downturn is not going to keep people from dying, and it is not going to keep a wealth transfer from occurring," says Paul Schervish, director of The Center on Wealth and Philanthropy at Boston College.
In 1998, Schervish and John Havens, associate director of the CWP, published a groundbreaking study analyzing "final estates"--that is, those in which there is no surviving spouse. The two scholars predicted that between 1998 and 2052, $41 trillion was going to be disbursed to four groups of beneficiaries: non-spousal heirs, government (through estate and inheritance taxes), philanthropic causes and the settlement "industry" (lawyers, trust administrators, bankers, etc.). Due to this unprecedented wealth transfer, Schervish and Havens have been predicting a "golden age of philanthropy."
What with all the recent turmoil, it's not surprising that their predictions have met some skepticism. Schervish has an answer for the doubters: "The greater proportion of the transfer is not going to go to us narcissistic baby boomers. We think it is going to come to us, so we look around and say, 'It's not coming to us. This transfer can’t be true.’ But the bulk of this transfer is going to be coming from baby boomers, not to them.”

But surely, after the huge amounts of wealth that was destroyed, the $41 trillion prediction has to be revised downward? Nope, says Havens. The $41 trillion figure assumed a conservative 2% annual increase in net wealth over the 55-year period in question. (With a 4% a year increase in net wealth, the transfer would be $136 trillion.)
This 2% assumption in growth of real wealth is still reasonable, says Havens, because even with this wicked downturn, the real annual growth in net wealth is still over 3% between 1950 and the present, a period that includes 10 recessions.

Havens and Schervish add that where their model seems to need adjustment is that far more people are passing on their wealth while they are alive, through family foundations and tax-efficient charitable vehicles, like donor advised funds. This will ultimately mean more dollars for charities and less for the state and federal tax collectors.
(For the best ways to shift wealth to both children and charity when interest rates and asset values are low, call or email Concierge Family Office).

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