We’ve all read the breathless projections of up to $140 trillion of wealth that Gen X and the Millennials will inherit over the next number of years through the Generational Wealth Transfer. And as professionals in philanthropy, I expect we’ve been waiting for that transfer to begin and make the great impact on charities that it will.
But I admit my hair is getting grayer—and disappearing—as I wait for the great reward of this promised inheritance.
And now I’m beginning to question whether the “Great Wealth Transfer” will actually result in that presumed boon to philanthropy. For example, are the next generations as generous in their giving as the Boomers? I realize they don’t have the extra wealth right now to be as free to make charitable gifts, but are we seeing it in their nature to be as generous as their parents? Or, could those inherited dollars go someplace other than charitable missions?
All In the Family
With so much of today’s wealth in the hands of the 1%, that largesse would be expected to stay in those same hands, as the inheritances will likely go to their children and families.
Is it sensible to wait for the much-promised transfer and assume the gains will filter through to charity? We know our boomer donors pretty well, but do we know their children and other family members to the same degree? Do we know they will support the same missions as their parents? Philanthropy is personal, and getting into their estate planning requires connecting with the Silent Generation and Boomers now.
In the DAF (donor advised fund) world, where I cut my teeth in philanthropy, we began to realize that the succession plans of current donors left many accounts to their children, who were virtual strangers to us. There was little knowledge of whether the Gen X and Millennials would maintain the DAF accounts, or were aligned with another DAF or charity’s mission, likely draining funds away upon the execution of the succession plan. That gave rise to an awareness of our future, and a new focus.
Rather than wait, fingers crossed, for that wealth to flow to your nonprofit, engage the boomers about their intergenerational asset transfers. Begin conversations with your wealthy donors about their intended legacy. Be forward-thinking about their philanthropic goals. Open the door to locking in some of that legacy now with their assets—the assets they are directing, through inheritance, to family in the future. You know the benefits to promote: save on taxes, avoid certain taxes, be smart about maximizing the value of all they have to share, provide an impactful gift during their lifetime, help charities address the problems we face today and for generations to come, etc.
Don’t sit around and wait for the generational wealth transfer to deliver a pile of money to your charity, or worse, send it from one DAF to another. Let’s move some of those trillions of inheritable wealth to your mission by engaging committed donors now, rather than waiting with fingers crossed and hoping you’ll benefit down the road from their unknown philanthropic intentions.