If you haven’t heard about the great wealth transfer, now’s the time to learn about it because, according to the Wall Street Journal, the transfer has begun.
Some $70 trillion will be distributed in America alone over the next 20 years, according to research firm Cerulli Associates. Of that, it is estimated that about $9 trillion will go to philanthropy, with the balance going to heirs. (Some of that money going to heirs will no doubt end up in nonprofits as well.)
Surprisingly, according to the WSJ article, “people aren’t waiting until they die. Annual gifts taxpayers reported to the Internal Revenue Service—a fraction of the gifts that flow outside the tax system—rose to $75 billion in 2016, from an inflation-adjusted $45 billion in 2010. Over that period, the amount that people could give away without paying taxes on gifts rose from $1 million to more than $5 million for individuals, and from $2 million to more than $10 million for couples.
That gift-tax exemption rose again in 2018 and today is $11.7 million for individuals and $23.4 million for couples. In 2026, it is scheduled to return to the 2017 level of $5.49 million per person, adjusted for inflation.”
The article goes on to remind us that “…many recipients are guided by different priorities and politics than their givers.”
What does that mean for nonprofits trying to navigate this new reality? It means that it’s a new ball game out there, and fundraisers need to adapt. It’s true that charitable-minded parents are more likely to raise charitable-minded kids, but expecting that those kids will give to the same organizations as their parents is wishful thinking. Young adult donors are much more interested in impact than their parents are, and for them, causes are more important than institutions. In addition, the ability to volunteer for an organization you’re interested in giving to — providing hands-on assistance to a nonprofit — is valued much more than with earlier generations. (So if you’re an organization that keeps the volunteers separate from the “major” donors, you might want to quickly rethink that.)
There’s loads of information out there about this “new” generation of donors, with more research coming out in the next few months. In a nutshell, though, it’s critical to realize that the time to learn about younger donors — what makes them “tick”, what’s important to them, and how they’re different than their parents — is right now. That doesn’t mean you have to ignore your long-term supporters, but you must carve out time every day to think about how you’re going to interact with the millions of young people who will receive a large sum of money from their parents in the next two decades. Nine-plus trillion dollars. Wow.
I’m Saving Giving by providing a clear path to success, supported by data, statistics, and interviews. You can find more of me lifting the lid on the charitable sector here on Philanthropy 451, in my bestselling book, Philanthropy Revolution, on socials at Twitter, Facebook, and LinkedIn or listen to this episode of UBS On-Air: In Conversation with Lisa to learn more.