The Chronicle of Philanthropy article referenced
above, �Much-Anticipated Transfer of Wealth Has Yet to
Materialize, Nonprofit Experts Say,� written by Holly Hall,
focused on the 20-year projections for charitable bequests
which we estimated to total $1.7 trillion in 1998 dollars. Ms.
Hall focused on the improbability of our estimate coming to
fruition in view of the fact that Giving USA estimates of
bequests from 1998 to the present have not been growing at
a rate fast enough for our projection to be valid.
Since John Havens and I are also on the methodology
advisory committee for Giving USA, the article essentially
asked about a discrepancy between two sets of estimates,
both of which we are instrumental in producing: the Giving
USA estimates and our wealth transfer estimates. Before
John and I were contacted by Ms. Hall, we had noted
that our 20-year trajectory for bequests would not be fulfilled
and had already begun to consider the reasons why.
In my first conversation with Ms. Hall, I suggested that the
article she was working on could be of greater service if she
were to investigate what was going on in the world of wealth
and in planned giving that led to the discrepancy and to try to
discover the other forms of giving that are not showing up as
bequests but are nevertheless triggered by a donor�s death. I
regret, she did not go down this path, but instead focused
only on the discrepancy. One of the ironies in the article is
that she quoted Robert Sharpe. I was surprised that he was
not quoted about his belief that that the annual amount of
bequests is not $20 billion a year but closer to $35 or $40
billion. Had he stated this or had Holly Hall reported his
higher estimates, estimates which I shared with her, a
critical voice would have actually supported our estimates.
Since the Chronicle article was published, we
have taken up the quest to explain the discrepancy between
our projections and the last 7 years of bequest trends
produced by Giving USA. The correspondence between John
Havens and Holly Hall, a link for which is provided below,
begins to set out our thinking. One important aspect is that
over the three-year period 1999 through 2001, there was a
decline in the level of household wealth (adjusted for
inflation) in the country that had not occurred since the
Depression. To have that occur at the beginning of the
20-year period is certainly an important factor to take into
account. From 1950 through 2004 the real annual rate of
growth in wealth exceeded 3.3%, and this was an era in
which there were nine recessions. While the 2000-2001
recession, 9/11, and the burst of the high tech bubble
all happened at the beginning of the 20-year period the
article focused on, and although we expect other recessions
to occur, we are sticking by our 55-year projection of the $41
trillion transfer ($45 trillion in 2002 dollars).
Moreover, we
are finding through some preliminary analysis, which we will
report to you at a later date, that the amount bequeathed to
heirs is easily on the 20-year track, and, most importantly,
that there are several forms of charitable giving that
are occurring during lifetime and others that are triggered at
death that are not being fully accounted for at the present.
All of this �unaccounted for giving� would help explain just
why the transfer to heirs and to charity might be more on
track in regard to the 20-year estimate than Holly Hall
reported in the article. Futhermore, the recent gift by
Warren Buffett and other major gifts, as reported in the
Wall Street Journal and other media,
demonstrate that substantial lifetime charitable giving is
taking place and may represent a trend away from charitable
bequests to inter vivos giving.
In the end, the market in fundraising, banking, and financial
advisement all concur that wealth is growing, larger gifts and
client accounts are in the offing, and the wealth transfer
projections we have made are tested and validated daily by
groups who do their own market analysis and have found the
wealth transfer projections to be something in which to
invest.
In summary, there are several pieces of information which
we provided Ms. Hall to explain the failure of our 20-year
bequest estimates to be on track. She did present some of
them, but not enough to educate her readers better about the
information we readily obtained from professional estate
planners and fundraisers (including the Association of
Fundraising Professionals), all of whom see a striking
increase in all forms of planned giving.
From our point of view, the April 6th article in the
Chronicle of Philanthropy does not probe deeply
enough into the complexities of the 20-year bequest estimate
and the factors that could contribute to discrepancies
between two estimations of charitable bequests. I would like
to call your attention to the link at the end of this article
which provides a comprehensive look at our analysis and the
discrepancies between the bequest estimates of our Wealth
Transfer Microsimulation Model and those of Giving USA.
