Wealth and the Commonwealth
  Research on Cultural Life in an Age of Affluence 2002: no. 2  

in this issue

SWRI'S PHILANTHROPIC ADVISEMENT SERVICES

THE NEW PHYSICS OF PHILANTHROPY

The Physics of Demand and Supply

Current Trends in Inter-Vivos and Bequest Giving

$41 Trillion Wealth Transfer

Projections for Charitable Giving

"RESEARCHER FINDING NOT ALL RICH HAVE WEALTHY ATTITUDES"



SWRI'S PHILANTHROPIC ADVISEMENT SERVICES

SWRI director Paul G. Schervish, Senior Research Associate John J. Havens, and Director of Publications Mary A. O'Herlihy regularly consult and conduct presentations, seminars, and workshops for wealth holders, financial advisors and financial institutions, foundations and other nonprofits on the findings and implications of statistical and interview research on wealth and philanthropy.

To find out more about our philanthropic advisement services to individual, corporate, and nonprofit clients visit our website /swri or call us directly at (617) 552-4070.

Learn more about SWRI's Philanthropic Advisement Services

   Greetings!

I am pleased to send you the second issue of a periodic update on our research at the Social Welfare Research Institute on wealth and philanthropy.

This issue focuses on the material forces that make up "the new physics of philanthropy," namely the supply-side vectors inclining wealth holders to use their wealth on behalf of the commonwealth.

Our research indicates that several identifiable forces affecting wealth holders are changing the supply-side or donor-side of philanthropy. These changes constitute a new physics of philanthropy.

The new physics entails an innovative way of thinking, feeling, and acting in regard to philanthropy. In the new physics, wealth holders seek out rather than resist greater charitable involvement approach their philanthropy with an entrepreneurial disposition, and make philanthropy a key ingredient of the financial morality they observe and impart to their children.

We hope "Wealth and the Commonwealth" will help provide some added meaning and practical benefit for you in your good work. If you would like to be removed from our mailing list, please reply to this message with the word "Remove" in the subject line.
Paul Schervish, Director, SWRI

  • THE NEW PHYSICS OF PHILANTHROPY
  •   In this issue we focus on part 1 of a two-part article on the supply-side vectors of charitable giving which analyzes the emerging financial and social-psychological forces that are increasingly influential in shaping philanthropy, especially by wealth holders. By referring to the new physics of philanthropy, we emphasize the increasing importance of material wealth and the desire to be efficacious in the commonwealth as supply-side factors, that is, as vectors actually inclining wealth holders toward a more steadfast commitment to philanthropy.

    In Part 1, The Material Side of the Supply Side, we integrate the new physics and the economic context of supply and demand for philanthropic funds. Specifically, we focus on what it means to speak about supply-side vectors and on empirical evidence for the material vectors of the new supply-side physics of philanthropy. Since the 2001 publication we have UPDATED TABLES and TEXT on trends and projections of charitable giving and make them available here.

    Download Complete Paper "The New Physics of Philanthropy: The Supply-Side Vectors of Charitable Giving. Part 1: The Material Side of the Supply Side." Also download updated trends and projections for charitable giving.

  • The Physics of Demand and Supply
  •   Until just recently, the usual approach to fundraising was to consider wealth holders as relatively reluctant givers. In order to overcome this reluctance, fundraisers and others promoting charitable giving employed a panoply of strategies ranging from cultivating friendships and presenting portfolios of needs, to advising about tax incentives, instilling guilt about privilege, making accusations of meanness, and establishing giving quotas for wealth holders.

    In looking at the supply side of philanthropy, we explicitly consider how the growth in the material capacity of donors generates a substantial increase in both the material and the moral inclination of wealth holders to donate to charity.

    Moving from a demand-side to a supply-side approach to philanthropy

  • Current Trends in Inter-Vivos and Bequest Giving
  •   How much do the wealthy give to charity as a percentage of income and wealth? The small number of families at the highest end of the distributions of wealth or income currently contribute a dramatically high proportion of total annual or inter-vivos charitable giving. The 4.9% of families with net worth of $1 million or more made 42% of the total contributions to charitable organizations in 1997. We have also made available COMPLETE TABLES FOR 1997 GIVING BY INCOME AND NET WORTH.

    How are final estates distributed between heirs, taxes, and charity? Although there is a negative correlation between wealth and percentage of wealth contributed in the form of inter-vivos gifts, there is a positive correlation between wealth and percentage of wealth going to charity in the form of charitable bequests made from final estates (that is, estates for which there is no surviving spouse). For final estates recorded in 1997 the average donation to charity was 14%. For estates valued under $1 million, 4% was contributed to charity. DATA AND ANALYSIS NOW ALSO AVAILABLE FOR 1999.

    Learn more about the trends in charitable giving in life and at death

  • $41 Trillion Wealth Transfer
  •   Based on a wealth-transfer microsimulation model developed at SWRI we estimate that over the 55-year period from 1998 to 2052, with a conservative 2% secular growth rate, the intergenerational wealth transfer will be $41 trillion, and may well reach double or triple that amount.

    Of the $41 trillion we estimate that $6 trillion will be transferred to charities. If the economy grows at 4% over that same period bequests to charity could well reach $25 trillion.

    Download wealth transfer projections

  • Projections for Charitable Giving
  •   The findings reported above about the top-heavy distribution of charitable giving, when coupled to our projections for growth in wealth and income over the next twenty years, indicate that substantial amounts of charitable contributions will be made by the affluent over that period, and explain why there is such growth in the charity procurement industry's efforts to target wealth holders.

    UDATED PROJECTIONS RECENTLY RELEASED: Based on our most recent estimates, at a 2% growth rate, charities stand to receive $6 trillion in bequests and $13.2 trillion in inter-vivos giving between 1998 and 2052. Of this $19.2 trillion total, we estimate that 52% will be contributed by millionaires.

    View our Projections for Wealth Transfer and Charitable Contributions

  • "RESEARCHER FINDING NOT ALL RICH HAVE WEALTHY ATTITUDES"
  •   May 27, 2000--The LA Business Journal published an interview with Paul Schervish, Director of the Social Welfare Research Institute.

    Question: Describe the so-called millionaire next door. SCHERVISH: There has always existed, in addition to what is understood as the very wealthy, a group of upper-echelon individuals. Andrew Carnegie defined the truly wealthy as those who would remain able to continue to live at the standard of living to which they had become accustomed. He called the other group the "economically competent," competent to pretty much fulfill their wishes economically but not fortified against a major economic downturn, in which they would be reduced to the middle class. The group you're talking about is hard to define as either one or the other; perhaps they're something in between.

    Read complete interview


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