Center on Wealth and Philanthropy
Spiritual and Cultural Life in an Age of Affluence

Wealth and the Commonwealth
Newsletter Volume 7: January 2005

Contents

Center Offers Service to Provide Regional and State Wealth Transfer Estimates

New Report: Metro St. Louis Wealth Transfer Study

New Report: African American Wealth Transfer Study

MaryPat Hebeler Joins the CWP Staff

Albert Keith Whitaker Joins the CWP Staff


 

Upcoming Features

Descriptions of other current projects are available on our website at the following links:

The Will of God and Wealth: The Varieties of Religious Discernment and Discerned Philanthropy

Geography and Generosity: The Boston Area and Beyond

We would also like to call your attention to two new articles posted on our website which are available in PDF files at the following links:

Wealth and Philanthropy

Methodology is Destiny: The Effect of Survey Prompts on Reported Levels of Giving and Volunteering

In forthcoming newsletters we will report on our new executive education program for financial professionals, development professionals, and wealth holders.

We welcome your feedback on the format and accessibility of our newsletter. In the event that a link to an article or to additional information is not working properly, please let us know. You can also visit our website where the material linked to our newsletter is available.

Dear Colleagues:

I am pleased to send you the January edition of our newsletter, Wealth and the Commonwealth. Over the last several months the Center has begun to do regional and state wealth transfer estimates using the new methodology we developed and tested that enables us to estimate the transfer of personal wealth from 2001 through 2055. This is an extremely valuable tool and we are pleased to be able to share it with you. A short summary of this service is included in this newsletter and a prospectus is available by contacting the Center.

As an example of the work we are now able to do, at the invitation of the St. Louis Metropolitan Association for Philanthropy we applied this methodology for the estimation of wealth transfer in the St. Louis metropolitan area. A summary of the findings from this study, as well as links to the technical report and the report published by the study's sponsor, are included in this newsletter. Additionally, under John Havens's direction the Center conducted a study of wealth transfer among African American households. A summary and link to the full study report are also included in this newsletter.

This newsletter also provides an opportunity to introduce two new members of our staff, MaryPat Hebeler and Albert Keith Whitaker, and to highlight new projects and new articles posted on our website.

We hope you enjoy this edition of Wealth and the Commonwealth. We welcome your feedback and we wish you the blessings of a peaceful and happy new year.

Cordially,

Paul Schervish

Center on Wealth and Philanthropy


  • Center Offers Service to Provide Regional and State Wealth Transfer Estimates
  • The Center on Wealth and Philanthropy is offering a new service to provide regional and state wealth transfer estimates. Wealth transfer estimates are projections of the amount of household wealth to be transferred at death. For several years we have focused on our national estimates. In the past six months we have developed the capability to provide these same estimates for states and large geographic regions.

    For each state or region we can now provide:
    1. Wealth transfer estimates for the next 20 and 55 years, each under growth assumptions of 2%, 3%, and 4%; such estimates are broken down according to transfers to heirs, charity, taxes, and settlement costs.
    2. Projections of inter-vivos (annual giving) for 20 and 55 years also at growth rates of 2%, 3%, and 4%.
    3. An estimate of current level and distribution of wealth in the region. Currently, there is no data available on wealth levels and distribution except for the entire nation.

    We use our Wealth Transfer Microsimulation Model to produce the wealth transfer estimates. The model combines data from the Census, Center for Vital Statistics, Federal Reserve, and the Internal Revenue Service.

    A change in thinking and planning has occurred nationally as a result of our $41 trillion wealth transfer forecast. Bringing to your community a valid local wealth measure, a wealth transfer forecast, and projections of charitable giving can be a way to draw together charities, fundraising consultants, donors, foundations, financial institutions, and financial professionals into a collaborative effort to advance philanthropy. Obtaining and communicating this information offers sponsors a distinctive contribution and place of regard in their community. Philanthropy advocates can use the wealth transfer and charitable giving projections as a way to initiate or invigorate programs for charitable advancement. Banks and financial professionals should welcome and can help sponsor the estimation of current wealth as well as the wealth transfer projections.

    An example of this new service is our recent St. Louis Wealth Transfer Study sponsored by the St. Louis Metropolitan Association for Philanthropy. The technical document can be used by the sponsor to produce a published report for dissemination to the media and throughout the community.

    If you or a coalition in your area are interested in sponsoring a study, we will develop a prospectus for the geographic area or areas you specify. In 2005 the cost of doing the research and writing the technical report is $10,000 per geographic area.

    For more information contact Paul Schervish, Director of the Center on Wealth and Philanthropy, at (617) 552-4070 or by email at paul.schervish@bc.edu.

  • New Report: Metro St. Louis Wealth Transfer Study
  • At the invitation of the St. Louis Metropolitan Association for Philanthropy, John Havens and Paul Schervish applied their new methodology for the estimation of wealth transfer in states and metropolitan areas to the St. Louis metropolitan area.

    Their report provides two sets of estimates for households in the St. Louis area - a baseline of current wealth and the projected wealth transfer. The first set consists of the estimated distribution of household wealth and its distribution by age of head of household. The second set consists of the estimates of wealth transfer and the potential distribution of this transfer among government, heirs, charity, and estate settlement costs. A two percent annual rate of growth is used throughout the report.

    Highlights from their findings include the following:
    - During the 55 years from 2001-2055, St. Louis households will transfer at least $532 billion, of which St. Louis households will contribute a potential $93 billion in charitable bequests.
    - In 2001, the 1.065 million households in the St. Louis area owned an aggregate amount of $426 billion in wealth.
    - Householders in the St. Louis region with $1 million or more in net worth are relatively young as compared with their counterparts nationally.

    If you would like to learn more about the study and its findings, the full technical and published reports are available on our website by following the link below.

    Reports on St. Louis Metropolitan Area Wealth Transfer Study
  • New Report: African American Wealth Transfer Study
  • Income, wealth, and charitable giving in the African American community have risen rapidly in recent years. From 1992 through 2001, after adjustment for inflation, both aggregate income and aggregate wealth for African American households have risen at an annual rate of 4 percent, and aggregate charitable giving has risen at an annual rate of 5 percent. Similarly, the inflation-adjusted household averages for wealth, income, and charitable giving among African American households follow the same trend, albeit at somewhat slower rates.

    While at first glance these themes of growth appear encouraging for the African American community, they pale considerably when compared to the national trends. While African American households, as a group, gained substantial financial purchasing power in terms of both income and wealth, purchasing power for all other households actually increased at a faster rate. In terms of aggregate financial resources the African American community, as a group, was substantially better off in 2001 than in 1992; but their gains in income and wealth were not as large, on average, as for the total population, whose income and wealth grew even faster than African American households. The rate of growth in charitable contributions among all other households was greater than among African American households, due in substantial part to the higher rates of growth in financial resources among all other households. The result is that African American households gave a larger amount but a smaller share of aggregate national household giving in 2001 than in 1992.

    Using the Wealth Transfer Microsimulation Model (WTMM) developed and housed at the Center on Wealth and Philanthropy, CWP was able to estimate wealth transfer among African American households during the period from 2001 through 2055. The major results of the simulation indicate that the total amount of wealth transfer from African American households will range from $1.1 trillion to $3.4 trillion (2003 dollars) during the 55 year period from 2001 through 2055. The estimates of wealth transfer from African American households are large, but they account for less than 2.5 percent of the $46.3 to $153.7 trillion (2003 dollars) of CWP's 1999 estimate of total wealth transfer for the nation. Although African American households constituted 12.4 percent of all households in 2001 they will generate less than 2.5 percent of the national total wealth transfer. This is due to the low endowment of wealth owned by African American households in 2001 and the lower than average rates of growth in the wealth of African American households.

    Report on Wealth Transfer Among African Americans
  • MaryPat Hebeler Joins the CWP Staff
  • MaryPat Hebeler is Assistant for Administration at the Center on Wealth and Philanthropy. She received her bachelor's degree in Literature from Canisius College in Buffalo, New York. She completed her Master's in Education with a concentration in Administration, Planning, and Social Policy at Harvard University's Graduate School of Education. She is currently pursuing her Ph.D. in Higher Education Administration at Boston College's Lynch School of Education.

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  • Albert Keith Whitaker Joins the CWP Staff
  • Albert Keith Whitaker is Research Fellow at the Center on Wealth and Philanthropy. He earned his bachelor's degree in Classics and Philosophy and a Master's in Classics from Boston University, and his Ph.D. in Social Thought from the University of Chicago. He also holds a certificate in National Security Studies from the University of Kiel, Germany.

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