News from The Center on Wealth and Philanthropy
Center on Wealth and Philanthropy
Spiritual and Cultural Life
in an Age of Affluence
Wealth and the Commonwealth Newsletter
Volume 10: July 2006


Wealth Transfer Study for North Dakota: 2001-2055

Paul Schervish Writes About Recent Coverage of the Wealth Transfer Study

Today's Wealth Holder and Tomorrow's Giving: The New Dynamics of Wealth and Philanthropy

The Sense and Sensibility of Philanthropy as a Moral Citizenship of Care

Philanthropy's Indispensable Ally


Wealth Transfer Study for North Dakota: 2001-2055

In the Spring of 2005, Impact Foundation's Institute for Innovation and Effectiveness commissioned John J. Havens and Paul G. Schervish to apply their research methods to study North Dakota's wealth transfer for 2001- 2055. The Impact Foundation's hope is that the findings of this study will create a wave of renewed energy among donors and non-profits, inspiring them to generate greater financial support to expand and improve services, and ultimately the quality of life for North Dakotans. Using the Wealth Transfer Microsimulation Model (WTMM) specially calibrated to the state of North Dakota, Paul Schervish and John Havens have derived findings concerning the level and distribution of household wealth, the amount and distribution of wealth transfer, and the amount and distribution of charitable giving in North Dakota.

Click here for a PDF of the study

Dear Colleagues,

I am pleased to send you this issue of our newsletter, Wealth and the Commonwealth. Over the past several months we�ve been quite busy at the Center preparing new research, some of which we�d like to share with you in this edition. We�ve included reports on the North Dakota Wealth Transfer, the new dynamics of wealth and philanthropy, understanding the moral dimensions of philanthropy as a spiritual sense and sensibility, and the role of financial security in philanthropy.

Most importantly, however, I would like to call your attention to an issue that has been central to the work of the Center and has received attention in the press recently: the $41 trillion wealth transfer estimate predicted by the Center in our 1998 report, �Millionaires and the Millennium.� The article I am referring to, �Much-Anticipated Transfer of Wealth Has Yet to Materialize, Nonprofit Experts Say,� was published in the April 6th edition of the Chronicle of Philanthropy. Over the last several months we have received a number of inquiries about our response to the article and thought it might be informative to include a discussion of our response in this newsletter.

It is my hope that the information provided in this newsletter about the wealth transfer estimates will lend itself to thoughtful consideration of this very important topic. As always, I welcome your comments and feedback. I wish you and your family a wonderful and relaxing summer.

Paul Schervish
Center on Wealth and Philanthropy

  • Paul Schervish Writes About Recent Coverage of the Wealth Transfer Study
  • 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.

    Link to CWP website for additional discussion of the transfer of wealth
  • Today's Wealth Holder and Tomorrow's Giving: The New Dynamics of Wealth and Philanthropy
  • Increasing numbers of individuals are approaching, achieving, or even exceeding their financial goals at younger and younger ages. A level of affluence that had been rare has come to characterize large groups and even whole cultures. In the context of an ongoing intergenerational transfer of wealth, the author examines demographic and spiritual trends that are motivating wealth holders to allocate an ever-greater portion of their financial resources to charity.

    Link to CWP website for PDF of article
  • The Sense and Sensibility of Philanthropy as a Moral Citizenship of Care
  • How can one understand the moral dimensions of philanthropy as a spiritual sense and sensibility? That is the leading question in this paper. The purpose is to elaborate a modestly integrated analysis of several aspects of philanthropy that make it a morally oriented behavior in the lives of donors.

    Link to CWP website for PDF of article
  • Philanthropy's Indispensable Ally
  • Most observers now recognize that lifetime giving understandably increases as people move up the economic ladder. CWP research also suggests that it's not just the objective size of people's pocketbooks that matters but also their subjective sense of financial security. Financial security means trusting that, even in the face of major economic downturns, one's means will support one's desired standard of living for the indefinite future. For people who feel such security, philanthropic decisions really are different.

    Read on...
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