What could it mean for our region’s shared prosperity if the often-discussed “Great Wealth Transfer” inspired more people to invest in their community’s future as part of their overall family, estate or succession plans?
This is a question local philanthropic leaders, community organizations and generous people have been asking as the largest intergenerational movement of wealth in American history begins to take shape.
Financial researchers estimate that as much as $124 trillion in assets will exchange hands in the United States over the next 20 years from older generations to younger heirs and charitable causes. Where those resources are directed will have tremendous bearing on the people and places poised to benefit.
Given such potential, community foundation peers in Wisconsin sought a more targeted understanding of how this generational shift may look in the state and in the specific regions we serve. The Greater Milwaukee Foundation and 11 others partnered to commission this research, which was conducted by University of Minnesota Extension. My thanks to Oshkosh Area Community Foundation for leading the research effort.
Greater Milwaukee has significant assets
The research revealed that in our four-county greater Milwaukee region alone, current household net worth totals $758.8 billion. Over the next 10 years, nearly $26.8 billion is expected to transfer from one generation to the next here.
Imagine what even a fraction of those assets could do for the causes you care about, especially if they were co-invested with additional long-term growth in mind. Dedicating just 5 percent of those assets toward community philanthropy would create over $1.3 billion in new endowments. Over the following 20 years, those funds could support nearly $1.6 billion in grantmaking available to target some of our community’s most pressing issues, according to the report.
In Wisconsin, $109 billion will be on the move over the next decade. If Wisconsinites chose to give just 5 percent of those resources toward long-term community benefit, it could create $5.5 billion in endowments, yielding $6.5 billion for grantmaking in the next 20 years. And in a state as generous as ours, 5 percent might be an underestimation.
Planned giving presents opportunity
Baby boomers already have a strong inclination toward generosity given their deep ties to place, appreciation for opportunity and considerable sense of civic responsibility. So how do we cultivate pathways for more people to engage in philanthropy as they make decisions about what’s next?
I would start with planned giving, which is a natural extension of the wealth transfer conversations people may have with their families or professional advisers. Not only does planned giving encompass a wide range of options for meeting both personal and charitable goals, it is an area of expertise for most community foundations. Our team at the Foundation is well-prepared to discuss every possibility and help donors create the legacy they envision. We’ve served the community this way since 1915 and will be here to see those wishes realized for centuries more.
These explorations also provide an opportunity to avoid general assumptions and recognize that planned giving is for anyone with foresight and a desire for deeper impact. For example, children and grandchildren who receive inheritance may find themselves with newfound capacity to make a difference in ways they couldn’t previously. Community foundations can be a trusted resource in helping them forge their own path in philanthropy as well.
Investing in the future benefits all
As the research indicates, leveraging this generational opportunity to invest in community provides a way to honor donors’ interests and open new avenues for moving the needle on vital community needs, from affordable housing to early education to job creation. The authors make this case well when they write: “Community-based philanthropy is a way for neighbors to invest and realize a shared vision for the future of their state. It is also a community engagement tool, providing opportunities for all community members of all means to give back to the place they call home.”
I’ve spoken with numerous community leaders about this notion of home in the context of philanthropy. Many value the idea of retaining wealth locally and making an impact in the place where they’ve raised their families or built their careers. Successful business founder Carl Mueller, for example, has been using his platform as a civic leader and columnist to encourage people to support greater Milwaukee as the place where their wealth was built, regardless of their current residence. I also appreciate how Tony Shields and his team at Wisconsin Philanthropy Network advocate for keeping resources rooted in the state so communities here can continue to thrive.
Donors can leverage community foundation benefits
We serve and partner with donors every day who love this community and want their gifts and legacies to endure. Ninety-nine percent of donor-advised funds at the Foundation are endowed and invested for long-term growth, compared with about 9 percent across other sponsoring organizations nationally, according to the Donor Advised Fund Research Collaborative.
And while this shows they are forward-thinking, I am equally inspired by how generous our donors are in the moment, having recommended over $59.5 million in grants last year, a major part of our record distribution.
I also believe our collective conversations about the great wealth transfer should focus on collaboration for impact rather than unhealthy competition for precious resources. There is room for both family priorities and community interests to be met when philanthropy is approached openly and discerningly.
Those who choose to give – in whatever form suits their situation – have an opportunity to be part of a movement whose scale could be unprecedented. The Foundation will continue to be a place where you can join that movement and discover new paths to individual and collective impact.
If Wisconsin sees $682 billion transferred over the next 40 years, including $101 billion in greater Milwaukee, as the research predicts, then surely we can find the philanthropic will to lift the trajectory of our shared home to new heights.