Study: Charitable Bequests Could Total $25-Trillion During Next 50 Years

Predicting a coming “golden age of philanthropy,” a pair of Boston College researchers say that charities could gain $6-trillion to $25-trillion in bequests over the next 50 years.

John J. Havens and Paul G. Schervish estimate that $41-trillion to $136-trillion will change hands over the next half century — far more than the $10-trillion to $13-trillion that previous studies had forecast for the so-called intergenerational transfer of wealth.

The Boston College study presumes that the “death tax” on the estates of wealthy people would remain unchanged. The estate tax is often seen as an incentive for people to leave bequests to charity, since doing so can help them shield assets from federal taxation. But critics of the tax say it forces the demise of family businesses and produces little net federal revenue. Mr. Schervish and Mr. Havens said they see a “cause for optimism” about future giving even if estate-tax rates are cut.

The Boston College figures far exceed the first wealth-transfer estimate of $10.4-trillion from 1990 to 2044 that was made nearly a decade ago by Cornell University researchers Robert Avery and Michael Rendall.

The new estimates span the years 1998 to 2052. The numbers use conservative projections for growth in the economy and in individual wealth, the share of wealth that people are expected to save rather than spend, and other variables.

The study’s wealth-transfer estimates “are not back-of-the-envelope projections,” Mr. Havens and Mr. Schervish stated. Still, they cautioned that until their estimates can be evaluated by other scholars, people should focus on their low-end figure of $41-trillion. They noted that their computer model does not take into account potential recessions, economic depression, or other crises in the 21st century. Nor does it presume an economic boom like the one that the United States has enjoyed in recent years.

While the study’s financial implications for charities are promising, philanthropy researchers say that whether individual charities benefit from a massive wealth transfer will depend on many factors.

The potential for increasing donations depends on whether a charity can make a good case for support and whether it has a strong board of directors, said Ann E. Kaplan, editor of Giving USA, a statistical almanac that provides estimates of how much Americans contribute to charity. Not only that, she said, “they have to ask for the money.”

The Boston College study was conducted with grants from the Lilly Endowment and the T. B. Murphy Foundation Charitable Trust.

The report, “Millionaires and the Millennium: New Estimates of the Forthcoming Wealth Transfer and the Prospects for a Golden Age of Philanthropy,” is available on the Internet at http://www.bc.edu/swri.

Copies of the study can be obtained by contacting the Social Welfare Research Institute, McGuinn Hall 515, Boston College, Chestnut Hill, Mass. 02467; (617) 552-4070. Copies also can be requested via e-mail at swri508@bc.edu.