Experts Question $58-Trillion Wealth-Transfer Estimate

Some $58-trillion, including $6.3-trillion in charitable bequests, will change hands from 2007 to 2061, according to an updated version of a study that has raised eyebrows among some researchers.

The new figures are from John Havens and Paul Schervish at the Boston College Center on Wealth and Philanthropy, who predicted in 1999 that $41-trillion, including $6-trillion in charitable bequests, would be transferred by 2052.

The figures include cash, real estate, and other assets.

Some experts have said the 1999 wealth-transfer estimates were greatly overstated, and the new estimates have raised questions as well.

The new projections assume that giving by living individuals will grow by 2 percent, while charitable bequests made from the estates of deceased individuals will grow by about 5 percent. Both of those percentages, however, are below historic averages for the last 30 years found in “Giving USA,” the annual tally of American philanthropy produced by Indiana University’s Lilly Family School of Philanthropy.

“If they’re correct, giving is growing at less than historic rates,” said Robert Sharpe, a Memphis fundraising consultant who specializes in bequests and other planned gifts. “Unless something catastrophic happens, giving should easily outpace these projections. These projections set a very low bar.”

Mr. Havens and Mr. Schervish defended their latest wealth-transfer estimates, noting that, while they chose 2 percent as a conservative estimate, they also provided estimates for growth in giving by living individuals of 1, 3, and 4 percent, as well as estimates for how two scenarios involving the estate tax could affect giving.

The researchers said their projections accounted for a loss of about $350-billion that would have gone to charity if the Great Recession had not occurred. They also pointed to a study by the Federal Reserve that found that, as of last year, private wealth of Americans finally exceeded the pre-recessionary highs of 2007.

“Our new wealth transfer estimate,” they wrote, “is $58.7-trillion (2007 dollars), an increase of 11.7 percent above our original estimates in real terms. Even accounting for the recession, we find that 2 percent growth yields a larger estimate of wealth transfer than we published in 1999.”

Even with the devastation of the recession, they continued, “real household wealth is 10.2 percent higher than its value in 1998 (the base year of our original analysis)” according to the Federal Reserve.

The increased post-recession wealth, the researchers said, had the biggest impact on their new projections. “Indeed,” they wrote, “a golden age of philanthropy still beckons as a shining beacon at the end of this long recession.”

Already, Mr. Schervish said, private bankers, estate planners, and other financial advisers he has met with are gearing up for increased business related to the wealth transfer. “They know a windfall is coming,” he said.

But other experts aren’t so sure.

“There is no guarantee that this level of charitable giving will come through,” said Leo Arnoult, a fundraising consultant who sits on a committee of experts who oversee the annual “Giving USA” report. “There are so many variables that can change over a more than 50-year period,” he said. “Major businesses don’t project that far out, so why should the nonprofit sector?