Charities Could Receive $25-Trillion in Bequests Over 50 Years, Study Finds

Charities stand to gain $6-trillion to $25-trillion in bequests over the next 50 years, say Boston College scholars who today issued a new study on the so-called intergenerational transfer of wealth.

The scholars estimated $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 estimated.

The estimates on the wealth transfer and bequests were made by John J. Havens and Paul G. Schervish in a report entitled, “Millionaires and the Millennium: New Estimates of the Forthcoming Wealth Transfer and the Prospects for a Golden Age of Philanthropy.”

“The work of charities and philanthropies is a far happier task than previously recognized,” said Mr. Schervish. “What this means for charities is that on the horizon is a growing intersection between a material and moral life that can be tapped into.”

The Boston College study presumes that the so-called 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. Mr. Schervish and Mr. Havens stated, however, that they see a “cause for optimism” about giving in coming decades even if estate-tax rates are lowered.

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 are based on a computer-simulation model that uses 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, an economic depression, or other such developments 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 demonstrate that it has a strong board of directors, said Ann E. Kaplan, editor of Giving USA, which provides annual estimates of how much Americans contribute to charity. “Not only that,” she said, “they have to ask for the money.”

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

The full text of the report is available on Boston College’s World-Wide Web site.