3 Ways to Approach Fundraising Around the Great Wealth Transfer

For more than a decade, the Great Wealth Transfer from an estimated 73 million baby boomers to their children has been a familiar concept, albeit a bit of an abstraction. First, it was pegged at $30 trillion, then at $68 trillion and most recently at $84 trillion, according to Cerulli. What is it really? And when is it actually going to happen? 

The answer is that time is finally here, and it’s playing out in real time. 

What Is the Great Wealth Transfer?

Baby boomers, who were born between 1946 and 1964, have long been the most populous and wealthiest cohort in American history. The generation derives its name from the fact that the postwar birth rate boomed beginning in 1946 after enlisted men returned from the battlefields of World War II and started families en masse. 

In the baby boomer generation, there were 76 million childbirths, which far exceeded baby boomers’ parents — the 47 million born in the Silent Generation that spans roughly between 1928 and 1945 — and every generation since (there were 55 million Generation X childbirths and 62 million millennial childbirths in their respective generations). The relative scale of baby boomers in terms of childbirths is staggering. Moreover, looking past the raw population numbers, baby boomers also accumulated an unheard of amount of wealth.

That’s due to a few factors. Perhaps the biggest driver of baby-boomer wealth was the drastic increase in labor force participation by women relative to the Silent Generation (opens as a pdf). In 1950, there were 18 million women in the workforce — accounting for about a third of all jobs — and by 2000, there were 66 million women working — accounting for half of all jobs. 

More people were making money, which led to an economic boom in the latter half of the 20th century. Said economic boom meant rising stock and overall asset prices, as well as a housing market that raised the tide even further. At the market’s peak, almost one in 10 homes were worth $1 million or more. 

Today, the oldest boomers are 77 years old, which is a year older than what the CDC lists as the average American lifespan. Mortality is setting in. The youngest Boomers will reach 76 (the current average expectancy) in 2040. The proportion of the U.S. population that’s older than 65 years old rose nearly 40% between 2010 and 2020, a trend that will only continue to pick up speed. 

When Will the Great Wealth Transfer Happen?

Susan G. Komen, a breast cancer nonprofit, recently shared that 2022 marked its biggest year ever in terms of realized gifts stemming from planned giving. This nonprofit may be ahead of the curve in tracking its gifts, but its scale indicates that many other nonprofits are likely already benefiting from great wealth transfer too. 

Simple cohort math also backs Susan G. Komen’s observation. Suffice to say, the Great Wealth Transfer began in 2022 and should last about 20 years.

Its exact size will depend on how asset prices continue to fluctuate in baby-boomer portfolios between now and the time of their passing. As of now, Cerulli estimates this will result in a $11.9 trillion windfall for nonprofits between now and 2045. 

How Can Nonprofits Take Advantage of the Great Wealth Transfer?

The Great Wealth Transfer is finally happening. Failing to properly capitalize on the greatest transfer of wealth in human history would be a giant missed opportunity for nonprofits. Time is of the essence. 

So, what steps might a fundraiser take? If you haven’t spent a lot of time planning for the Great Wealth Transfer yet, here’s what you should consider doing.

1. Make It Easy to Ask for Planned Gifts

For nonprofits, the importance of being part of the estate-planning process for as many baby boomers as possible simply cannot be overstated. 

Even for middle-class donors, bequests frequently exceed $100,000. By working with estate lawyers and financial planners or using digital estate planning tools, the name of the game is trying to make it as easy as possible for baby boomers to leave bequests to charities. Nonprofits can do this at the awareness stage by asking their regular donors to consider a planned gift and provide educational material on how best to do this. 

Importantly, when asking, it is always better to ask for a percentage of an estate rather than a cash figure. The latter is almost always far more substantial. Asking for $30,000 may sound like a lot, but you’d get $60,000 by asking for 5% of an estate of $1.2 million — the average estate size for baby boomers (opens as a pdf). 

2. Consider Retirement Accounts 

With 37% of Americans having individual retirement accounts (IRAs), accounting for $13 trillion in value, never overlook retirement accounts when asking for gifts. All too often, beneficiary designations are left blank during the estate-planning process. Asking to have your charity named the beneficiary of a donor’s IRA can be incredibly lucrative. There are tax advantages to doing this for a donor, so you might be surprised how receptive your audience will be.

It is also worth noting that seniors can also use their IRAs to give in real-time using qualified charitable distributions (QCDs) that represent an increasingly popular avenue for tax-advantaged giving. One of the fastest growing areas of philanthropy, QCDs let seniors to donate up to $100,000 from their IRAs per year in a tax-advantaged way. 

3. Understand What Millennial Donors’ Wealth Mean for Your Nonprofit

Born between 1981 and 1996, Millennials — or at least the oldest members of this cohort — are now entering middle age, which also coincides with peak earning years. At the very same time, many will also come into significant wealth. Why is that important? 

Millennials are incredibly generous, with 85% having given to charity and 70% volunteering — and that’s before entering peak earnings years or coming into wealth. There are 600,000 Millennial millionaires today and Millennials will have five times the wealth they have today by 2030 because of the Great Wealth Transfer (opens as a pdf). Millennials also have fewer siblings among which to divide this wealth than previous generations because of falling birth rates. 

What that means practically is that plenty of money will flow directly to charities as part of the Great Wealth Transfer. But a great deal of money that initially goes to Millennials will be redirected to the charities of their choice, and given their relatively young age, they may be less settled and more open to influence regarding the causes they’ll support. 

So, get to really know your Millennial donors well over the next few years. Introduce them to philanthropy, even if they don’t seem quite capable of making a major gift today. Play the long game. It might actually be pretty short. Make Millennials feel connected to your mission and consider getting them involved early though giving circles, like peer-to-peer fundraising. 

Most of all, make sure you’re employing a digital-friendly approach to be ready for the moment they are able to significantly contribute. Millennials value this, and they’ll be in control of much more wealth over the next few years and could be far more willing to disburse it to noble causes.

The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.