by Mary Solomons, Skidmore College
We are in the midst of a tsunami of wealth transfer.
It is predicted that over the next 50 years, anywhere between 20 and 40 trillion dollars of wealth will pass from parents to their children. This year the federal estate tax exemption is nearly $5.5 million dollars, or roughly $11 million if two parents are leaving funds to a child.
To look at it another way, 10% of wealth is changing hands every five years. Millennials are inheriting their wealth at a rate faster than their parents or their grandparents; one third of millionaires under the age of 32 inherited their money.
As fundraisers, what are we doing to engage this next generation of wealth?
Changing the Way We Cultivate the Donor Pipeline
Historically, when did we begin to engage with children of means? Alumni might connect with their alma mater when their children are beginning the admission process. We might approach them when we’re looking to fill a board seat or leadership volunteer role. However, this is usually years after they graduated, a period during which these potential young philanthropists have already established their philanthropic priorities—and you may not be among them.
We know that Millennials think about their charitable giving differently than their parents. They tend to give emotionally and in the moment, inspired because they feel they can make a difference. A top takeaway from the 2014 Millennial Impact Report notes that this generation supports causes they are passionate about rather than institutions. But what is often overlooked is that when deciding what to support, ¾ of Millennials say they would be likely or highly likely to support an organization if asked by a family member—this is a higher percentage than if they were asked by a peer (63%). Forty percent of affluent Millennials took an active role in their family’s charitable giving before the age of 21.
What does this information tell us?