Community Foundation Hopes to Translate $51.55 Billion Wealth Transfer into Community Good

New research commissioned by a cohort of Midwest community foundations projects an unprecedented transfer of wealth from the World War II generation to the baby boomers and then from the baby boomers to the next generation. In a likely scenario, $51.55 billion is expected to change hands within the next 50 years in Kent County alone. In Michigan the transfer of assets is expected to peak from 2030 to 2035.

With most estates in the U.S., the vast majority of assets go to heirs. For generations, people lived their entire lives close to their birthplace and as wealth passed from one generation to the next, most stayed in the same area. This is no longer true as Michigan’s economy is providing fewer opportunities for young people. It is widely accepted that once wealth leaves a community it does not return – even if that wealth was created in the community. Grand Rapids Community Foundation will be asking residents to consider designating a small portion of their estates, 401(k) and IRA accounts or life insurance policies to the Community Foundation. Through the Community Foundation’s endowment, there will always be funds to support a variety of nonprofits in the community.

“We hope this study will start conversations. We want people to think about what is important to them in regard to their hometown. We also hope that they will consider a long term philanthropic investment in the community - now or in the future," said Diana Sieger, president of the Community Foundation.

For 85 years, the Community Foundation has supported hundreds of nonprofit organizations with more than $100 million in grants. “If the Community Foundation is able to capture just a small amount of the net worth of people who care about this community, we will be able to keep Grand Rapids vibrant and caring – the kind of community we already enjoy,” said Sieger.

Endowment funds are strategically invested to be permanent and grow over time. The principal is never spent. A portion of the earnings from the fund is paid out in grants to address a variety of community needs. Each year, an endowment of this size could generate millions of dollars for community projects and priorities—forever.

Across the state of Michigan: $140 billion will transfer from one generation to the next by 2017. By 2057, $972 billion, will have transferred.

Retirement accounts and insurance policies, says the Community Foundation, are excellent vehicles for planned giving. Both can be designated to charity without modifying an existing estate plan. IRAs and 401(k)s may be the best asset to earmark for estate giving since they can be highly taxed when given to heirs, losing up to 70% of their value in some cases.

For more information about this study and its impact or to discuss a planned gift, contact the Grand Rapids Community Foundation at 616.454.1751.