The Nebraska Community Foundation works with community, organizational and donor-advised affiliated funds serving 250 communities located in 80 counties. NCF and its affiliated funds have reinvested $269 million in Nebraska since 1994.
A key to moving Nebraska hometowns and their leaders forward in their endowment-building efforts is Nebraska-specific estimates of the intergenerational transfer of wealth (TOW) completed in 2002. The TOW study estimated the amount of wealth that would transfer from one generation to the next over the first 50 years of this century and when the peak transfer would occur in each county in Nebraska. This analysis, based-on the groundbreaking work completed by Havens and Schervish in 19991.
Rural Nebraska has about 750,000 persons living in non-metropolitan areas that have populations of 13,000 or less. The transfer of wealth analysis estimates that approximately $230 billion will transfer in rural Nebraska by 2060.
More important than these vast sums is the timing of this transfer. NCF estimates that 51 of 93 Nebraska counties will experience their peak transfer of wealth in or before 2039; 26 very rural counties will peak in or before 2019. By comparison, the peak TOW for the U.S. will not occur until sometime after 2050, if ever. This quickly-approaching peak TOW in rural areas is the result of two factors: (1) out-migration (especially of 25-44 year olds) that has been occurring for several decades; and (2) a rapidly aging population.
The following map of Nebraska depicts the estimated timing of the peak transfer of wealth for each county.
NCF launched a statewide effort to alert rural communities to the critical impact associated with the TOW phenomenon and to teach affiliated fund leaders how to use the data as a case statement for building endowments to retain a portion of their community’s wealth.
The very large numbers associated with the transfer of wealth can make it difficult to determine where to begin. Therefore, in 2002 NCF began expressing the wealth transfer estimates on a 10-year time frame instead of the original 50 years, and asking community leaders if capturing just five percent of the estimated 10-year TOW to benefit their community would be realistic.
The five percent goal is working! By breaking the analysis into smaller, more understandable and incremental goals, fund advisory committee and community leaders have become more comfortable with the TOW tool. Now community leaders can truly embrace the opportunity to use the TOW as a case statement for why donors should contribute to building an unrestricted endowment for their community.
NCF provides training in donor visitation and expertise to assist donors and their advisors in arranging planned gifts that have long-term impact on the ability to grow economies and populations. The result of this work can be measured in the number of planned gifts and bequests to NCF affiliated funds.
Educating community leaders, donors and their financial planners about the opportunity and the threat associated with the intergenerational transfer of wealth can have many benefits. The most fundamental is that if we do nothing, our place will likely become poorer and more dependent upon external resources than it is today. But if a portion of the transfer of wealth is gifted to build charitable endowments, our hometowns can better take control of their destiny and build a more positive future.
1 “Millionaires and the Millennium: New Estimates of the Forthcoming Wealth Transfer and the Prospects for a Golden Age of Philanthropy.” Havens, John J. and Schervish, Paul G.; Boston College, 1999.
Doug and his wife, Judy, made a generous commitment to both the Imperial Community Foundation Fund and the Nebraska Community Foundation. Their gift comes in the form of a life insurance policy – $200,000 to ICFF and $50,000 to NCF – that will benefit both organizations in the future. Doug and Judy make tax-deductible contributions to fund the premiums on the policy, and the policy is owned by NCF for the benefit of ICFF and the NCF Endowment.Read more →