Published October 28, 2001

'A Golden Future for Nebraska?'

BY DAVID HENDEE

WORLD-HERALD BUREAU

LINCOLN - During the next 50 years in Nebraska, an estimated $258 billion of personal wealth will change hands from one generation to the next, according to a study by the Nebraska Community Foundation.

Rural Nebraska's share is estimated to exceed $94 billion.

Indeed, the transfer of estate wealth is already well under way in many of the state's most rural counties, which tend to have declining populations and a greater percentage of elderly than do Nebraska's metropolitan areas.

What happens to that wealth - now held in everything from portfolios of financial instruments to houses, land and personally owned businesses - could determine the fates of many Nebraska communities big and small, said Jeff Yost, executive vice president of the foundation.

The majority of estates are distributed to children and other heirs, but the transfer of this wealth offers golden opportunities for people to give money to causes they care about, Yost said.

"If just 5 percent of this wealth were gifted into endowments for community betterment it could sustain the quality of life in those places and, in many cases, enhance it and help them turn the corner as a place where you'd want to raise your family," said Yost, whose foundation encourages charitable giving to support community betterment.

From Omaha-dominated Douglas County ($99 billion to transfer by 2050) to Lincoln's Lancaster County ($45.8 billion) and tiny Keya Paha County ($57.8 million), there is wealth in every corner of the state.

The analysis did not include the future impact of the estates of Nebraska billionaires Warren Buffett, Walter Scott and others among the super-wealthy who happen to live in the state.

Del Weber, president of the Omaha Community Foundation, said Douglas County's $99 billion figure is not unrealistic. The Omaha Community Foundation is not affiliated with the rural-based Nebraska Community Foundation.

"There is a lot of wealth out there," Weber said. "But the flip side is that charitable giving is driven by too few individuals. It needs to be broadened. Not a lot of people have gotten into the charitable mode yet."

Money for local endowments doesn't come easily, Weber said. "Only about 15 percent of the wealthy who do estate planning leave something for charity."

The situation is especially critical in much of rural Nebraska, which is struggling with out-migration, an aging population and economic decline. Yost used Webster County in south-central Nebraska as an example.

Webster County's population dropped 5.1 percent during the 1990s. The county has more lower-income families and fewer higher-income families, relative to Nebraska. More than 38 percent of its wealth is connected to property. Nearly one in four residents is 65 or older and nearly one in eight is at least 75.

During the next five years in the county, an estimated $54.5 million will transfer. If 5 percent of it were gifted locally, an endowment of $2.7 million could be built. Assuming a conservative 5 percent annual payout that allows the endowment to grow, $135,000 would be available every year for community betterment investments.

The future isn't bright where wealth leaves the communities in which it was created and goes to taxes, nonlocal charities or heirs who have moved to urban Nebraska or out of state, Yost said.

Rural bankers often see the exodus after a death in town.

"The children attend the funeral and graveside services and their next stop is the bank. They withdraw their parent's assets and then leave town," Yost said.

The ripple effect across the state's economy is billions of lost dollars, he said.

Without solid long-term funding, he said, rural communities will struggle, young families may leave and schools and health care could suffer.

"The threat is real," he said.

Don Macke, the foundation's special projects director who conducted the wealth analysis, has identified 24 rural counties that already are in their peak years of transferring wealth to the next generation. Many are transferring $10 million to $20 million a year. Some are at the point where former residents control more of the county's wealth than do current residents.

In 62 counties, the peak years of transition are forecast for 2015 to 2039. In seven counties, including the cities of Omaha, Lincoln and Kearney, the peak years are expected to be the decade of 2040.

Bob Stowell, an Ord attorney and member of the foundation's board of directors, has seen the impact a generous gift can have on a community.

A few years ago, the estate of John and Alyce Wozab left $1.2 million to create an endowment to fund community betterment projects in Valley County. The endowment has provided $105,000 for such things as baseball gear, therapeutic horseback riding, ambulances and music and theater performances.

Stowell said he is especially gratified that others are now coming to him to ask how they, too, could share some of their wealth after they die.

"The Wozabs had vision and the greater good in their hearts," Stowell said. "There is an urgency to do this, to take a percentage of an estate and provide a legacy for a community that helps foster a way of life."

There is a deep-running ethic of giving in the state. Results of this year's Rural Nebraska Poll conducted by the University of Nebraska found that 80 percent of rural Nebraskans contribute each year to charity. The Internal Revenue Service says Nebraska ranks 13th in the nation in charitable gifts they report on their income taxes, as a percent of adjusted gross income.

Yost plans to present details of the wealth report at the foundation's annual meeting Thursday in Nebraska City.

"If communities can get to the point in the next 10 years where they have a $10 million endowment, instead of $1 million, it begins to change the equation for a lot of people about where they're going to live, have their businesses and raise their kids," he said. "Sixty thousand dollars a year (in earnings) is nice, but a half-million dollars a year is money."

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