A massive wealth transfer over the next twenty years

Kelvyn Eglinton, Momentum Waikato Chief Executive

It is true that for many charitable agencies, the competition and complexity of sourcing funds is ever growing, whilst at the same time the pool of funding opportunities is steadily draining.

I’ve been learning what the future of giving looks like and how gifts in Wills will shape the funding environment in years to come. How can establishing an endowment fund, driven by such bequests, become a part of organisations’ funding strategies going forward?

The JB Were’s Support Report ‘The changing shape of giving and the significant implications for recipients’, published in June 2018, gives us a good overview of this opportunity. Whilst focused on Australia, the general trends equally apply here in Aotearoa.

While currently providing only about eight percent of the sector’s income, bequests are becoming a major element of forward-thinking charities’ funding plans. With the changes we are seeing, identifying who your supporters are and what they are really passionate about will become vital funding strategies over the next two decades.

Bequests are set to become ever more significant, due to an ageing population, rising asset values and a decade of continuous market growth. The Baby Boomers have enjoyed some of the largest asset and home value increases of any generation.

An analysis of average bequest size, the proportion of Wills containing bequests and mortality rates suggests an annual total of around $450 million in Australia is received by charities via gift in Wills. It is estimated that 45 million US households will pass on $68 trillion in wealth over the next 25 years. At a recent presentation of the JB Were report, the collective scale of New Zealanders’ bequests across all charities was quoted at potentially $100 million per annum.

A Giving Australia 2016 survey shows that as people age, an increasing proportion prepare a Will. With those already over 65, 88 percent have a Will and seven per cent of them including a bequest. Given the current mortality rate in Australia is around 140,000 annually, it means there are approximately 10,000 bequests made each year, with an estimated average value of $50,000. A similar back-of-the-envelope calculation here in NZ, where our mortality rate is around 32,000 per year, with 50 per cent of the population having a Will, suggests that the average value per bequest is similar in nature.

This massive wealth transfer taking place in many Western countries should provide a strong boost for charities, particularly those that work to establish a donor programme and an endowment fund ahead of time and with a long-term view.

If you wish to discuss how you can make a bequest to the charity or cause you passionate about, or to establish an endowment fund to support the causes close to your and/or your organisation’s heart, make contact with us here at Momentum Waikato.