Charitable Boom Is Coming, But Not for Several Years

Demographics point to a significant boom in charitable planning beginning in about five years—and that eventually should mean a healthy increase in planned gifts received by charities.

The coming boom is one of the conclusions of researcher Russell James, J.D., Ph.D., an attorney and professor at Texas Tech University who has analyzed a massive government study of Americans aged 55 and older. His 2013 research report is titled American Charitable Bequest Demographics.

Number of older Americans will soon increase
The number of older Americans will soon be on the rise—and they are the primary donors of charitable estate gifts. James found that more than 80 percent of charitable bequests come from decedents who are aged 80 or older. Currently there is a “baby bust” of people entering their 80s because of low birth rates during the Depression in the 1930s. But the number of people entering their 80s will begin skyrocketing in about five years—and in 25 years when many Baby Boomers will be in their 80s the annual number will be almost double what it is today.

Percent of childless women also increasing
James found other demographics that also point to an increase in charitable planning. The percent of childless women is on the rise, and childlessness is the number one demographic predictor of charitable planning. Education attainment is climbing as well, and it also is a strong predictor.

But the number of wills is down
All that good news is somewhat offset by the declining percentage of older Americans who are making wills. From 1998 to 2010 that percentage fell from 61 percent to 54 percent, and it is continuing to decline. James speculates that one reason is because more people are using transfer on death and payment on death designations that are much easier to set up than wills—and are free. Such designations, which were not part of the study, also can be used for charitable contributions. Of those 55 and older who do make wills and/or trusts, an increasing percentage have charitable beneficiaries. In addition, funded living trusts are up even though wills are down—and wills are still being used by more than half of Americans 55 and older.

The variety of gift options available to donors shows how important it is to market the significance of estate planning and all its available tools. The best choice for each donor depends on individual estate-planning circumstances, which is why it is crucial for donors to consult with their attorneys.

Patience is a virtue: most dramatic increases in actual dollars charities receive not for several years
“The excitement about the much-discussed wealth transfer for charities may still be a bit premature in terms of dollars received,” James wrote. “The most dramatic increases in actual dollars received by charities may not be seen for several years. … However, the population boom should ultimately have a positive impact.”