What about Bequests? | Sharpe Group
Posted July 1st, 2011

What about Bequests?

Main – Giving USA—Figuring Out the Figures
Related – Should Prior Evaluations Be Revisited?


One can also be confused when looking at Giving USA reports on giving by bequest in recent years. For example, the 2011 report announced an 18% increase in bequests for 2010. So far, so good.

Looking more closely, however, this comes on the heels of a reduction in the 2009 estimate from $23.8 billion to $19.2 billion. The revised 2009 number represented a 39% decrease over 2008! We should keep in mind, therefore, that the 2010 bequest number is at this point simply an estimate based on various inputs related to mortality and assumptions regarding decedents’ behavior. It may thus be wise to go slowly in benchmarking bequests against the 2010 “increase” as the IRS numbers are not yet available for that year and past experience indicates a high likelihood that this figure may be dramatically revised up or down in the future.

Readers will no doubt recall the “Great American Wealth Transfer” that was originally predicted by Robert Avery and Michael Rendall in 1990 and then revisited in another projection by Boston College researchers Paul Schervish and John Havens in 1998. When examining Giving USA bequest figures over the last decade, one might well ask, “What happened to the wealth transfer?”

It is important to note that despite the slow growth in bequests over the past decade, this source of philanthropic support has weathered unprecedented economic challenges very well and, even considering a tumultuous investment market, 9/ll and other challenges, more funds have been left by bequest to charity over the past 10 years than at any other time in U. S. history.

Where is the rest?


What happened to the predicted growth in charitable bequests? While there are a number of factors that affect charitable bequest income, one of the most important is the number of deaths in America. In a surprising turn of events, death rates in recent years have been relatively flat because census death rate projections did not live up to expectations and in fact, to the surprise of many, in some years numbers of deaths actually declined.

As in the case of current giving, programs that have had significant increases in bequest income in recent years should be evaluated in terms of outperforming the macro trends.

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