From a Model of Scarcity to Abundance
Guest post by Aaron McMurray, Chief Strategy Officer, Innovia Foundation
For many nonprofit and community leaders, the narrative of scarcity and lack of funds to address their communities’ greatest opportunities and challenges can be the biggest barrier to progress.
To counter this narrative of scarcity in rural communities, Innovia Foundation commissioned a transfer of wealth study in June 2019. Innovia serves the 10 counties of Eastern Washington and 10 counties of North Idaho. They collaborated with Locus Impact Investing to better understand the way that wealth is held in the foundation’s 20-county service area. The study produced conservative estimates about the amount of wealth that will transfer from one generation to the next in the coming decade.
The results of that study have created ripples across eastern Washington. Nonprofit leaders, engaged citizens, and philanthropists alike are taking note of the staggering amount of wealth that is held in our region, and the equally impressive amount that will transfer generationally in the next ten years.
In Eastern Washington alone, the current net worth is over $200 billion, with over $29 billion set to transfer from one generation to the next. Innovia Foundation has challenged community leaders across the region to imagine the possibilities if just 5% of this wealth transfer were retained and reinvested in local community endowments. The impact would be transformative. With 5% of the coming wealth transfer, over $1.4 billion could be invested in local community endowments, generating over $60 million annually. This could support grantmaking for nonprofits doing important work in their communities, impact investing to create local art districts that propel economic growth and vitality in rural communities, annual support for after-school programs, affordable childcare and early-learning centers, and access to quality healthcare for rural residents.
What Does This Mean for the Nonprofit Fundraisers?
For nonprofit fundraisers, the timing could never be better to talk to donors and supporters about gifts of bequests and other appreciated assets to your organization. Over 95% of wealth in the United States is held in non-cash, appreciated assets. Organizations that talk to their supporters about gifts of these kinds of assets have been demonstrated to experience over 55% higher fundraising growth relative to peer nonprofits that only talk to donors about gifts of cash.
What Does This Mean for Donors?
For baby boomers and retirees (the demographic who hold the vast majority of the wealth that will transfer in the next ten years), the transfer of wealth data invites them to consider their legacy and impact of the wealth they have created. In the absence of a plan, the majority of wealth that regions like Eastern Washington have built leaves those communities as it transfers generationally. The alternative for wealth holders is to join the growing number of community leaders and philanthropists who are committing to leave just 5% to be invested in local community endowments to benefit charitable initiatives and organizations for generations to come.
Innovia Foundation invites you to join us in imagining the impact of 5% for your community. For more information or to join the conversation, feel free to email Aaron McMurray.