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Business
Boston’s rich expected to
donate large sums
In 50 years, area gifts may total $1 trillion
By Beth Healy | G LOB E STAFF
MARC H 05 , 2013
Despite an enormous loss of wealth during
Paul S. Grogan says, “People
the Great Recession, Boston-area families
don’t want to just write a check
and estates are expected to donate a massive
anymore.”
sum to charities over the next half century,
perhaps eclipsing $1 trillion, according to a
new study commissioned by the Boston
BILL BRETT FOR THE GLOBE/FILE
Paul S. Grogan says, “People don’t
want to just write a check anymore.”
Foundation.
The report, based on research by Boston College’s Center on Wealth and
Philanthropy, found that the recent recession erased about $350 billion in assets
that were likely to flow to charities by 2061.
Even so, a huge wave of generational wealth will change hands over the next
several decades, the study found, ranging from $950 billion to $3.9 trillion,
depending on how fast the economy grows.
Of that, about 42 percent will probably go to charity, according to the study. That
would mean between $419 billion and $1.6 trillion designated for nonprofits
over the next five decades. And increasingly, people will pass that money on
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after they die.
That’s a fundamental shift in the way wealthy people have historically
donated money, said John J. Havens, associate director of the philanthropy
research group at Boston College. “They want to have more say about where it
goes, and make sure it happens.”
That’s the Bill Gates and Warren Buffett approach to philanthropy, and it has
been catching on over the past decade.
In particular, entrepreneurs and investors who made their own money — rather
than inheriting it — are interested in being more hands-on with their giving. And
for those who plan to leave their money in family foundations, they want to get a
mission and responsible family members in place while they are able to oversee
the efforts.
“That’s a profound change,’’ said Paul S. Grogan, chief executive of the Boston
Foundation, which commissioned the study. “There’s a new emphasis on really
engaging donors. People don’t want to just write a check anymore.”
The new study is an updated version of research BC produced for the Boston
Foundation in 2006. The foundation, a large community-based grant maker,
paid for the updated version to get a sense of the impact the financial crisis had
on wealth, and would have on future giving.
What the researchers found was in some ways not surprising: The very wealthy
lost money but were not nearly as severely harmed in the crisis as people of more
modest means. The hardest hit were the 41 percent of households in Greater
Boston with a net worth of less than $100,000. Those 700,000 households saw
their collective wealth plummet 76 percent in the recession, to $3.3 billion.
Debt proved to be a big burden for many of those people. The number of
Boston-area households with a net worth of zero or negative swelled by 48
percent, to 244,043 in 2010, according to the study. Nationally, the number grew
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Those figures are daunting, Grogan said, and could signal an even greater need
for the wealthy to fund charities that help the poor.
The 14 percent of Greater Boston households worth $1 million or more (238,887
households) lost only about 16 percent of their wealth from 2007 to 2009, the
Boston College study found. The average household in that group lost $689,000,
and together, they lost $164 billion. But their resources allowed them more
resilience than people of modest incomes.
The good news, Grogan said, is that those people can help solve some of the
region’s problems. The bad news, he noted, is the “severe inequality and
declining mobility — the declining ability for people to actually live the American
dream.”
Beth Healy can be reached at bhealy@globe.com.
© 2013 THE NEW YORK TIMES COMPANY
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