Nonprofits stand to gain needed dollars

Pasadena Star News

By: Cynthia Kurtz

Posted: 11/12/2014 

Baby Boomers get the credit and the blame for many things. There are just too many Boomers and they have disrupted every system they met sometimes in good ways and sometimes in not such good ways: education, employment, popular culture and norms, and aging. Now the California Community Foundation (CCF) - a Los Angeles based foundation that supports many of the estimated 19,000 non-profit organizations in LA County - is talking about another Boomer phenomenon. 

The estimated net wealth of Los Angeles County residents in 2010 was around $1.3 trillion.  With investments and assets having increased in value in recent years that number is higher today.

All wealth is redistributed over time and CCF estimates that within the next 10 years $114 billion of this wealth will be redistributed through wills, trusts and gifts. Within the next 50 years the redistribution will reach $1.4 trillion. 

Why would CCF care about the redistribution of these dollars? Because they care about the future of philanthropy in Los Angeles County and are already helping non-profit organizations understand how to leverage these dollars for their work. 

Non-profit groups are struggling financially. The recession put extra stress on education, food, medical and other services as more individuals and families found themselves without the economic means to purchase basic needs. Non-profit organizations have struggled to keep up with the increased demands. While more people needed help, fewer people were able to support the non-profits and fundraising dollars dwindled.

As the economy slowly climbs out of the recession, non-profit organizations need to regain financial stability as well as plan for future needs. CCF has strongly urged nonprofit organizations to include planned giving campaigns as a part of their strategic plans.

Wills and trusts often include planned giving for philanthropic purposes. If just a small percentage of the wealth that will change hands in LA County - say five percent - went to non-profit organizations, the impact would be significant. Five percent of $114 billion is over $5 billion. To put that in perspective, $5 billion would cover for ten years the total operating expenses of 75 percent of the county’s active nonprofits! 

There is huge potential for impacting programs in the San Gabriel Valley. Approximately 18 percent of the County’s 10.2 million residents reside in the San Gabriel Valley.  CCF’s study found that 18.4 percent of the wealth that will transfer in the next 10 years is here in the SGV.  That’s $21 billion. Five percent going to philanthropy would provide more than $1 Billion.

Philanthropy is venture capital for investments in human “infrastructure.” Just like investments in other kinds of infrastructure – like factories, water, and transportation - investing in human infrastructure is good for the economy. It creates jobs, drives demand and increases purchasing. 

But philanthropy does more. It provides help and hope – like job training for people who can’t find work, health care so people can lead productive lives, and the safety net that keeps people from slipping into poverty. Clearly, human infrastructure investments are equally important as the other infrastructure investments we must make.

So Boomers, this time you can be heroes. Think about how you are going to redistribute your dollars. Five percent for human infrastructure would be a good investment.