Transferring wealth across the nation

At last week’s Philanthropy Australia national conference, we released A Blueprint to Grow Structured Giving, with the goal of doubling Australia’s giving to $5 billion in the next decade. This week, we kickstart the discussion with a deeper look at three of the Blueprint’s elements

  • Opportunities to grow giving and the factors to help address them.
  • Spotlight on intergenerational wealth transfer.
  • Spotlight on community and place-based philanthropy.
 

One of the key elements of the aspiration to double the nation’s structured giving in the next decade is the estimated $2.6 trillion wealth transfer forecast to occur in Australia between 2021 and 2040.

While most of those of those funds will originate from the nation’s big cities on the east coast, almost a third will take place in our regions in the next decade. 

And that – estimated to be $333 billion by 2030 – represents a new opportunity for community foundations and other regionally-based organisations to have increased impact.  

According to Seer Data and Analytics, Sydney and Melbourne provide the strongest basis for intergenerational wealth transfer. In Sydney and suburbs, for example, the estimated wealth transfer in the Lindfield-Roseville area between 2020 and 2030 is $4.9 billion, or an average of $4 million per household. In Baulkham Hills, West-Bella Vista it is a total transfer of $1.9 billion and an average per household of $2.7 million. In Melbourne’s Toorak, the total transfer over the decade is estimated to be $2.6 billion and an average per household of $2.7 million, while in South Melbourne it’s $613 million in the transfer, at $1.1 million average per household.

Once the analysis shifts to regional Australia, the forecast wealth numbers are understandably smaller, but the potential impact may be greater than it will be in the cities.

The Seer Data and Analytics’ table of the 12 top areas for wealth transfer outside Australia’s major cities range from Busselton in Western Australia ($1.54 billion, with a per household average wealth transfer of $900,000), to Bowral in NSW ($1.483 billion, $1.1 million), to Buderim - North in Queensland ($1.299 billion, $900,000).

What is also clear that in some of those areas, such as Busselton or Tamworth in NSW, there is a forecast large wealth transfer but there is also a lower giving level. That could represent an issue, but for the consolation that both areas have high a level of volunteering. And that’s because volunteering and charitable donations have a correlation. According to Seer: “What we learnt was that areas with volunteering have higher rates of charitable donations and that the relationship is even stronger in wealthier areas. Our analysis suggests communities are expected to exhibit an additional 3.5% rate of giving for every additional 10% rate of volunteering.’’

The transfer of wealth equation, not surprisingly, reflects our ageing population. In the next 20 years, 38 per cent of the total wealth transfer is forecast to come from those aged 85 and above.

The cohort who will be passing their wealth on at the peak of this wealth transfer are now in their late 60s and 70s and are potentially entering retirement. So now is the time to have that discussion about estate planning.

One regional community foundation has already embraced the idea of tapping into the intergenerational wealth transfer potential. The Wangaratta-based Into Our Hand Foundation used Seer Data and Analytics to provide the picture of wealth transfer in its region in north-east Victoria. As Into Our Hands’ Executive Director Sarah Thompson said recently: “At the moment growing philanthropy in the regions is a struggle,’’ she says. “It’s not easy to live in small communities where you raise money and you’re accountable to them.

The Seer results estimated household wealth transfer in north-east Victoria in five-year intervals from 2016-2066 by age, gender, household type and locality. The conclusion was that if one per cent of the wealth transfer from the region was bequeathed to the community foundation, the foundations’ endowment could build to $25 million in 10 years.

If 10 per cent of households in Wangaratta and the adjoining council areas of Indigo, Alpine and Mansfield left five per cent of their household wealth to Our Hands, the Foundation corpus would be $1.5 million within two years, and $5 million in five years. On any measure, it represents a significant contribution to the Foundation – and therefore, the communities it serves.

The idea has generated enthusiasm across the community foundation sector. Australian Community Philanthropy has formed a steering group to explore lessons from existing transfer of wealth campaigns that can be applied to community foundations.

It is a potentially transformative innovation – 70 per cent of the nation’s community foundations are located in rural and regional Australia.

ACP chair Ben Rodgers says: “Giving to place is a legacy that people can visualise – 100 years from now, local people will be coming together to remove the barriers faced by their neighbours. Transfer of Wealth Campaigns can help inspire people to partner with a community foundation to have an enduring impact for the place they call home.’’

As the Blueprint makes clear, community philanthropy and place-based giving has become more common as a means of addressing local and driving social change. This kind of place-based philanthropy has the potential to act as a motivating and enabling force, helping to build collaborative relationships, galvanise coalitions, provide capital, and mobilise resources at a local level. These local foundations can raise funds and make grants locally, operating as “funding’ and “doing’’ organisations, and occupying a powerful role in regional communities.

If the response to the Black Summer bushfires and the pandemic showed anything, it was how much we value our local community and how willing we are to support it, with time and money.

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