It is estimated that over the next 10 years, approximately $30 trillion will transfer to surviving spouses, children and charities. With this transfer of wealth, and because statistically women generally live longer than men, it is estimated that by 2030 women will control 70% percent of wealth in the United States, through both earnings and inheritance.
As this major wealth transfer is already in process, now may be the time for philanthropically inclined women to identify their philanthropic goals and to allow those goals to be reflected in their actions.
Change is underway
In the past, married couples tended to make joint giving decisions. But the current data coming out of The Women’s Philanthropy Institute at the Lilly School of Philanthropy indicates that over the last decade, joint giving has declined from 73.4% to 61%, suggesting that spouses are making independent decisions about their giving, and women are realizing that is it acceptable to have different philanthropic goals within the family unit.
Couples acting independently in their philanthropic decision-making also speaks to the larger trends of female entrepreneurship, wealth creation and ownership of their long-term financial health. Women first began entering the workforce in earnest about 1972, and now own 40% of businesses in the United States and generate $1.8 trillion in revenue. While COVID-19 has hindered women’s progress in the workplace most recently, it has also increased entrepreneurship out of necessity. As both revenue generators of wealth and philanthropists, women have a unique perspective. Today, more and more women choose to support community-based organizations that empower and educate other women to own their own businesses or to learn a skill or trade to support their families, paving the way for future generations.
Historically, women have chosen to give more upon death than they did during life by choosing to recognize charities in their estate plan. When they did choose to give during their lifetime, it was to a church or synagogue or to support their children’s day-to-day activities. Today, women choose to give as a community, not just to their communities. There is an increase in giving circles, which are communities of women who come together to donate money and time to support a common cause or geographic area. Giving circles allow women to think through how they want to relate to and support a community. COVID-19, social media and increased awareness have all contributed to the increased interest in giving circles.
“I serve on the board of a foundation created by a San Antonio woman that is still benefiting the community that she loved and worked in,” said Daniel Lasater, PNC Private Bank market executive. “Her legacy continues as her generosity and passion continues to be felt by so many individuals. This type of legacy foundation is so much easier to create and manage today that it was when she created her foundation. The tools and options available to benefactors are so much more accessible and user friendly than they were 30 years ago.”
Living legacy
Women realize that their legacy is important and are looking for practical ways to instill their philanthropic values in the next generation. Many now feel that waiting until the will is read to impart values is too late. Naming an adult child or grandchild as the joint or successor advisor to a donor-advised fund has been a useful tool for many women seeking to instill their values in the next generation by allowing them to be part of the conversation now. In the case of a private foundation or charitable trust, members of the next generation can be named to the board or named as a co-trustee of a charitable instrument in the present day.
Philanthropy can also be a great tool to educate children about responsibility. For example, some families allocate a certain amount of funds to tweens and teenagers and ask them to do research and create a presentation advocating for the charities they would like to support.
Taking the first step
The most important step in determining a philanthropic focus might be to ask yourself “Why?”
- Why are you drawn to philanthropy?
- Why is it an important piece of the economic puzzle from your experience?
- Why do you want to be part of it?
The causes that are of interest might develop from those questions, as might a strategy to support those causes. As mentioned above, giving circles can be a meaningful way to support a common cause with other women. Families can come together and support local charities as well. Alternatively, women can establish a donor-advised fund, which women, wealth and legacy is sometimes referred to as a “charitable checking account.” These are easy accounts to establish and are typically a quick and easy way to achieve tax benefits while women are in the process of researching charities that inspire them.
Regardless of one’s entry point into giving, research and due diligence on potential recipient charities are recommended. Never give to an online request for funds without first determining if the charity and the site are legitimate. There are several online sites available (e.g., GuideStar, Charity Navigator and CharityWatch) that can assist in determining the charity’s validity.
As wealth continues to shift to women over the next decade, women’s influence over philanthropy will continue to grow. Actions speak louder than words, and the steps women take today to deploy capital to solve the problems they care about most can have global economic implications in the future.
Original article by PNC on February 2, 2023
“PNC” is a registered mark of The PNC Financial Services Group, Inc. Investments: Not FDIC Insured. No Bank Guarantee. May Lose Value.
©2023 The PNC Financial Services Group, Inc. All rights reserved