Recent research on transfer of wealth numbers led the Community Foundation of Southeast Kansas to up its fund-raising goals — by more than $100 million.
The Kansas Association of Community Foundations conducted a transfer of wealth study for the next 50 years, indicating that over the next 50 years, more than $14 billion will transfer from one generation to the next in Bourbon, Cherokee, Crawford and Labette Counties combined. That number is estimated at more than $2.4 billion over a 12-year time frame.
“Our conservative goal is to secure 5 percent of the total amount transferred in Bourbon, Cherokee, Crawford, and Labette Counties by encouraging every resident to give to the community foundation for the benefit of future generations,” said Kimberly Clark, Community Foundation of Southeast Kansas executive director. “Through this generosity, we have the potential to add $121,312,565 to our community foundation endowment in the next 12 years, which would help us provide grants to local nonprofits and ultimately strengthen southeast Kansas.”
That’s a huge bump from the foundation’s goals before the study. Clark said that now, within the first seven years of the foundation, it had more than $6 million in assets. Before the study came out, the foundation’s goal was to get to $20 million by 2020, the same 12-year time frame.
“(The study) gives everybody a working tool,” Clark said. “It’s a wonderful figure. We’re just trying to capture 5 percent.”
And that 5 percent is a workable number, according to Richard Oler, one of the foundation trustees and a retired Certified Public Accountant.
“It’s realistic for a group of charities, including the Southeast Kansas Community Foundation, based on data from other states that have done similar transfer of wealth studies,” Oler said. “Roughly 5 percent has transferred to charities other than churches and universities.
“On the estates that I worked on (as a CPA) that had charitable interest, that number could be accurate,” Oler said. “It might even be low.”
Clark said that following the Great Depression and World War II, the U.S. entered a golden age of business growth and personal prosperity. Over the next 50 years, a conservative estimate of $41 trillion nationwide will change hands. Most will go to heirs and taxes, but Clark said that the foundation’s hope is that a portion will be preserved and invested in local communities.
“For generations, people lived their entire lives close to their birthplace and as wealth passed from one generation to the next, most stayed in the same county. This is no longer true,” Clark said. “Once the wealth leaves our community, it may never return, so we hope to encourage residents to designate a portion of their estates, 401(k) and IRA accounts or life insurance policies to the community foundation.”
The Community Foundation of Southeast Kansas manages endowments that will ensure southeast Kansas enjoys the long-term benefits of this transfer of wealth opportunity. By definition, community foundations are tax exempt, public charities created by and for the people of a local area, such as southeast Kansas.
Clark said the foundation would invest the money and use just 5 percent of it each year for community betterment projects and programs undertaken by local nonprofits. She said the foundation would start an awareness campaign to try and drum up interest in the foundation.
“This is an option,” Clark said. “You can still care for yourself and your family while caring for your community as well. There’s an opportunity here to offer gifts to future generations. If we don’t, what we experience today, we may not have 50 years down the road. It’s a quality of life issue.”
The Transfer of Wealth study was commissioned by the Kansas Health Foundation and conducted by the Center for Economic Development and Business Research at Wichita State University. Future intergenerational wealth transfer for each county in Kansas was estimated based on a model initially created by Boston College.
According the study, a statewide total of $598 billion will transfer from one generation to the next by 2060 and $66 billion will transfer by 2020.
Kevin Flaherty can be reached at kevin.flaherty@morningsun.net or by calling 231-2600 Ext. 134
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