As the baby boomer generation ages in the new decade, they are likely to leave more money to charity than ever before. But it will come at the expense of their children's inheritance.
Several boomer billionaires have publicly said they will give most of their wealth to charity rather than to their children when they pass away. But many other boomers have been discretely planning similar moves, say wealth advisers.
"Based on what we’re seeing here I think the marketplace has vastly underestimated the amount of wealth which is going to go to charity in the next two decades as baby boomers are dying," says Andy Sams, director at TwinFocus, a multi family office.
The wealth management industry has been eyeing up the $30 trillion expected to be passed from one generation to the next over the following three decades, as estimated by PwC. However, as they reach retirement, many wealthy boomers are spending this money on charitable projects instead. In 2020, the average age of a baby boomer reaches 66, which means retirement for most men around the world.
"Definitely this generation is leaving more wealth to their charity foundations than to their children," says Anita Choudhrie, a leading (boomer) philanthropist, who runs The Stellar International Art Foundation and Path To Success, which empowers disabled women in sport.
The number of charitable foundations has increased rapidly in recent years. Nearly three quarters of all foundations studied by UBS and Harvard Kennedy School's Hauser Institute were established in the last 25 years. In Asia, where most wealth is new, they are more likely to have been founded in the last 10.
Leaving A Legacy
As well as backing charities with her own wealth, much of Choudhrie's work is fundraising from fellow boomers. The idea a "legacy" is starting to come up more and more at dinner tables, business boardrooms and family forums as this generation decides how it wants to be remembered, she says. "Legacy is a buzzword today."
For the over 65s, this legacy is most likely to be translated into education, art and culture. Almost nine in every 10 such individuals direct at least part of their philanthropic efforts to this area according to a report from Wealth-X. "This very proud generation of baby boomers wants to leave a legacy in memory of their upbringing and heritage," adds Choudhrie.
But this is not a new idea. Already The Giving Pledge, founded by Warren Buffet and Bill Gates, has 205 signatories who will give most of their wealth to charity when they die. Both Gates and Buffet have also said their own children will receive only a fraction of their wealth.