What Churches Need to Know About the Great Wealth Transfer
May 27, 2022
Have you ever microwaved Ramen without water?
Me neither, but I have a friend who has. Apparently, the Ramen turned out very black and burnt. Missing a single ingredient ruined one of the easiest meals to make.
In the financial stewardship and fundraising world we are in the midst of a key ingredient to securing the financial stability of our churches and serving our congregants.
This key ingredient is called the Great Wealth Transfer.
Understanding the Great Wealth Transfer will equip you to help your congregants walk in biblical financial stewardship, leave a legacy while reducing tax burdens, and make sure your church provides a space for individuals to experience God for generations.
Let’s dive in!
What is the Great Wealth Transfer?
Over the next 20-25 years 45 million households will cumulatively pass on $73 trillion from one generation to the next! Cerulli Associates estimates that $10-$12 trillion of that will go to charity.
Just to help you get your head around this mammoth number, these estate gifts alone will provide an average of $476 billion to nonprofits each year — a number equivalent to the total of all charitable giving in 2021. Total giving from bequests alone will be comparable to total giving from all other sources of donations combined — individuals, corporations, foundations, etc.
Where that wealth will go is being decided right now!
According to research by FreeWill, this staggering transfer of wealth is made possible by a few characteristics of the Baby Boomer generation:
- 50% more people than the previous generation
- A dramatically increased number of female Baby Boomers joined the workforce, resulting in twice as many wage earners
- Wage earners had a significantly higher education than previous generations
- Earnings were invested during an incredibly robust time in the market, which resulted in a significantly higher return on investment
- The value of Baby Boomer homes has appreciated dramatically
Additionally, the baby boomer generation had less children than previous generations which concentrates wealth per child. Baby Boomers were also more likely than other generations to have no children.
This is pertinent to churches because individuals without children are generally more eager to leave a financial legacy with causes or organizations they believe in.
How the Great Wealth Transfer Could Impact Churches
When it comes to coffee, some people are die-hard Starbucks fans and others won’t drink anything but Dunkin. People will drive out of their way to get the coffee they believe in!
Belief drives action.
In fact, belief is such a powerful motivator that it has proved a strong indicator of how people will spend their money. Studies show that people give to causes and organizations that are tied to their beliefs.
The National Study of American Religious Giving said, "Three-quarters of American giving goes to religiously-identified organizations.” This means that the wealth transfer could bring particularly massive benefits to ministry and impact on the life of faith.
Three-quarters of the $10-$12 trillion that is expected to be given to charities over the next 20-25 years, can be expected to go to religiously-identified organizations. This includes churches!
Much of this wealth will be passed through planned giving. Planned giving is a term used by the nonprofit sector to describe gifts that are given from assets instead of cash. The comparable term legacy gift infers more about what planned gifts accomplish. Through our legacy gifts, we play a role in passing on the legacy of faith to future generations.
It’s important for churches to understand this, because someone is going to receive this money. If the church doesn't get it, other organizations will. The primary reason a church — or any organization, for that matter — will not receive legacy gifts and partake in this incredible transfer of wealth is because they are not asking.
Legacy Giving Programs Help Congregants Practice Biblical Stewardship During the Great Wealth Transfer
Do you know why most people have cases on their phone?
They want to protect their phone and use it to the fullest potential. In other words, they want to steward what is valuable to them.
Stewarding the resources that God has placed in our trust is such a basic part of Christian discipleship; it empowers us to make the best use of what God has given us and not miss crucial opportunities.
For faith-based organizations financial stewardship is two fold — especially as we navigate the Great Wealth Transfer:
- Ministries need to set up planned giving programs. Legacy giving is good stewardship of the tools God has given because it provides larger and better gifts for current and future needs of an organization.
- Ministries need to have a legacy giving program to help their donors steward the wealth they have been given. Legacy giving provides a tremendous opportunity for Christians to make a powerful witness to their faith and steward the resources God has given them. However, many Christians are just as likely to not have an estate plan or a will. With a legacy giving program ministry leaders can educate, lead and accompany people through this important part of their faith journey.
Here are three ways churches can steward the resource of legacy giving and help donors steward their wealth.
Encouraging Biblical Stewardship Step #1: Educate
Do your donors know you accept and value legacy gifts?
At church, members are used to a plate being passed around for monthly or even weekly donations. If someone is involved with a non-profit they are familiar with quarterly mail requesting a gift for $50-$500. The need for small, regular gifts is normalized and understood by routine invitations.
But many donors don’t even realize that legacy gifts — typically larger gifts of assets — are an option. Creating a routine system for introducing and inviting legacy gifts increases your donor’s interest and their likelihood of an investment in your church or nonprofit.
Education like this can happen with a simple conversation, semi-regular seminars, or reminders in an email newsletter.
The important thing is that you’re reminding donors that legacy giving is an option and why an investment like this carries value for them, their family and the future of the organization they care about.
Encouraging Biblical Stewardship Step #2: Ask
Have you ever said you were going to fold your laundry while watching a show and five days later it’s still in an unfolded pile on the sofa?
That’s how a lot of people approach making a plan for their end-of-life finances. Statistics say that most people agree that having a will or trust is important, but only 33% have one! That means 67% of people have not made a clear plan for passing on their wealth to the people and charities they love.
This leaves an open door for churches and faith-based nonprofits to help individuals practice biblical stewardship and invite legacy gifts. Gifts given through planned giving, assets, or estate planning tend to be larger, provide for immediate needs as well as the longevity of an organization, and have tax advantages for the donor.
The average US charitable organization receives 10% of their total gift income from bequests. Nonprofits that have been inviting planned gifts for decades — higher education and hospitals, for example — receive more than 20% of their total gift income from bequests on average.
“Why isn’t our congregation receiving more of these gifts?” ministry leaders often ask me. And I respond with, “Are you inviting them?”
People will plan for these end-of-life gifts for the same reasons they support your ministry during life. They are grateful. They believe in your mission. They have been personally impacted. They trust you. They are loyal. Giving back brings them joy. But the #1 reason they will make these gifts is because they are asked.
By simply asking donors if a donor would consider making a legacy gift you are significantly ahead of the curve.
Encouraging Biblical Stewardship Step #3: Amplify Urgency
Procrastination is a primary reason people don’t have a will, trust, or estate plan. Remember, most people believe it's important but almost 67% of people haven’t gotten around to writing one up.
You can help your donor overcome procrastination by building urgency – tell them why now is the time to create a will or trust. Help your donors consider their loved ones, values, and the impact they want to leave.
These are three important questions for any individual to answer:
- Have you named guardians for your minor children?
- Have you considered the impact you want your estate to have on your heirs?
- Does your plan for family and ministry reflect your personal values and wishes?
Help your donors understand that dying with a will helps to prevent unnecessary financial and emotional hardship for their survivors. Guide them to see the gift a well-ordered plan can be to a grieving family.
Some of the congregations we’ve worked with have amplified the urgency of these gifts by providing free or low-cost will making services during August, Make-a-Will Month. Others have asked us to provide estate planning seminars and follow-up gift planning visits for their seniors groups. Additionally, more and more congregations are taking the comprehensive campaign approach, and including legacy gifts in their campaign goals.
Discover How Brenda Moore and Associates Can Help You Navigate the Great Wealth Transfer With Confidence
Starting a legacy giving program and navigating the Great Wealth Transfer is an exciting opportunity for churches; but, it can also feel overwhelming to guide a congregation through a rarely discussed and often sensitive subject like end-of-life gifts.
Remember, God has given us more than enough for ourselves and others. Walking in this truth allows us to lead the way in generous giving with our time and resources as well as guide others to do the same. Many donors find a deep sense of joy in the opportunity to leave a legacy through a financial gift especially when they know it’s advancing the faith they cherish.
Our work at Brenda Moore and Associates is fueled by our mission to help faith-based organizations hit their fundraising goals so that they can introduce others to Jesus today and for generations to come! We would be honored to accompany you in your journey.
Schedule a call to see if we’re a good fit to help you launch a legacy giving program or capital campaign!