A substantial amount of wealth in the U.S. is in the process moving from baby boomers to their heirs. Called the Great Wealth Transfer by many, it will see an estimated $30 trillion in assets — some sources report that figure at $68 trillion, others even higher — change hands over the next few decades.
Locally, John Petures Jr., president and CEO of the Akron Community Foundation, says in the next decade alone, an estimated $10 billion will move from one generation to the next just in Summit and Medina counties, a sum that has significant potential to do good in those communities.
“If we were to secure 5 percent of that $10 billion in funds that were established here — not 50 percent, 5 percent — we’re talking about ballpark $537 million worth of assets, added to a community foundation that already has $200-plus million in assets,” he says. “Keep doing the math: 5 percent is the payout annually for distributions. Ready for the number? $27 million worth of grant-making in a single year.”
It’s hard to argue with significantly increasing the amount of money an organization is able to give to area nonprofits. But those figures only materialize in nonprofit coffers if the ACF and its wealth-transferring fund-holders can make the case to Gen-Xers and millennials — many of whom are leaving to live elsewhere — that they should give part of that wealth back to the community, the community in which that wealth was likely generated.
ACF is growing and gearing up to be a facilitator of this massive generational wealth transfer. Since Petures joined the foundation almost 11 years ago, its assets have more than doubled to nearly $225 million, and it’s made $13.2 million in total grants and distributions during fiscal 2018, an all-time high for the organization.
The reason for the success?
“We became a more donor-centric organization,” Petures says. “We embrace and enhance the work of charitable people who make a permanent commitment for the good of the community. We listen, we find out what they care about, and we find ways to connect them and to maximize ways that they can be generous in benefiting those things they care about most in the community.”
To do that, ACF made what Petures calls an investment to become more competitive. It stepped up its marketing by rebuilding and modernizing its website and hired a marketing director to improve its outreach, in part through paid advertising — a first for the organization.
It also added staff, which now totals 21, double the number when Petures came to the organization in 2008. Many of these hires have roles involved in both the cultivation (attraction) and stewardship (service) of fund-holders. The move was necessary because the foundation isn’t based on transactions; it’s based on relationships.
“I learned that people don’t give to causes. People give to people,” Petures says. “And to build those relationships — and really to distinguish ourselves from the private donor-advised fund-holders — it took people to do that. It took more boots on the street in raising the money.”
Petures also learned about fund-holders’ desire to connect more intimately with the beneficiaries of their generosity — the organizations working in the field addressing community issues.
“They just didn’t want us to tell them, ‘Here’s where the needs were,’” Petures says. “They wanted to see it.”
ACF switched from primarily talking with people in its boardroom, explaining the problems and the pathways toward their solutions, and instead offered them opportunities to visit the nonprofits and the communities that stood to benefit from donors’ gifts. Through this format, he says nonprofits, community leaders and organizers can speak for themselves, directly to the people who can help fund their efforts to make real and tangible change happen.
“We connect them to those leaders,” he says. “And when they learn about it, they tell others. They come back and tell us how they’re excited about it as well.”
By listening to its fund-holders, the ACF is also becoming more donor-centric by adjusting its standard donor-advised fund agreement. Previously, the agreement did not allow for legacy advisement, meaning that once an individual fund-holder who established a fund passed away, those funds often, by the sheer nature of the language of the agreement, would become part of the ACF board’s discretionary pool and available for grant-making.
“And when we looked at leading practices across the county, it was like, wait a minute, this is rather simple. Just change the provision for those that want to pass down this opportunity to give back to the community to the next generation of children and grandchildren,” Petures says.
In new arrangement, the family member who takes over the fund has the authority to make grant recommendations moving forward. This is a critical demand of aging boomers who are about to bequeath the largest collective inheritance on their heirs this country has ever experienced and want to ensure their familial benefactors have the means for community giving.
But in addition to the means, Greater Akron fund-holders, as well as donors countrywide, are expressing concern that their children and grandchildren may not appreciate the importance of giving back to the community in which their families’ wealth was created. To help make the case for community giving, many are working with their community foundations to find a way to continue their family legacy of community giving.
One tactic the Akron Community Foundation will employ is to create a place where multiple generations of family can get together and talk about wealth and giving. That will manifest as the Center for Family Philanthropy, a newly approved extension of ACF’s Cedar Street building.
The Center for Family Philanthropy initiative was first brought up in the ACF boardroom in 2016. Donna M. Coury, J.D., director for the center and the one who will head up the initiative for the foundation, says the desire of fund-holders to have these family meetings sparked the initial conversation.
To facilitate those conversations, a few of the foundation’s development directors will undergo training to help the foundation better conduct multigenerational family meetings at the center, which will host families — in person and through videoconferencing — and house a library to store families’ philanthropic work, their mission statements and meeting notes so that information can be passed from one generation to the next.
“The physical space is important because it makes a welcoming place to bring people together to have discussions and talk about philanthropy, and obtain information on the community and grant-making,” Coury says.
Another ACF initiative, The Institute for Emerging Philanthropists, is dedicated to wealth inheritors — as well as young financial advisers and young professionals — with an educational program designed to support, inspire and cultivate developing donors. ACF will work to identify, then nurture, the community’s emerging philanthropic leaders with the aim of giving those in this group a sense of the critical needs of the community, then teach them practical philanthropic strategies to address them.
It will be structured in classes that deal in practical matters, such as developing a mission statement and how to evaluate nonprofits to make sure that their donations effectively address the issues they care about.
“It will also help them develop a lifelong commitment to improving the community and the lives of people around them and to developing their own personal philanthropic goals and values,” Coury says.
Each member of the class’s 20 members will be asked to offer a $2,500 gift to their nonprofit of choice, which ACF will match; at the end of each year-long class, $100,000 will make its way into the hands of the community’s nonprofits.
Community is everything
Both initiatives are being introduced via a concert and conversation with Peter Buffett. The son of the Oracle of Omaha, Warren Buffett, and an accomplished musician, author and philanthropist, he will take to the stage at E.J. Thomas Performing Arts Hall on May 16 to publicly kick off the Center for Family Philanthropy and present the inaugural class of the Institute for Emerging Philanthropists.
Buffett became an “accidental philanthropist” after his father pledged in 2006 to donate 350,000 shares of Berkshire Hathaway Inc. stock to create the NoVo Foundation, which Peter Buffett and his wife, Jennifer, run.
“It was not something I thought I was going to be doing or really thought about much at all until it became part of what my life was going to be all about,” says Buffett.
When speaking to families across the country through his talks titled, “Life Is What You Make It: A Concert & Conversation with Peter Buffett,” he tries to help those who are in a similar situation understand the importance of exploring how family wealth was created, where it came from and the systems in place that allow one family to have so much while other families have so little.
“Either wealth is going to isolate you from what real community is, which is diversity and complexity and different points of view — you can essentially buy your way out of community, in a broader sense of the word — or it can give you a window into it by looking at how the wealth was created, where it came from and who’s not participating, and start to redistribute it in ways that might potentially build community,” Buffett says.
He says that we are nothing if we’re not in community and in relationships, and that it’s critical to focus inward to determine what’s needed and how each person can effect change where they live.
“Community is essentially everything,” Buffett says. “And a foundation is great way, at that level, to know what’s going on, what’s needed and who can help.”