Sometime between now and the first part of the next century lots of things are supposed to happen to those of us who are still around.
We will be older, perhaps wiser, and some of us might even be happier. But a few million of us are projected to be so far ahead in one category that all of the other categories might appear in-sig-ni-fi-cant.Money will come in the mail. Lots of money, money filtered through eras past, money that someone else accumulated, money acquired mainly because of our birth, marriage or some ancestor's death.
The baby boom meets the inheritance boom.
By the turn of the century it has been estimated that $8 trillion - give or take a trillion - is going to be passed along in America from the so-called World War II generation to the boomers. It marks the largest intergenerational transfer of wealth ever.
If Uncle Sam had all that money, there would be enough to bequeath $32,000 to every single one of his 250 million nieces and nephews, or, enough to pay off the current $4 trillion national debt not once, but twice.
You may stop supposing now because that will not happen. Experts say the wealthiest 1 percent of the families will retain one third of that cash (roughly $2.67 trillion). The following 9 percent will inherit another third. That leaves 90 percent of the population fighting over the leftover third.
"The rich get richer," said Virginia Hodgkinson, vice president for research at Independent Sector, a Washington organization whose goal is to increase giving and volunteering.
Independent Sector, foundations, charities and heirs are watching the inheritance boom closely. With trillions at stake - that's a number followed by 12 zeros - it remains a mystery whether, and how, the older generation and the boomers will give as they prosper and age.
What is no mystery is that the money is there, largely in the control of those 55 and older.
"This is the first broad-based generation that really came in with the good economy of World War II, plus that had pensions, plus that was ready to save, plus that hit the high housing market. Their homes increased far more than in previous generations," said Hodgkinson.
During the '80s the number of millionaires rose 1,600 percent, she said. And though the average millionaire's wealth went up 1,700 percent, giving only increased 400 percent in the decade. Some of the wealthiest Americans seem to be sitting on their nest eggs.
The $64,000 questions: What will eventually happen to those trillions? How much of it will be shared?If history repeats itself, much of the next generation of heirs may simply elect to keep the money, use it and pass it along to subsequent generations. Some may elect to give some away, but history tells us that the level of giving among the truly rich rarely keeps up with the rate of gain.
Part of Hodgkinson's job has been to analyze philanthropic trends discovered in surveys conducted by the Gallup Organization. A 1990 Gallup survey reported that only one in five people leaves a bequest to charity. Hodgkinson said the results of the newest of the Independent Sector biennial surveys, due in October, seem to indicate a continuance of that trend.
"If it's all going to be just an intergenerational transfer, these people aren't giving back to the community, and it was the community that created the wealth to begin with," she said.
Hodgkinson isn't the first person to be concerned about the disposition of wealth. In fact, there was a man who lived a century ago who faced the same dilemma: Andrew Carnegie.
Critics can argue about how virtuously Carnegie gained the hundreds of millions in his fortune, but, as Hodgkinson said, few can argue with the manner in which it was redistributed.
Besides Carnegie Hall, the Carnegie Institute and numerous foundations, Carnegie financed the building of more than 2,500 libraries around the world.
Carnegie had a vision. In his essay titled "The Gospel of Wealth," he examined the avenues open to the disposition of wealth.
"It can be left to families. It can be bequeathed to public purposes. It can be administered by its possessors during their lives," he wrote in 1901.
Acknowledging that the first and second modes have been the most popular, Carnegie then proceeded to make a case for the third choice, the practice of stewardship:
"To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and, after doing so, to consider . . . returning their surplus wealth to the mass of their fellows in the forms best calculated to do them lasting good."
Many in the lower and middle classes might chuckle sarcastically at that notion today. There is not much evidence that the rich, as a whole, are looking out for the poor.
In fact, the champion givers in our time, according to Hodgkinson's research and the Gallup survey, are the least affluent.
Those with incomes of $10,000 or less gave 5.5 percent ($550) to charity, a higher percentage than those with incomes between $75,000 to $100,000 (who gave 3.2 percent or $2,400 on a $75,000 income) and those with incomes of $100,000 or more (who gave 2.5 percent or $2,500 on a $100,000 income).
But change may be afoot.Asmall but growing number of young millionaires and potential heirs to fortunes are spreading around millions of dollars that heretofore might have been handed from generation to generation in the same family.
Though a lot of the new giving has political and social motives, it is still, at its base, an attempt to share as Carnegie did.
The recently published "We Gave Away A Fortune" (New Society Publishers, Philadelphia, $14.95) chronicles the life changes and processes of 16 people around the country when they decided to give away inheritances ranging from hundreds of thousands of dollars to tens of millions.
Included among those contributing to the book is George Pillsbury Jr., son of former Sen. George Pillsbury and, like his father, an heir to the Pillsbury estate. Another is Tracy Gary, who is related to the Pillsburys, but whose fortune came from her father's work at GTE.
When Gary was attending boarding school in the 1960s she knew she was living a "life of privilege," but it had never registered in her mind that someday she would inherit $2 million.
Gary had a nanny, Nellie Lorance, who traveled with the family wherever it went.
"When I was 9, I asked Nellie how much she made. She said $75 a month, and room and board," said Gary, who now lives in San Francisco where she administers a foundation that benefits women's causes. "My father was making thousands of dollars. I saw Nellie working 60 hours a week."
At age 23 Gary inherited $2 million and it dawned on her that the money had power, influence and lots of strings attached - strings to other people she could and should help.
Young George Pillsbury had come to a similar conclusion when he inherited his first sack of the Pillsbury flour fortune, $400,000:
"My view was that this money rightfully should have been going to employees of the Pillsbury Co. over the years but was skimmed off and ended up in trust funds for people like myself. I felt it was not my money," he wrote in "We Gave Away A Fortune."
Gary has given away, to date, $1.2 million. Pillsbury, who could not be reached for comment on this story, didn't total his giving, but he mentions gifts totaling about half a million, and he gives this forecast for his future giving:
"It is going to be hard for me in this lifetime to give away all of my money - there is just too much of it. Over the past three years my portfolio value doubled from $700,000 to $1.4 million. And just last year I gained control over more money in a trust fund."What separates some of the younger givers from the older generation is their willingness not only to give away the interest their nest eggs earn, but, in some cases, the eggs themselves.
The wealthy have long taught their children to never give away "the principal." That principle allows families with money to be philanthropic with the interest earned, but keep control of the actual fortune so it can be reinvested in businesses and/or passed down through the generations.
Against their parents' wishes, some have given away the principal.
Among them is Chuck Collins, 32, an heir to the Oscar Mayer fortune who, since learning of a $300,000 inheritance from his grandfather 14 years ago, has given it all away. Today he lives on a $25,000 salary in the Boston area where he works for a low-income community group.
The Pillsbury and Gary examples come from the bank of old money. What interests organizations who champion philanthropy is how charitable the coming generations will be.
Christopher Mogil, heir of an executive of a clothing manufacturing company and a co-author of "We Gave Away A Fortune," is optimistic the inheritance boom will lead to a better world.
"The '80s were famous for being a time of greed. Make money, make money. Now we're getting some of the fallout. We're seeing the scandal of United Way, CEOs making millions. That type of thinking doesn't get the planet where it needs to go. We're hopeful in the '90s there's going to be a money revolution."
Distributed by Scripps Howard News Service
Those with incomes of $10,000 or less gave 5.5 percent ($550) to charity, a higher percentage than those with incomes between $75,000 to $100,000 (who gave 3.2 percent or $2,400 on a $75,000 income) and those with incomes of $100,000 or more (who gave 2.5 percent or $2,500 on a $100,000 income).
Virginia Hodgkinson
citing a Gallup survey