"Giving while living" is becoming popular as more Americans decide to spread their money among relatives and charitable causes to see its impact while they're still alive, USA Today reports.
An increasing number of Americans are setting up private foundations and hiring their children to run them or volunteer on the boards, in order to keep families working together and to support favorite causes at the same time. According to the Foundation Center, the number of independent foundations has jumped 77 percent in the past ten years to 63,059.
Eight years ago, the Center on Wealth and Philanthropy at Boston College published a report estimating $41 trillion — at a minimum — would be transferred among generations by 2052, a figure that was four times larger than previous estimates. Of that amount, heirs would receive $25 trillion and the rest would go to taxes and charities. While the center stands by its estimate, which many have called overly optimistic, its prediction that $6 trillion would be donated to charities might have to be revised, according to John Havens, one of the report's authors. "Charitable bequests are not coming in at the level we anticipated because more people are giving while they're alive," he said.
Most of the gifts that pass among family members are small. Paying for education is one way that older generations are helping younger ones. In a 2006 survey of 828 people who had grandchildren under twenty-one, 55 percent said they contribute in some way to their grandchildren's education, often using prepaid "529" college plans that allow money to grow tax-free. In the past three years, the amount invested in 529 plans has doubled to nearly $105 billion and is expected to double again by 2011, though how much has been funded by grandparents is unclear.
Handing down lessons of charity is one reason for the increase in the number of family foundations. Many of the wealthy and not-so-wealthy who are establishing family foundations do so to maintain close relationships. "You have these multigenerational meetings, and the discussion around the table is whether the money goes to help the environment or education or to individuals still suffering in New Orleans," said Karen Fahrner of Bryn Mawr Trust Wealth Management in Philadelphia. "It's a nice way to pull families together."