Billions of dollars to be passed down

Wealth transfer will be significant in the Delta over the next fifty year
By Susan Montgomery

Within then next 10 to 50 years, wealth from the baby boomer generation will be inherited by their children or other beneficiaries.

How much will that be? Nationwide, about $30 trillion, researchers say.

In Mississippi, the amount is expected to run to almost $38 billion over 10 years and nearly $324 billion over 50 years, according to a recently issued report.

In the northwest Mississippi, wealth transfer projections amount to almost $5.8 billion over 10 years and $55 billion over 50.

People and institutions trying to build endowments are particularly interested in how much of these funds are saved for the communities from which they are generated. Among these are the Community Foundation of Northwest Mississippi.

The foundation, which serves 11 northwest Mississippi counties, has distributed $20 million in donations to nonprofits and charities since it was founded 15 years ago in DeSoto County. The foundation serves as vehicle for distribution of charitable donations and handles endowed funds.

“We think — and we don’t have any numbers on this — that a lot of that money will be transferred to heirs outside of our area. What if a portion of that money could be put into endowments?” explained Tom Pittman, the foundation’s executive director.

“What we are talking about, what we are branding is the 5 percent solution. This could be left to an endowment and your heirs would still get 95 percent. That seems to be a reasonable kind of thing,” he said.

He and others have been meeting with individuals and groups across the 11 counties and “the 5 percent solution” is one of the topics being addressed.

The foundation, along with six others across the state, wanted to know more about how much wealth might be transferred and, through the Mississippi Association of Grantmakers, commissioned a study by the Center for Rural Entrepreneurship in Lincoln, Nebraska. The center is considered to be a go-to spot for this type of research, according to Sammy Moon, director of the grantmakers association.

The process began in 2016 and by the end of the year, a report had been received and vetted by an advisory board of statewide financial experts working in connection with the Social Science Research Center at Mississippi State University. The Center for Population Studies at the University of Mississippi also contributed.

The researchers looked at seven sets of data, Moon said. The age of the population, educational attainment (because that’s related to earning power), income and net worth, investment income, work status and occupation types, and housing values.

“We had multiple conversations with that advisory group through the entire process. It was a pretty broad group of folks,” Moon said. These were estate attorneys, certified public accountants, financial planners and educators, among others, he said.

“It’s primary information that is really important to foundations that are doing long term endowment strategies and to any others that are doing planned giving,” he said.

Members of the Association of Grantmakers represent “organizations that have as part of their mission to make grants to improve the well being of children, families and communities in the state,” he said.

In the area covered by the Community Foundation, the 10-year “capture” of 5 percent in endowed funds would amount to $288 million and the payout in grants per year, $14 million. The 50-year capture would be $2.76 billion in endowed funds with a yearly payout in grants of $138 million.

The report provided totals for each of the foundation’s counties. With the 5 percent capture, the 10-year payouts in yearlly grants would be:

$670,000, Bolivar

$255,000, Coahoma

$9.4 million, DeSoto

$493,000, Leflore

$893,000, Marshall

$996,000, Panola

$88,000, Quitman

$307,000, Sunflower

$178,000, Tallahatchie

$1 million, Tate

$76,000, Tunica

The foundation can individualize endowment set ups, and it collects a 1 percent yearly fee for administrative costs. Its staff of six is headquartered in DeSoto County. Pittman recently said, “We are in the business of serving both donors and nonprofits. We are in the business of helping both.”

“We have a mechanism to handle more than what we are doing. And there is a need for more than what we are doing.”

The foundation is trying to reach people who are making estate planning decisions and their advisors. “What we would like to do is sell them on leaving some of that money to their community,” he explained. With the endowments, each donor can say, “I have done what I can do.”