Tompkins County Transfer of Wealth Opportunities

Human Services Coalition Forum

Wednesday, November 14, 2012

Making a Difference Close to Home

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traveling together…

…sharing the journey

We are is a tax-exempt public charity

created in 2000 by and for the people of

Tompkins County to serve as a growing

permanent endowment and information source to support

everyone’s philanthropic action as a means of improving the quality of life for

the Tompkins County community.

fundsOver 70 Funds

1. Tompkins Today and Tomorrow Fund

• Unrestricted grant making fund

2. Field of Interest Funds • Arts and Culture• Children and Youth Fund• Crime and Sexual Assault Victims Fund• Social Justice Fund• Women’s Fund

3. Donor Advised Funds & Designated Funds

• These funds have originated to fill the philanthropic goals of individuals, families or organizations

• Nearly $3.9 million granted from 2000 to September 30, 2012

• Assets are over $8.4 million held in over 70 different funds

(as of 9/30/2012)

facts

Participating community foundations:

• Central New York Community Foundation• Community Foundation of Herkimer & Oneida Counties• Community Foundation of the Hudson Valley• Community Foundation of Tompkins County

Transfer of wealth (TOW) is the process whereby one generation transfers their assets to the next generation.

This typically occurs at the time of death andrepresents the moment when charitable gifts from estateplanning can result in powerful legacy community giveback.

TOW most likely symbolizes the single largest under-developed philanthropic resourceavailable to communities to support their development.

OUR FUTURECreating and growing a “creative” economy with technology transfer holds potential for significant sustained economic and social development.

Vacation, recreational and second home development within the Finger Lakes Region could create asecond pool of seasonal or new residents with both motivation and capacity for giveback.

COMMUNITY WEALTH

2010-2060 Surprising wealth transfer in next 50 years

$53 trillion in United States

$2.07 trillion in New York State

$38.63 billion total in Tompkins County

Wealth Transfer

A possible timing scenario for the U.S., New York and Tompkins County

Now is the time to have planning conversations with professional advisors

2011-2015

2016-2020

2021-2025

2026-2030

2031-2035

2036-2040

2041-2045

2046-2050

2051-2055

02468

10121416

U. S.New YorkTompkins County

Current Household Net Worth Tompkins County, New York as of 2010

$190,200 per household

$7.4 billion total

Population:

101,564

Estimate2,900 High Net Worth

HouseholdsAssets of >$500,000

Today• Many of the next generation no longer

live in our county

• Once the wealth leaves our community,it will never return

• For generations, people lived entire livesclose to their birthplace

• Tompkins County wealth generally passed from generation to generation, but primarily stayed in Tompkins County

Yesterday

COMMUNITY WEALTH

Capture of TOW opportunities could provide critically important newfinancial resources necessary for economic and social innovation and renewal.

Three beneficiaries

Taxes CommunityHeirs

PASSING WEALTH FROM ONE GENERATION TO THE NEXT

By encouraging conversations about planned giving into charitable endowments, Tompkins County has the opportunity to retain some portion of our local generational

transfer of wealth for grants which will benefit future generations

5%

A possibility for the next 10 to 50 years

Endowment gifts can be held by Community Foundation for BOTH grant making and for agency endowments

6+ TIMES

One gift, many generations, endless results

YEAR 15

$100,000 in cumulative grants and services

$158,000 balance

YEAR 25

$200,000 in cumulative grants and services

$213,000 balance

assumes 5% annual payout and 8.5% rate of return

INITIAL GIFT INVESTED 1 TIME 2 TIMES

YEAR 50

$625,000 in cumulative grants and services

$455,000 balance

YEAR 1

Establish an endowment

$100,000 gift

WHY ENDOWED GIFTS

Impact if only 5% of Tompkins County wealth was given as charitable gifts designated for community endowments

$1.93 billion in 50 years

$126.51 million in 10 years

Many gifts, many generations

If people make a charitable gift of 5% of their estate to community endowments

YEAR 10

$126.5 million charitable gifts

Range from $6.33 to $33.5 million in total grants

$145.5 million community endowments

YEAR 50

$1.93 billion charitable gifts

Range from $96.58 million to $3.5 billion in total grants

$3.94 billion community endowments

LOOKING AHEAD

HISTORY & BACKGROUND

o Millionaires in the Millennium (1999)o Boston Collegeo $41 Trillion TOW opportunityo 1998-2052 period

o Transfer of Wealth in Nebraska (2002)o RUPRI Center for Rural Entrepreneurshipo Completed over 38 studies in 1,100 communities

TOW Studies in the United States

U.S. Household Net Worth1945-1990

1945

1947

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

$0

$2,500

$5,000

$7,500

$10,000

$12,500

$15,000

$17,500

$20,000

$22,500

$25,000

$27,500

$30,000

$32,500

$35,000

$37,500

$40,000

Source: Board of Governors of the Federal Reserve Syste, Statistical Releases, Flow of Funds - Z.1

in b

illi

ons

of r

eal 2

010

doll

ars

Events of the Last Decade

Dot Com & 9-11 CrisisThe Post 9-11 RecessionHousing BubbleFinancial CrisisThe Great Recession of 2008

U.S. Household Net Worth1990-2010 Q2

Q1

Q2

Q3

Q4

Q1

Q2

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009 2009 2009 2010 2010

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

$70,000

$75,000

$80,000

Source: Board of Governors of the Federal Reserve System, Statistical Releases, Flow of Funds - Z.1

in b

illi

ons

of r

eal 2

010

doll

ars

Bubble 1

Dot Com & 9-11 Recession

Bubble 2

Great Reces-sion

Historic Trend Line

Methodology

Suggestive Forecast NOT a Prediction Forecast, NOT a Prescriptive Demand

Base year 2010, for 50 year period 2010-60Real NOT Constant Dollars

Estimating Net WorthStep I

Survey of Consumer Finance, The Federal Reserve Board TriennialCurrent Release: 2007

Flow of Funds, The Federal Reserve BoardCurrent Release: December 9, 2010Next Release: March 10, 2011

Estimating Net WorthStep II

Age CharacteristicsMarket Valuation of Property by ClassConcentration of Creative Class Employment &

IncomeDividends, Interest & Rent (DIR) IncomeProprietors’ Employment & IncomeResidential Real Estate, Owned Businesses,

Investments

Scenario Building

Step IPopulation projectionsEconomic growth scenarioStep IIWealth ReleaseStep IIIReview & Verification

Estimating Net WorthStep III

Discounting assetsMotor vehicles, art, jewelry

ImmigrantsGroup quarters populationHigh amenities, vacation homes, retireesEconomic development projectsOther special cases

Tompkins County Technical Advisory Committee

• Suzanne Aigen, Aigen Agency• Martha Armstrong, Tompkins

County Area Development • Fred Ballantyne, TIAA-CREF and

former Community Foundation Board

• Mary Berens, Cornell (ret.) and Community Foundation Board

• Phyllisa DeSarno, Economic Planning, City of Ithaca

• David Kay, CARDI, Cornell University• Paula Peter, The Solstice Group• Ed Marx, Tompkins County

• Jean McPheeters, Tompkins County Chamber of Commerce

• Ed Morton, Chemung Canal Trust Company and Community Foundation Board

• Karen Sharkey, Audrey Edelman USA Realty

• David Squires, Tompkins County, Director of Finance, and Community Foundation Board

• Frost Travis, Travis & Travis Development and Ithaca Rentals and Renovations

• Bryan Warren, Warren Realty

28

Average U.S. Net Worth by Age

Less than 35 35-44 45-54 55-64 65-74 75 or more$0

$200

$400

$600

$800

$1,000

$1,200

$106

$326

$661

$936

$1,015

$638

Age Cohort

Mea

n ne

t wor

th in

thou

sand

s of

rea

l 200

7 do

llar

s

29

Average U.S. Net Worth by Work Status

Working for someone else Self-employed Retired Other not working$0

$500

$1,000

$1,500

$2,000

$2,500

$350

$1,961

$543

$124

Work Status

Mea

n ne

t wor

th in

thou

sand

s of

rea

l 200

7 do

llar

s

30

Average U.S. Net Worth by Education Level

No high school diploma High school diploma Some college College degree$0

$200

$400

$600

$800

$1,000

$1,200

$143

$252

$366

$1,098

Education Level

Mea

n ne

t wor

th in

thou

sand

s of

rea

l 200

7 do

llar

s

Median Age, 2010

20

25

30

35

40

45

Herkimer41.8 Ulster

40.8Putnam

40.7Oneida

40.7 Cayuga40

Madison38.6

Onondaga38.5

Dutchess38.4 New York

37.7 Oswego37.2

U.S.37

Cortland35.3

Tompkins31.5Y

ears

Percent of Group Quarters Population, 2010

0%

2%

4%

6%

8%

10%

12%

14%Tompkins

12.9%

Madison7.5% Cortland

7.2%Oneida6.4%

Ulster6.3%

Dutchess6.3% Cayuga

5.7%

Oswego4.1%

New York3.1%

Onondaga3.0% U.S.

2.7% Putnam2.2% Herkimer

1.7%

Percent of Dividends, Interest and Rent Income, 2009

0%

5%

10%

15%

20%

25%

Tompkins20.08%

U.S.18.02%

Ulster17.99%

New York17.81% Dutchess

16.92% Madison16.18%

Putnam16.17%

Onondaga15.93%

Oneida15.88%

Cortland14.37%

Cayuga14.03%

Herkimer13.66%

Oswego12.05%

Population Growth2000-2010 (Annual)

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%U.S.1.1%

Tompkins0.6% Dutchess

0.6%

Putnam0.5% Ulster

0.4%New York

0.3%

Madison0.1%

Onondaga0.0%

Cortland-0.1%

Oswego-0.1% Oneida

-0.1%

Herkimer-0.3%

Cayuga-0.3%

Many gifts, many generations

If people make a charitable gift of 5% of their estate to community endowments

YEAR 10

$126.5 million charitable gifts

Range from $6.33 to $33.5 million in total grants

$145.5 million community endowments

YEAR 50

$1.93 billion charitable gifts

Range from $96.58 million to $3.5 billion in total grants

$3.94 billion community endowments

LOOKING AHEAD

What other groups and individuals need to hear this information?

How should the Community Foundation market the TOW study results?

What actions should we take to increase the likelihood of charitable endowment TOW gifts?

What organizations and businesses are potential collaborators?

What questions remain? How could this presentation be improved?

For the very latest in Community Foundation events, grant

opportunities and donor services, visit

our website at

www.cftompkins.org

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