Editor’s Note: The following essay is authored by Jenny Xia and Patrick Schmitt, Co-Founders of Free Will, an award-winning social venture with a mission of supporting world leaders in law, design, and philanthropy. To date, more than $850 million has been committed to nonprofit organizations through Free Will.
In the next two decades, an estimated $30 trillion will be inherited in the US as the large and prosperous Baby Boomer generation passes its wealth on to the next generation. This is the largest wealth transfer in human history, and may be the single greatest opportunity for philanthropy ever.
This demographic wave is beginning to thrust “planned giving” and “bequests” (giving through wills, trusts, and a few other avenues) from the outskirts of mainstream philanthropy into the spotlight.
As the conversation around planned giving intensifies, savvy nonprofits (and readers of sites such as this one) will study how gender shapes giving behavior. And for women-focused charities the next two decades will be enormously important.
Three years ago, the two of us founded FreeWill, based on breakthrough research we did as graduate students at Stanford University. In the time since, more than 75,000 people (predominantly women) have used the tools to commit more than $840 million to a wide variety of organizations. We’ve worked with more than 250 nonprofit organizations to help them generate thousands and thousands of gifts.
Recently, we embarked on a deep analysis of all the data from the first 50,000 estate plans, and found some surprising results — Did you know, for example, that having a pet increases the likelihood that one adds a charitable gift to their will by 30%?
Part of this analysis was the most robust study to date of how gender affects estate planning and bequesting rates that has ever been completed.
The graph below shows a few fascinating findings:
Of the estate plans made on FreeWill, nearly 55% were made by women compared to 45% by men, meaning women are 22% more likely than men to make an estate plan. In heterosexual marriages and partnerships, women may be more likely to run the family or couple’s finances.
Women both have longer average lifespans than men and are more likely to be several years younger than their spouse. The result, according to the 2010 census, is that there were more than 11 million widows (in 2010) compared to 3 million widowers in the US. As widows inherit, it follows that they are set to become the final allocator of a couple’s combined net worth.
Men and women include charitable gifts in their estate plans at roughly equal rates, but interestingly, men on average tend to give much larger bequests (in part skewed by some exceptionally large bequests from men).
As we look towards the “great wealth transfer”, here’s some advice for those seeking the highest impact:
If you’re a donor, understand that a bequest is probably the largest gift you’ll ever make. On FreeWill an average bequest is more than $80,000, even from middle-class donors. Consider focusing on women-lead and women-focused nonprofits. You can use FreeWill to easily (and at no cost) make your plans and include a charitable gift, as well as other options.
If you’re a nonprofit leader or board member who wants to build a sustainable organization, know that this is the time to double down on planned giving. These gifts will fuel your future, and power the important missions you have. The role of female donors is likely to be especially important.
Philanthropy Women covers funding for gender equity in all sectors of society. We want to significantly shift public discourse, particularly in philanthropy, toward increased action for gender equality. You can support our work and access unlimited and premium content with one of our subscriptions.