For-purpose organisations are set to attract just 1% of the $150 billion that Australians will leave as inheritances this year, according to new research.

Equity Trustees recently collaborated with JBWere on an event series, launching JBWere’s groundbreaking Bequests Report. There has been limited Australian data to date around the $5.4 trillion in total inheritances set to shift between generations over the next two decades, and the opportunity for individuals and families to have a profound impact in community.

The most popular destinations for inheritances are still the next generation for singles (51%), a partner for couples (38%), and family and friends (20%) – all well above the 1% that for-purpose organisations receive.

“That 1% demonstrates the need to speak transparently about philanthropy, something that is possible either during our lifetime or via a will,” says Equity Trustees National Manager, Active Philanthropy, Denise Cheng. “You don't have to be a multimillionaire to start your giving journey. It just requires shifting the mindset to philanthropy being important and needed because there are big social issues out there that need the flexibility of funding that philanthropy can offer.”

While New Zealand has similar levels of giving through inheritances (1%), both the UK (3.7%) and USA (4.4%) are far higher. It suggests that it is possible to reshape the local culture to include philanthropy as part of family conversations about inheritances.

Women set to drive social change

Women are set to be a driving force as attitudes to philanthropy change in coming years. The combination of an ageing population and longer female life expectancy means the oldest daughter in a family is 50% more likely to control the family finances when wealth is transferred, according to The Bequest Report.

The She Gives initiative, supported by Equity Trustees as a sector partner, celebrates the role of women as agents for positive social change and is helping grow the power of women’s giving.

Equity Trustees Chair, Carol Schwartz AO, a member of the She Gives Advisory Group, says women can take a leadership role in helping to grow philanthropy.

“The data already shows that women give a higher proportion of their income than men and generally shape giving within the family unit,” she says. “Not everyone calls themselves a philanthropist, or considers themselves in that role, yet they are contributing to things that matter to them. Anyone who donates their time, money or talent to create a better world is a philanthropist.”

Research has found that Australian women who give are humbler and quieter in their giving, more focused on results rather than recognition, and less likely to talk about their philanthropy than US women.

She Gives is helping to raise the profile of women by sharing 100 stories of individual women’s giving and national stories of collective giving.

New perspectives on giving

“More people are thinking about the role of wealth in their lives, and what defines legacy” Denise says.

“We are seeing a growing trend of families asking, how much is enough? And we love how John McCleod, in the Bequests Report, challenges families with children, to consider the impact on inheritances if charity were included as another beneficiary. The amounts left per child are not much reduced even with increasing charity allocations. An interesting thought to consider.”

Rising lifespans also means that intergenerational wealth may skip a generation. Many recipients will be financially independent and closer to retirement age by the time they are ready to receive an inheritance from their parents. This wealth may flow through to their children, who may be in their 20s.

“It raises questions about whether there is enough education and support for that generation coming through to understand how to manage wealth and how to nurture a legacy,” Denise says.

“A philanthropic trust may be an opportunity to ensure that money doesn't get whittled away through inexperience.”

Another trend is the rise in the number of families where succession ends with the current generation – individuals who have chosen to not to have children, or do not have close family to leave their wealth to. Denise says, “Some families choose for their legacy to be about philanthropy. Their legacy can continue forever, by supporting their favourite charities, which is a really beautiful way of looking at it.”

With the looming wealth transfer, which is set to be the largest in history, there is an opportunity for individuals and families to review their estate plans, consult with loved ones around the meaning of legacy, and examine if personal philanthropy could be a way of leaving a lasting legacy to society.

Reach out to the Active Philanthropy team at Equity Trustees to find out more.