Community Foundation Legacy Society Members & Donor Advisors

Tuesday, May 8, 2012

Tompkins County Transfer of Wealth Opportunities

Turning a One-time Opportunity into Long-term Good

Making a Difference Close to Home

]

• Over $3.6 million has been granted from 2000-2011

• Assets are $8.3 million held in over 70 different funds

*as of 3/31/2012

Community Foundation

facts

• Transfer of Wealth Study – Tompkins County: A Profile of Socioeconomic Measures– Understanding the Transfer of Wealth– 2011 Transfer of Wealth Study for Select Upstate New York C

ounties including Tompkins County – 2011Transfer of Wealth Tompkins County Executive Summary– Transfer of Wealth presentation to the Estate Planning Counci

l of Tompkins County October 2011– Deciding to Give: A Guide to Personalizing Your Philanthropy– Transfer of Wealth presentation to the AFP Finger Lakes

chapter May 2012– Transfer of Wealth presentation to Community Foundation

Legacy Society Members and Donor Advisors May 2012

www.cftompkins.org

Policies, Documents & Reports

• Our keynote speaker will be Don Macke, Director of the RUPRI Center for Rural Entrepreneurship.  The Center works throughout the United States and supports research, outreach, education and policy development related to rural entrepreneurship.

• RUPRI or the Rural Policy Research Institute is a national research and policy center focusing in multiple areas including economic development, poverty, health care, telecommunications, informatics, policy analysis and community impact analysis

• Don also served as the lead author of the recently completed Tompkins County Transfer of Wealth Study. 

www.cftompkins.org

Annual CelebrationTuesday, May 22, 2012

5-7pmPark School of

CommunicationsIthaca College

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

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

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

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

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

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%

Per Capita Income Growth2000-2010 (Annual)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Putnam3.4% Tompkins

3.3%

Dutchess3.0%

Ulster2.8%

Onondaga2.7%

Madison2.7% New York

2.6% Cortland2.5%

Herkimer2.5%

Oneida2.4%

U.S.2.4%

Oswego2.4%

Cayuga2.4%

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

Everyone can be a philanthropist

Presented to:• Estate Planning Council of Tompkins County• Community Foundation Board of Directors• Association of Fund Raising Professionals Finger Lakes Chapter

Possible Future Presentations:• CEO group of Tompkins Chamber of Commerce• City of Ithaca Planning and Economic Development Department• TCAD (Tompkins County Area Development)• Tompkins County Public Library Foundation• Cayuga Medical Center Foundation• Realtors• Others?????

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?

THANK YOU FOR YOUR GIFTS AND SUPPORT OF THE COMMUNITY FOUNDATION

THANK YOU FOR YOUR TIME AND ADVICE THIS EVENING

PLEASE CONTACT US WITH ANY FUTURE QUESTIONS, COMMENTS, OR MARKETING IDEAS ABOUT

TRANSFER OF WEALTH OPPORTUNITIES