The Pentera Blog

Bequests Are Expected to Increase This Year and Next

A projected increase in estate giving during the next two years is expected to hold following an analysis of the Tax Cuts and Jobs Act and current economic conditions, according to “The Philanthropy Outlook 2018 & 2019.”

The annual report researched and written by the Indiana University Lilly Family School of Philanthropy does not provide numerical estimates of philanthropic giving, as it typically does, because of the uncertain impact of the new tax law passed at the end of 2017. Instead, it discusses giving by individuals, foundations, corporations, and estates under three economic scenarios: high growth, uneven growth, and flat growth.

Projections prior to the new tax law estimated that bequests would increase 4.4% this year and 5% next year. The report says that because estates react more slowly to policy changes than giving from other sources, “the projected increase in bequest giving in 2018 and 2019 will hold unless substantially large gifts are made in 2017 or 2018.”

“Giving by estates can vary greatly from year to year. This volatility is mostly due to very large bequests made by a few estates in a given year,” the report explains. “Therefore, a significant increase one year will suppress the growth rate in giving the following year.”

The report says that two significant factors are expected to have a positive influence on bequests during this year and next:

  • Above-average growth in the S&P 500.
  • Close-to-average to above-average growth in household and nonprofit net worth in preceding years.

The complete report is available at www.philanthropyoutlook.com