Stories of unassuming farmers who have left thousands— and in some cases, millions—to their hometown schools, churches and favorite charities will become increasingly common, according to the recently published “Minnesota Generational Transfer of Wealth” (TOW) study commissioned by theMinnesota Initiative Foundations. “Farmers and business owners, who retire and sell their assets because their children don’t want to carry on, often find themselves with sizeable estates,” said Bill King, president of theMinnesota Council on Foundations (MCF).

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Such windfalls can trigger introspective moments when people consider whether or not charitable giving is something they value and want to pursue. “Every person, no matter how much or how little they have, reaches a moment in their lifetime where they consider doing something greater than themselves,” said Matt Kilian, Initiative Foundation vice president for external relations. “In the next 20 or so years, many will have the financial resources to bring their dreams to life, thanks to the hard work of their parents and grandparents.”

Between 2011 and 2030, as an entire generation of Baby Boomers reaches retirement age and beyond, the TOW research estimates that the historic sum of $47.9 billion will be passed on. In the 14 central Minnesota counties, that wealth transfer is approximated to be $5.8 billion.

“Now, think if a tiny portion of those dollars—say, five percent— were to be invested in permanently endowed funds,” Kilian added. “What a gift from one generation to future generations.”

Economic Impacts

Those optimistic numbers, however, don’t tell all there is to know about giving trends across central Minnesota. The truth is that when it comes to charitable giving, the toll of the recession still lingers.

BILL KING: "Many of us are taught how to make money.  But we also need to be just as thoughtful and earnest aout choosing how to give back to our communities."

Individual giving in the state sank 7.7 percent from $4.19 billion in 2007 to $4.02 billion in 2008, the start of the downturn and the most recent year for which complete giving data are available. That’s a significant statistic, when you consider that individual contributions account for nearly 75 percent of all giving in Minnesota, with the remainder coming from foundations and corporations.

Philanthropy, however, tends to trail behind measurable improvements in the economy and consumer confidence.

According to the “Current Conditions Report” published by the Minnesota Council of Nonprofits (MCN), 31 percent of nonprofits saw an uptick in individual contributions in 2010, compared to just 21 percent in 2009. The survey also found that 40 percent of organizations predict a rise in individual giving in 2011, which could be among the positive signs for economic recovery in the state.

“Two years after the start of the recession, Minnesota’s overall nonprofit economy continues to grow,” said Jon Pratt, MCN executive director, “and now foundation and individual contributions are getting back to their previous levels.”

Changing Relationships

The slow recovery may have changed the relationship between donors and the nonprofits they support. “There are so many good and worthy causes that need help,” said Paulson. But supporting all of them is not realistic. Many people have been forced to be more thoughtful—and in some instances make tough decisions—about their philanthropy.

MATT KILIAN: "Every person, no matter how much or how little they have, reaches a moment in their lifetime where they consider doing something greater than themselves."

While some people continue to give even in the toughest times, the recession and its aftermath have made donors more thoughtful and intentional in their giving choices, according to Heidi Droegemueller, president of the Minnesota Chapter of the Association of Fundraising Professionals.

“Donors are asking nonprofits more questions and have higher expectations for a return on their investment,” she said. “Individuals will continue to respond to nonprofits that can make their case effectively.”

Drogemueller added that donors are also drawn to organizations that engage them in meaningful ways, demonstrate results and accountability, and share inspiring stories of how their donations have made an impact. She also believes that donors want organizations to be honest about what is going well and what help is needed.

For Gladys Paulson, what’s most important is leaving a legacy of generosity within her own family. “Our children grew up understanding frugality,” she said. “But never to the point that we wouldn’t share.” IQ