Despite an enormous loss of wealth during the Great Recession, Boston-area families and estates are expected to donate a massive sum to charities over the next half century, perhaps eclipsing $1 trillion, according to a new study commissioned by the Boston Foundation.
The report, based on research by Boston College’s Center on Wealth and Philanthropy, found that the recent recession erased about $350 billion in assets that were likely to flow to charities by 2061.
Even so, a huge wave of generational wealth will change hands over the next several decades, the study found, ranging from $950 billion to $3.9 trillion, depending on how fast the economy grows.
Of that, about 42 percent will probably go to charity, according to the study. That would mean between $419 billion and $1.6 trillion designated for nonprofits over the next five decades. And increasingly, people will pass that money on while they are alive, rather than leaving behind bequests for others to manage after they die.
That’s a fundamental shift in the way wealthy people have historically donated money, said John J. Havens, associate director of the philanthropy research group at Boston College. “They want to have more say about where it goes, and make sure it happens.”
That’s the Bill Gates and Warren Buffett approach to philanthropy, and it has been catching on over the past decade.
In particular, entrepreneurs and investors who made their own money — rather than inheriting it — are interested in being more hands-on with their giving. And for those who plan to leave their money in family foundations, they want to get a mission and responsible family members in place while they are able to oversee the efforts.
“That’s a profound change,’’ said Paul S. Grogan, chief executive of the Boston Foundation, which commissioned the study. “There’s a new emphasis on really engaging donors. People don’t want to just write a check anymore.”
The new study is an updated version of research BC produced for the Boston Foundation in 2006. The foundation, a large community-based grant maker, paid for the updated version to get a sense of the impact the financial crisis had on wealth, and would have on future giving.
What the researchers found was in some ways not surprising: The very wealthy lost money but were not nearly as severely harmed in the crisis as people of more modest means. The hardest hit were the 41 percent of households in Greater Boston with a net worth of less than $100,000. Those 700,000 households saw their collective wealth plummet 76 percent in the recession, to $3.3 billion.
Debt proved to be a big burden for many of those people. The number of Boston-area households with a net worth of zero or negative swelled by 48 percent, to 244,043 in 2010, according to the study. Nationally, the number grew 41 percent, to 17.1 million.
Those figures are daunting, Grogan said, and could signal an even greater need for the wealthy to fund charities that help the poor.
The 14 percent of Greater Boston households worth $1 million or more (238,887 households) lost only about 16 percent of their wealth from 2007 to 2009, the Boston College study found. The average household in that group lost $689,000, and together, they lost $164 billion. But their resources allowed them more resilience than people of modest incomes.
The good news, Grogan said, is that those people can help solve some of the region’s problems. The bad news, he noted, is the “severe inequality and declining mobility — the declining ability for people to actually live the American dream.”