July 26, 2011; Source: Christian Science Monitor | As foundations talk about how to tap into the intergenerational transfer of wealth for a portion that might be diverted to philanthropic endowments, demographic analysis from the Pew Research Center provides startling statistical evidence of the increasing wealth gap between whites and non-whites in the U.S. The tiny proportion of wealth, let’s say five percent, that might be eked out of the estimated $70 trillion or more in intergenerational transfer of wealth for philanthropic investment constitutes less than a fig leaf to cover this nation’s increasing wealth stratification by race–and it’s dangerous. Key facts:
- Although all racial groups lost wealth during the recent (and continuing) recession, whites were less harmed than African-Americans and Latinos: “From 2005 to 2009, median wealth fell by 66 percent among Hispanic households and 53 percent among blacks, compared with 16 percent among whites.”
- The result is that the median net worth of whites ($113,149) in 2009 was about 20 times that of blacks ($5,677) and 18 times that of Hispanics ($6,325).” The racial wealth gap is now greater than is has been in the past quarter century.
- Although white families also lost wealth during the recession, white families tended to be much less reliant on single assets (homes) for their wealth than other racial groups. The multiple assets of whites tended to include IRAs, Keoghs, mutual funds, and stocks.
These are distressing statistics. While philanthropy may be able to persuade some high net worth households into higher levels of legacy or in vivo giving, most of the transfer of wealth is not redistributive, but actually exacerbating wealth divisions by race that could lead to a hardening of class and race distinctions.–Rick Cohen