Rural MN looks to generational wealth transfer to stimulate vibrancy
In the Midwest, 41-45 percent of people move throughout their lifetime – but it’s not just people that migrate. So does money. In fact, we know that in the next twenty years, $47.9 billion will transfer from one generation to the next in Minnesota.
This could mean big things for small, rural communities. But if heirs leave their hometowns, their money often leaves with them.
The challenge, then, is how can rural communities keep that money local to bolster vibrancy and seed a legacy?
Community foundations are stepping up to take on that challenge.
A handful of years ago, the West Central Initiative in Fergus Falls, Minnesota, was intrigued by work being done by the Nebraska Community Foundation (NCF). In Nebraska, they had taken a study originally done by researchers out of Boston College and applied it to rural Nebraska. They came up with some pretty amazing findings.
“More than $600 million will transfer in the next 50 years,” said NCF President & CEO Jeff Yost. “In rural Nebraska, in particular, this is an incredibly important moment because we know that $230 million will transfer between generations in many of our rural places.”
WCI President Nancy Straw wondered what this study might turn up in Minnesota. They brought on University of Minnesota researcher Andrea Lubov to create a formula specific to Minnesota, broken down by county.
“The whole point of the study was to learn what we can do in our hometowns that would help bring those resources to accomplish the projects we want to do,” said Kim Embretson, WCI Vice President of Development. “The first thing we did was talk to nonprofits, shared the study, so they could let donors know that there’s this big opportunity.”
The study helped change nonprofits’ thinking about how to effectively fund raise, said Embretson. “They were pretty good at capital campaigns and annual fundraising, but this helped them focus and sharpen intent to do something about legacy gifts.”
Now rural nonprofits are working together to talk to rural residents about leaving a legacy. “We’re not looking to convert people from one nonprofit to another, but to collaborate around this one effort that could transform our nonprofits, deliver many more services and serve a lot more people.”
WCI, along with many other Minnesota nonprofits, is looking to proposed legislation, called Endow Minnesota, that would offer a 25 percent tax credit for any donor who establishes a permanent endowment with a local community foundation, to raise visibility of the Transfer of Wealth study.
“This effort is bringing community foundations together,” said Embretson. “It is democratizing philanthropy and bringing resources back to communities.”
To follow the progress of Endow Minnesota, visit the Minnesota Council on Foundations.