Cerulli Associates projects that we are amid an unprecedented wealth transfer of $124 trillion through 2048. The projected around $100 trillion will be transferred from Baby Boomers and older generations, while $18 trillion will go to charity. This massive transfer creates a unique opportunity to channel significant capital toward impact investment. Charitable bequests and legacy giving represent a potential source of capital to fuel impact investing.
Traditionally, legacy gifts are a vital source of income for the non-profit sector. Andrew Carnegie in his essay The Gospel of Wealth (1962) declared his belief in the greater good and the obligation of the wealthy to distribute their wealth for driving collective causes, the common good, and the alleviation of welfare. Charitable bequests account for a meaningful pie of total giving. In a study by Wishart and James (2021), bequest giving constituted about 16% of total donations in Australia, and 12% in the Netherlands (Giving in the Netherlands, 2020), and the US at $42.68 billion (Giving USA, 2024 Report).
In current times, there are opportunities to transform legacy gifts for impact investing. Unlike traditional charitable giving that's immediately spent, legacy gifts can be structured to create lasting impact through sustainable investment approaches.
A Natural Mate: Long term Orientation of Impact Investing and Legacy Giving
The world is at an existential moment, with massive geopolitical, ecological, technological, and sociological shifts and crises, and entrenched inequities. Addressing these challenges will require a collective and intergenerational approach, that seeks to align the current generation's desires to act for the good of future generations and broaden the horizon of goodwill and providence beyond familial relations to greater humanity. These issues require significant long-term capital deployment, and legacy giving can help bridge critical funding gaps while potentially generating returns that support ongoing impact
The alignment of timeframes makes legacy giving particularly suitable for impact investing. Impact investments often require patient capital and longer time horizons to achieve both financial returns and social/environmental impact. Legacy gifts, being future-oriented by nature, can accommodate these longer investment cycles without the pressure for immediate liquidity that other funding sources might demand.
Legacy Giving for Impact Investing: An Effective Way to Honour Impact Intention
The intertemporal and interpersonal dimensions of charitable bequest and legacy giving which places others before self, in forgoing present consumption for the future, and offering one’s entitlement of gifts and resources for others, make it different from conventional inter vivo giving and philanthropy. The sense of communion operates to motivate charitable bequest: in empathy and gratitude to give back. reciprocity for the good received in lifetime, or for reparation of guilt and remorse. Being in communion with others is also about exhibiting prosocial behaviour and succumbing to social norms and peer pressure of giving for good.
However, there are barriers to making bequests. An academic study by Routley, Sargeant and Day (2017) on legacy giving shows that despite the potential of legacy giving, only a small number of people include bequests in their wills. In the UK, in 2016, 6% of decedents left legacy gifts. In the US, just over 10% of those over 55 years old with a will or trust have included a bequest. Global world giving has also been on the decline (Charities Aid Foundation, 2017; Kumar & Chakrabarti, 2023).
Donors do not live to see the efficacy and impact of their gift. They want to be assured of the efficacy of their money to ensure the money is well used and the impact comes into fruition. Based on generativity theory, this will enable them to achieve symbolic immortality to carry on their self-identity, self-concept and what is important to them post death. This enables them to transcend death in building one’s legacy motivate legacy gifts.
Impact investing may be used to help reassure donors of impact through charitable bequest.
Ongoing impact:
- Assigning legacy gifts to impact investing, ensure their capital continues to generate both financial returns and positive impact long after their lifetime. This structure can be more attractive than traditional bequests that simply distribute funds to charities.
- Furthermore, impact investing addresses a common concern among legacy donors: the sustainability of their giving. Rather than making a one-time charitable gift that gets spent down, impact investments can create a revolving pool of capital that generates ongoing returns while advancing social and environmental goals. This multiplication effect means the donor's legacy can potentially have greater long-term impact than through traditional charitable vehicles.
Measurable and managed:
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The rise of sophisticated impact measurement tools and frameworks has also made legacy giving for impact investing more appealing. Donors can now specify detailed impact metrics and outcomes they want their legacy to achieve, while professional impact investment managers can provide transparent reporting on both financial and impact performance. This accountability helps ensure the donor's intentions are honoured over time.
Track record, increase range of impact themes and funds
- The growing ecosystem of impact investment opportunities also makes this an attractive time for legacy giving in this space. There are now established fund managers, proven business models, and diverse investment options across asset classes and impact themes. This maturity helps reduce risk while offering donors choices aligned with their specific impact priorities.
- Studies have shown that impact investments can deliver market-rate or near-market-rate returns while creating measurable positive outcomes. This evidence helps trustees and estate planners feel confident in allocating legacy assets to impact strategies.
Impact and Legacy Building in Multigenerational Families
Although people tend to prioritize their inner circles of family members and friends when appointing wealth beneficiaries (Paek et al., 2024), using charitable bequest for impact investing a way for mobilizing wealth to a greater society good.
In succession planning and intergenerational wealth transfer, creating a meaningful legacy involves more than wealth accumulation. It is about transmitting values, stewarding resources for future generations. When legacy motivations are enacted, stewardship and preservation of resources for impact reflect intergenerational justice and reciprocity. The desire to leave a positive legacy for the future also motivates intergenerational beneficence because it enables people to experience a meaningful connection with a social entity that will presumably outlive themselves.
On a family level, legacy giving is also communion in being a memorial to preserve family relations and keep a good post-death self-image. Legacy giving for impact investing can inspire greater family engagement across generations. Engage the younger generation to co-create this legacy giving to carry on the family values. Younger family members often connect strongly with impact investing's dual objectives of financial returns and positive change. By actively involving the next generation in where your legacy giving may go to, you demonstrate their value to the family and ensure their beliefs, values, and investme3nt considerations are included This can lead to more meaningful family discussions about wealth transfer and legacy planning.
Legacy Giving for Impact: Addressing Wealth Inequalities
Vandevelde (1997) in his study on taxation inheritance, and Masson & Pestieau (1997) in their study on bequest motives shares that Inherited wealth is generally quite unequally distributed and may account for a large part of all wealth possessed and represents the largest descending monetary transfer. Going beyond concerns of family and intergenerational equity, legacy giving for impact and impact investing may serve as a form of wealth distribution and distributive justice to decrease wealth inequalities, as well as the distribution of resources to people in need.
Forming Legacy Giving for Impact Investing in Singapore?
The influx of wealth, and the growth of ultra-high-net-worth individuals, family offices and philanthropists in Asia, presents opportunity to motivate wealth and capital towards Social and environment impact. Singapore is also positioning herself to be a philanthropic hub in Asia with more active participation and even launched a tax incentives scheme to promote global philanthropy with local dollars (EDB, Oct 2023; MAS, July 2023).
Singapore’s aging population and the increasing number of singles create an unprecedented opportunity for promoting charitable bequests. By 2030, one in four Singaporeans will be over the age of 65 (Population in brief, Prime Minister’s Office, 2023, Pg 10), intensifying the demand for social services and support. The increase in singles in Singapore also presents an opportunity for philanthropy and charitable bequest. As singles without dependents consider their legacy, charitable bequests emerge as a meaningful way to contribute to society beyond their lifetime.
Legacy giving is relatively new in Singapore, and a recent 2021 survey by Community Foundation Singapore (CFS) and the National Volunteer and Philanthropy Centre of Singapore reported a healthy outlook, mindset, and potential for charitable bequest. Findings of the study were presented in the Community Foundation Annual Report (2023). More than half of respondents were positively inclined towards legacy giving and its impact on society; Preferred giving is simple, through cash and more than 50% would consider charitable bequest after addressing dependents’ needs.
For Whom? Anchoring on perspective of charitable bequest and legacy giving, augurs a new perspective to open up the field of impact investing to larger target group. Beyond concurrence with traditional findings of seeking efficacy through impact, governance, and accountability amongst older legacy givers, this 2021 survey by CFS also pointed out the potential and openness of women, youth, and mid-lifers in considering legacy giving. Using the vehicle of legacy giving for impact capital, we open up the field for greater participation in impact investing.
Given the context of multi-layered climate and social crisis and growing inequalities, the United Nations Sustainable Development Goals (SDGs) provide a global framework for addressing these issues, calling for an annual investment of up to $7 trillion to meet the 2030 agenda. Leveraging on charitable bequest and legacy giving for impact investing offers an empowering way to create a lasting impact, in funding the needed help and ensuring their values endure beyond their lifetime.
To learn more about Charitable Bequest, read the literature review:
- A Literature Review on Motivations to Charitable Bequest and Legacy Giving.
Learn more about impact investing as an approach to sustainable investing in CSP SG’s Applied Sustainable Investing in Wealth Management courses, available at both a L3 (introductory) and L4 (intermediate) level.
References
Bang, H. M., Koval, C. Z., & Wade-Benzoni, K. A. (2017). It's the thought that counts over time: The interplay of intent, outcome, stewardship, and legacy motivations in intergenerational reciprocity. Journal of Experimental Social Psychology, 73, 197-210.
Bekkers, R., & Wiepking, P. (2011). A literature review of empirical studies of philanthropy: Eight mechanisms that drive charitable giving. Nonprofit and voluntary sector quarterly, 40(5), 924-973.
Carnegie, A. (1962). The gospel of wealth, and other timely essays. Harvard University Press.
Community Foundation Singapore. A Toolkit for Advisors, chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://legacygiving.sg/wp-content/uploads/2022/03/A-Greater-Gift-Toolkit-for-Advisors_updated_v2.pdf
Community Foundation Annual report, 2023
Cunliffe, J., & Erreygers, G. (Eds.). (2013). Inherited wealth, justice and equality. London: Routledge.
Fajardo, T. M., Townsend, C., & Bolander, W. (2018). Toward an optimal donation solicitation: Evidence from the field of the differential influence of donor-related and organization-related information on donation choice and amount. Journal of Marketing, 82(2), 142-152.
Feliu, N., & Botero, I. C. (2016). Philanthropy in family enterprises: A review of literature. Family Business Review, 29(1), 121-141.
Giving in the Netherlands 2020
Giving USA 2024 Report
Investor’s Guide to Impact Investing (CSP Zurich Publication)
10 ingredients to Impact investing (CSP Zurich Publication)
Kumar, A., & Chakrabarti, S. (2023). Charity donor behavior: a systematic literature review and research agenda. Journal of Nonprofit & Public Sector Marketing, 35(1), 1-46.
Masson, A., & Pestieau, P. (1997). Bequests motives and models of inheritance: a survey of the literature. Is inheritance legitimate? Ethical and economic aspects of wealth transfers, 54-88.
McAdams, D. P., & De St Aubin, E. (1992). A theory of generativity and its assessment through self-report, behavioral acts, and narrative themes in autobiography. Journal of Personality and Social Psychology, 62, 1003-1015.
Paek, J. J., Goya-Tocchetto, D., & Wade-Benzoni, K. A. (2024). The Andrew Carnegie Effect: Legacy Motives Increase the Intergenerational Allocation of Wealth to Collective Causes. Social Psychological and Personality Science, 19485506231201684.
Population in brief, Prime Minister’s Office, 2023, Pg 10
Routley, D. C., Sargeant, A., & Day, H. Everything We Know About Legacy Giving In 2017.
Routley, C., & Sargeant, A. (2015). Leaving a bequest: Living on through charitable gifts. Nonprofit and Voluntary Sector Quarterly, 44(5), 869-885.
Sanders, M., & Smith, S. (2014). A Warm Glow in the After Life?: The Determinants of Charitable Bequests. CMPO.
Sargeant, A., & Hilton, T. (2005). The final gift: targeting the potential charity legator. International Journal of Nonprofit and Voluntary Sector Marketing, 10(1), 3-16.
Vandevelde, T. (1997). Inheritance taxation, equal opportunities and the desire of immortality. In Is Inheritance Legitimate? Ethical and Economic Aspects of Wealth Transfers (pp. 1-15). Berlin, Heidelberg: Springer Berlin Heidelberg.
Vasoo, S., Singh, B., & Chookkanathan, S. (Eds.). (2023). Singapore Ageing: Issues and Challenges Ahead.
Walkate.H and F. Paetzold (2024) White paper: Impact Investing Grows Up: from Intentionality to Additionality
Wade-Benzoni, K. A., Sondak, H., & Galinsky, A. D. (2010). Leaving a legacy: Intergenerational allocations of benefits and burdens. Business Ethics Quarterly, 20(1), 7-34.
Wiepking, P., Scaife, W., & McDonald, K. (2012). Motives and barriers to bequest giving. Journal of Consumer Behaviour, 11(1), 56-66.
Wishart, R., & James III, R. N. (2021). The final outcome of charitable bequest gift intentions: Findings and implications for legacy fundraising. Journal of Philanthropy and Marketing, 26(4), e1703.
Zaval, L., Markowitz, E. M., & Weber, E. U. (2015). How will I be remembered? Conserving the environment for the sake of one’s legacy. Psychological science, 26(2), 231-236.
https://www.mas.gov.sg/schemes-and-initiatives/philanthropy-tax-incentive-scheme-for-family-offices
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