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Getting and sharing

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Parsing African-Americans' economic progress

John Havens, a senior research associate at Boston College's Center on Wealth and Philanthropy, and Sociology Professor Paul Schervish, the center's director, have studied wealth accumulation and philanthropic giving among African-Americans for the period between 1992 and 2001. Their findings: African-Americans' aggregate wealth and charitable contributions are sizeable and growing; however, their share of total national wealth and giving has shrunk.

The researchers have produced forecasts of African-American estates and bequests to charity through 2055 by incorporating data from varied sources—the Federal Reserve's Survey of Consumer Finances, the Internal Revenue Service, the Center for Disease Control's National Center for Health Statistics, and other authorities—into a simulation model developed by Havens. The results, described in their working paper "Wealth Transfer Estimates for African-American Households," appear in the journal New Directions in Philanthropic Fundraising.

Between 1992 and 2001, the authors report, the total wealth of the country's more than 13 million African-American households increased at an annual rate of 4 percent (to nearly $1.1 trillion); their charitable giving grew by 5 percent a year (to about $11.2 billion).

However, during this same period, the wealth and philanthropy of the general population increased at an even faster clip. While the average wealth of African-American households grew at about 2.4 percent per year (slower than the aggregate, which is boosted by population growth), the average wealth of "all households" increased at more than double that pace, nearly 5.9 percent.

"There's some segment of the African-American population that's beginning to succeed in the accumulation of wealth," said Schervish in an interview. "The difficulty is that there's a substantial portion that's still not being successful." Schervish and Havens have identified certain commonalities among wealthier African-Americans, who, they say, tend to be married, well-educated, and own their own businesses. A greater percentage of them have served in the military (about 32 percent, compared with 16 percent of all African-Americans).


HAVENS AND SCHERVISH uncovered a potentially encouraging trend when they disaggregated their data by age. Younger African-Americans (ages 41 and below) increased their wealth by an average of about 15 percent per year, a slightly faster rate than did the general population (14.7 percent), and at the same pace as Caucasians within the same age group—a "striking finding," according to the authors. Schervish and Havens hope to explore this trend further as new economic data becomes available. The key question, they say, is whether the parity of wealth accumulation will be maintained as younger African-Americans age. In social-science terms, is their current equality a "life-cycle effect," accounted for by the relative lack of wealth and budding careers of all young households, and one that will fall away in later years; or is it a "cohort effect," the result of civil rights legislation and increased educational opportunities, the influence of which will be sustained as today's young African-Americans grow older? If the parity of the young proves to be enduring, African-American estates could be worth 10 to 25 percent more than otherwise, by 2055.

According to Schervish, "there's some evidence of a changing landscape, that the African-American story is no longer a simple, unified story."

Chris Berdik


Chris Berdik is a writer based in the Boston area. The complete study by Havens and Schervish can be downloaded at the website of the Center on Wealth and Philanthropy (formerly the Social Welfare Research Institute).

 


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