The above chart is from the a new report, "The Future of Philanthropy in L.A.: A Wealth of Opportunity," which I blogged about yesterday. The red line is LA County's projected transfer of wealth from 2010-2060, plotted against other counties (and cities, such as Detroit, Philadelphia, Chicago, Brooklyn). The growth rate is anticipated to be 8.7 percent yearly. That's a pretty torrid rate and, as you can see, will enable LA to outpace other major metro areas by a wide margin.
Growth always sounds great, but it can create challenges. For example, when countries grow too fast, they can have problems with inflation: too much money becomes available too fast to buy too few goods or services. Governments can get headaches trying to manage this.
In terms of the looming transfer or wealth in the LA region, the challenge is for non-profit organizations to get ready for it to happen. If your philanthropic metabolism is based on the present levels of wealth transfer, it's going to need to evolve to deal with wealth transfers that will be, as the report points out, 1,303 percent higher than Philadelphia, at an extreme.
The California Community Foundation has released a new study, "The Future of Philanthropy in L.A.: A Wealth of Opportunity." My KPCC business vertical colleague Brian Watt will have a report on air later that you can listen to, and I'm going to provide a bit on insight in the overall trend of wealth formation and transfer in the LA area.
The numbers are far from trivial: "Despite the recession, Los Angeles County residents have an estimated net worth of almost $1.3 trillion." Just to put that in perspective, the entire annual GDP of the United States is about $14.5 trillion. What's truly staggering, however, is how much of this money will transferred generationally: the RUPRI Center estimates $1.4 trillion by 2060 — a huge increase over 2020's projected $114 billion.
What's truly fascinating about these numbers is where the wealth is coming from. According to the report, "LA's growing and future wealth will be driven by entrepreneurs, especially immigrant entrepreneurs."
Spencer Platt/Getty Images
Sheila Collins protests with others outside of U.S. Senator Charles Schumer`s office to demand more jobs on April 1, 2011 in New York City.
America loves entrepreneurs. And in the current dreadful economy, we're looking to the risk-takers and idea-guys more than ever to get us out of our unemployment rut. In some respects, you could call the entire Republican economic platform a formula for spurring entrepreneurship, with its combination of tax cuts and reduced regulation. Then again, you could say the same thing of the Democrats, who want the government to spend more money to stimulate demand for the products that entrepreneurs would create.
KPCC's Shereen Marisol Meraji reported from Los Angeles' entrepreneurship central today on the Madeleine Brand Show. She visited a co-working space and investigated the process of business-building at its most grassroots level. I'm energized by stuff like this, but I also have to throw a small amount of cold water in the face of the idea. The fact is that as important as entrepreneurs are to the economy, it's unlikely that they'll be able to create enough jobs to hammer down a 9.1 percent unemployment rate nationally and a 12-plus-percent unemployment rate in LA County.