New Study Offers Insights Into the Giving
Motivations, Priorities and Strategies of Wealthy Americans
Among wealthy households, the average amount given to charity
last year increased 28 percent, according to the 2014 U.S. Trust®
Study of High Net Worth Philanthropy. Through an ongoing
partnership with the Indiana University Lilly Family School of
Philanthropy, the fifth in this series of biennial studies reveals
a strong commitment to charitable causes among high net worth
households. This positive trend is seen in several findings,
including:
- Last year, virtually all (98.4 percent)
high net worth households donated to charity, compared to 95.4
percent in 2011. This marks the highest rate of high net worth
participation in charitable giving since the study began in 2006.
This high rate of giving among the wealthy compares with 65 percent
of the U.S. general population who donate to charity1.
- The average dollar amount given to
charity by wealthy donors increased 28 percent, from $53,519 in
2011 to $68,580 in 2013. Average giving as a percentage of
household income decreased by one percentage point, as increases in
income levels slightly outpaced increases in giving levels among
this demographic.
- Eighty-five percent of wealthy donors
plan to give as much (50 percent) or more (35 percent) in the next
three to five years (through 2018) than they have in the past – up
from 76 percent who said they planned to give as much (52 percent)
or more (24 percent) when asked in 2012. The top reasons cited by
those who plan to increase their giving are “increased financial
capacity” (85 percent) and the “perceived need of the nonprofits or
causes” they support (48 percent).
“This year’s study, more than ever, tells us that when wealthy
donors are intentional about and engaged in their giving – when
they find that meaningful intersection between their ideas and
ideals – they give more, are more impactful and more personally
fulfilled," said Claire Costello, national philanthropic practice
executive for U.S. Trust.
This research series is the most comprehensive and
longest-running of its kind, and an important barometer for wealthy
donors’ charitable engagement and viewpoints. The latest study
offers valuable insights that help inform the strategies of
nonprofit professionals, wealthy donors and charitable advisors
alike.
The following are key findings from the 2014 study, which reveal
significant shifts as well as consistent trends in the giving
behaviors, priorities and strategies of the wealthy, including: the
nonprofit subsectors they support, what motivates them to give, why
they stop giving, how they give, and family traditions. The study
also examines the relationships among wealthy donors’ knowledge of
and engagement with giving, how much they give, and the personal
fulfillment they enjoy from philanthropy.
Volunteers give more
Volunteerism among high net worth individuals remained strong
last year, with 75 percent of respondents volunteering with at
least one nonprofit organization. Among those who volunteered in
2013, 59 percent volunteered more than 100 hours; 34 percent
volunteered more than 200 hours.
The study found that volunteerism has a strong connection to
giving levels, and increasingly so. Wealthy donors who volunteered
in 2013 gave 73 percent more on average than those who did not
volunteer ($76,572 compared to $44,137). The study also found that
giving among wealthy donors who volunteer increased 23 percent from
2009 ($62,302) to 2013 ($76,572), on average.
Education sector captures hearts and wallets
Many nonprofit subsectors enjoyed increased contributions from
wealthy donors last year. However, findings demonstrate that the
education sector was biggest winner, including:
- Eighty-five percent of wealthy donors
gave to education in 2013 – making it the charitable subsector
supported by the largest percentage of high net worth households. A
closer look reveals that 73 percent gave to higher education and 60
percent gave to K-12 education.
- Education also received the largest
share of dollars (27 percent) among all charitable subsectors –
more than giving to religious, environmental, arts, basic needs and
international causes combined.
- The highest percentage of wealthy
households directed their largest gifts to religious organizations
(34 percent) and educational causes (27 percent) – including higher
education (19 percent) and K-12 (8 percent).
Why the wealthy give, and stop giving
A variety of motivations drive high net worth philanthropy. In
2013, wealthy households cited the following as their top
motivators for giving: believing that their gift can make a
difference (74 percent), personal satisfaction (73 percent),
supporting the same causes annually (66 percent), giving back to
the community (63 percent), and serving on a nonprofit
organization’s board or volunteering for a nonprofit (62 percent).
Only one-third (34 percent) of donors cited tax advantages among
their chief motivators for giving.
Wealthy donors have strong feelings about how the nonprofits
they support should use their contributions and conduct themselves.
For instance, the majority of these donors (81 percent) expect the
nonprofits they support to spend an appropriate amount of their
donation on general administration and fundraising, and to
demonstrate sound business and operational practices (80 percent).
They also expect nonprofits to honor their request for privacy and
anonymity (78 percent) and, similarly, to not distribute their name
to others (74 percent).
When donors stopped giving to a particular charity they
previously supported, the top reasons cited were because they
received too frequent solicitation or the nonprofit organization
asked for an inappropriate amount (42 percent), the donor
personally changed philanthropic focus or decided to support other
causes (35 percent), the organization was not effective (18
percent) and the nonprofit organization they supported changed
leadership or activities (16 percent).
“Nonprofit organizations that understand what savvy donors value
and expect, carefully steward their gifts, and demonstrate that
they are making a meaningful difference through wise and
transparent use of resources can develop enduring partnerships with
donors that achieve a shared vision,” said Patrick Rooney, Ph.D.,
associate dean for academic affairs and research at the Indiana
University Lilly School of Philanthropy.
Donors give strategically
The majority of wealthy donors (73 percent) have a specific
strategy in place to guide their charitable giving. This is further
evidenced by the fact that 93 percent of donors apply a certain
level of focus to their charitable activity, giving to a targeted
set of organizations based on geography or a specific cause or
issue.
More than half (57 percent) of wealthy donors used a giving
vehicle in 2013, or plan to establish one to achieve their
charitable goals going forward. Other trends in the use of giving
vehicles – such as private foundations, donor-advised funds and
charitable trusts – include:
- Giving vehicles received a large share
of charitable dollars (28 percent) in 2013 when compared to giving
directly to charitable subsectors such as the environment, arts,
etc.,, up from 23 percent in 2011.
- Wealthy donors are favoring
donor-advised funds, with 16 percent of respondents giving to a
donor-advised fund in 2013, 8 percent to a private foundation, and
just 4 percent to charitable trust.
- Households with a net worth of less
than $1 million are less likely to have or plan to use a giving
vehicle (31 percent) compared to those households with net worth
between $1 – 5 million (51 percent) and $5 million or greater (69
percent).
Beyond donations and the use of giving vehicles, 84 percent of
wealthy donors are aware of innovative ways to use their assets to
advance social or charitable goals, such as socially responsible
investing, social impact bonds or mission-related investing.
Despite this high level of awareness, only 13 percent currently use
such approaches.
Knowledgeable and engaged donors give more and achieve
greater fulfillment
The study found strong relationships between wealthy donors’
knowledge of giving and their characteristics and behaviors,
including how they monitor their giving and its impact, consult
with advisors, leverage giving vehicles, and achieve personal
fulfillment from philanthropic pursuits. For instance:
- Respondents who rated themselves as
“expert” (14 percent) when it comes to charitable giving gave a
significantly higher amount to charity in 2013 ($150,229), compared
to those who describe themselves as “knowledgeable” (72 percent,
$64,599) or “novice” (14 percent, $19,013).
- Slightly more than half of wealthy
donors monitor or evaluate the impact of their charitable giving
(53 percent). Among those who monitor the impact of their
charitable giving, 29 percent are novice, 53 percent are
knowledgeable and 78 percent are expert donors. Those who monitor
their giving donate a much higher amount ($104,265) than those who
do not monitor ($28,543).
- Knowledgeable and expert givers are
also more likely to derive greater personal fulfillment from their
charitable giving – and greater fulfillment leads to higher giving
levels. In 2013, 73 percent of wealthy donors reported achieving
personal fulfillment through their charitable giving. Those who
report personal fulfillment donated more than five times the amount
of those who were not fulfilled (roughly $80,500 compared to
$15,100).
Family traditions and preparing the next generation
When it comes to decision-making, 61 percent of respondents who
are married or are living with a partner reported that they make
decisions about their giving jointly with their spouse or
partner.
Many wealthy families have giving traditions (41 percent), such
as volunteering as a family and giving to charity during the
holidays. Among those who volunteer (75 percent), respondents were
far more likely to do so with family (68 percent) or friends (68
percent) than they were to do so through a workplace campaign (25
percent) or some other organized group (49 percent).
With regard to the transmittance of philanthropic values, the
study found that a family’s personal efforts and those of their
friends and peers continue to be the leading sources by which the
next generation learn about giving (55 percent), followed by
religious organizations (44 percent) and nonprofits (24
percent).
Societal issues and confidence in those working to address
them
Consistent with their top giving priority, more than half (56
percent) of wealthy donors also prioritize education among policy
issues most important to them – followed by poverty (35 percent),
health care (34 percent), and the environment (28 percent).
The study also found that, regardless of government funding of
nonprofits, most wealthy donors would remain loyal to the
organizations that have already won their support. In fact, in the
event government decreased funding for an organization that a
wealthy household currently supports, nearly one-third (32 percent)
of respondents would increase their charitable contributions.
When it comes to resolving domestic and global issues, wealthy
donors express the most confidence in nonprofit organizations (92
percent) and individuals (91 percent). Fewer – and in many cases
far fewer – have faith in the federal government (54 percent),
state or local government (61 percent), Congress (25 percent),
large corporations (58 percent) and religious institutions’ (73
percent) ability to do so.
To view a detailed summary of key findings from the 2014 U.S.
Trust Study of High Net Worth Philanthropy and to access the full
90-page report, visit www.ustrust.com/philanthropy.
1 The Center on Philanthropy Panel Study, 2009, Indiana
University
MethodologyThe purpose of the 2014 U.S. Trust Study of High Net
Worth Philanthropy is to provide comprehensive information on the
charitable giving and volunteering activities of high net worth
households. Conducted between April 2014 and September 2014, the
study consisted of mail and web surveys randomly distributed to
20,000 households in high net worth areas of the United States. The
fifth in this series of studies builds on those completed in 2006,
2008, 2010 and 2012 and was once again written and researched in
partnership with the Indiana University Lilly Family School of
Philanthropy. Results are based on a nationwide sample of 632 U.S.
households with a net worth of $1 million or more (excluding the
value of their home) and/or an annual household income of $200,000
or more.
U.S. Trust’s Philanthropic Solutions GroupU.S. Trust’s
Philanthropic Solutions Group serves the philanthropic needs of
individuals and families as well as nonprofit institutions across
the investment businesses with Bank of America. Philanthropic
Solutions distributes more than $300 million in grants to
charitable organizations annually on behalf of clients where U.S.
Trust serves as trustee, co-trustee or grant-making agent. The
investment businesses within Bank of America, including U.S. Trust,
Merrill Lynch Wealth Management and the Merrill Lynch Private
Banking and Investment Group are among the nation's leading
providers of investment and philanthropic services to individuals,
families, foundations, endowments and other nonprofit
organizations.
The Indiana University Lilly Family School of PhilanthropyThe
Indiana University Lilly Family School of Philanthropy is dedicated
to improving philanthropy to improve the world by training and
empowering students and professionals to be innovators and leaders
who create positive and lasting change. The school offers a
comprehensive approach to philanthropy through its academic,
research and international programs and through The Fund Raising
School, Lake Institute on Faith & Giving, and the Women’s
Philanthropy Institute. For more information, visit
www.philanthropy.iupui.edu.
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