Nearly all of high net worth households give to at least one charity
Despite the challenging economic climate, America’s high net worth households’ strong commitment to charitable giving remains strong, according to the 2012 Bank of America Study of High Net Worth Philanthropy.
Average giving as a percentage of household income in these households “held steady” at approximately 9 percent between 2009 and 2011, finds the report, which was produced in an ongoing partnership with the Center on Philanthropy at Indiana University.
Of the nearly $300 billion donated last year more than 70 percent was given by individuals, of which roughly half was given by the wealthiest 3 percent of American households. Other key findings:
- Last year, 95 percent of high net worth households donated to at least one charity, compared with 65 percent of the general population of U.S. households who donate to charity.
- In 2011, 89 percent of wealthy individuals volunteered their time and talent to nonprofit organizations – up 10 percentage points from 2009.
- More than three-quarters (76 percent) of wealthy donors plan to give as much as or more during the next three to five years (through 2016) than they have in the past, while just 9 percent plan to give less.
America’s high net worth were also as generous with their time as with their money. More than half (54 percent) volunteered more than 100 hours, and 35 percent volunteered more than 200 hours, further demonstrating their commitment to the organizations and issues they care about most.
The study also found a correlation between hour volunteered and money donated. Those who volunteered more than 100 hours, for example, gave on average more than $78,000, roughly twice the average gift among those who volunteered fewer than 100 hours (approximately $39,000).
The most common volunteer activity in 2011 was serving on a board of directors for a nonprofit organization (61 percent), followed by event planning and fundraising activities (both 48 percent), according to the study. Meanwhile, 40 percent provided professional services to the nonprofits they support, such as volunteering their business and marketing skills.
“During the past decade, we have seen donors become increasingly impact driven and strategic in their charitable activities,” said Una Osili, Ph.D., professor of economics and philanthropic studies and director of research for the Center on Philanthropy at Indiana University in a statement. “They are more focused, more engaged through volunteerism, and their commitment
Forty percent of wealthy donors consulted with an outside adviser about their charitable giving last year. They were most likely to seek advice from an accountant (53 percent), followed by their financial or wealth advisors (37 percent) and nonprofit personnel (33 percent).
Who benefitted most from high net worth charitable giving? Last year, the greatest percentage of these households gave to educational (80 percent) and basic needs (79 percent) organizations, followed by arts (69 percent), health (65 percent) and religious (65 percent) organizations.
What most compels America’s high net worth to give? The report found:
- Being moved by how a gift can make a difference (74 percent).
- Feeling financially secure (71 percent).
- Because they give to the same organization or cause annually (69 percent).
- Because they feel the organization they are supporting is efficient (68 percent).
Less than one-third (32 percent) of donors cited tax advantages among their chief motivators for giving. Half reported they would maintain their current level of giving even if income tax deductions for donations were eliminated, and 95 percent would maintain or increase their bequest giving even if tax deductions for estate giving were permanently eliminated.
Why would wealthy donors stop supporting a charitable cause? In 2011, 30 percent of wealthy donors stopped giving to at least one nonprofit organization they previously supported, among which 27 percent stopped giving to one organization and 32 percent stopped giving to two. The reasons:
- The donor received too frequent solicitation or the nonprofit organization asked for inappropriate amount (38 percent).
- The nonprofit organization they supported changed leadership or activities (29 percent).
- The donor personally changed philanthropic focus or decided to support other causes (27 percent).
- The donor’s household circumstances changed (22 percent).
- The donor was no longer personally involved with the organization (12 percent).
Many wealthy families have giving traditions (41 percent), such as volunteering as a family and giving to charity during the holidays. One-third (33 percent) of wealthy donors with children involve them and other younger relatives in their household’s charitable giving activities. With regard to the transmittance of philanthropic values, the 2012 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 (51 percent), followed by religious organizations (34 percent) and nonprofits themselves (21 percent).
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.