Where Wealthy Donors Give and What They Expect: U.S. Trust Survey

The wealthy contributed to eight different nonprofit organizations on average, with most giving to basic needs groups

New research on wealthy donors’ philanthropic engagement and perspectives, released Tuesday, found that 91% of high-net-worth households donated to charity in 2015, well ahead of the general population that did so.

In addition, half of wealthy individuals in the study volunteered their time and talents last year to charitable organizations they cared about, twice the rate of the general population.

The 2016 U.S. Trust Study of High Net Worth Philanthropy, written and researched in partnership with the Indiana University Lilly Family School of Philanthropy, was based on a survey of 1,435 U.S. households with a net worth of $1 million or more (excluding the value of their primary home) and/or an annual household income of $200,000 or more.

Eighty-three percent of wealthy individuals in the poll said they planned to give more in the next three years than they had in the past. Women, African Americans and individuals 50 and younger were even likelier to increase their giving in the next three years.

Future levels of volunteerism are also promising, as 90% of wealthy individuals who currently volunteer said they expected to do as much or more over the next three years. Even among those who did not volunteer last year, 39% planned to do so during the coming years.

“Wealthy donors continue to be incredibly generous with their time and money in support of social change in their communities and in the world,” said Claire Costello, national philanthropic practice executive for U.S. Trust. “And while their charitable activity is driven to a large extent by their personal values and convictions, donors are also listening closely to the needs of nonprofits as they make their giving and volunteering decisions.”

Recipients

Last year, wealthy donors contributed to eight different nonprofit organizations on average. Sixty-three percent gave to basic needs groups, making it the charitable subsector supported by the largest percentage of high-net-worth households.

Other favored causes: religion—50%, environment—42%, health—40%, K-12 education—33%, and higher education—31%.

The study found that among the wealthy, volunteering with a nonprofit group strongly correlated with giving to that organization. Eighty-four percent of high-net-worth individuals gave financially to at least some of the organizations where they volunteered, while 49% gave to most, if not all, such organizations.

The research showed that volunteerism also influenced giving levels. Wealthy individuals who volunteered in 2015 gave 56% more on average than those who did not.

Volunteerism had other effects. Sixty-three percent of respondents said they experienced a high degree of personal fulfillment from their volunteer work, compared with 42% said they were fulfilled by their charitable giving. Women in the study said they derived greater levels of fulfillment from volunteering than men, as did younger individuals compared with those older than 50.

A quarter of wealthy individuals reported contributing to a political candidate, campaign or committee last year or said they planned to do so during the 2016 election season. Among this group, 40% donors over the age of 70 and 38% of LGBT individuals were likely to make such political contributions.

Democrats could expect contributions from 36% of those surveyed, Republicans from 22%.

Among wealthy individuals who contributed to a political candidate or campaign, 56% said they did so as an opportunity to exercise their voice, 49% to influence the outcome of elections and 46% believing their contribution could make a difference.

Seventy-six percent of respondents had not and did not plan to make political contributions during the current election cycle. Nearly half felt such contributions would have little to no effect when compared with corporate contributions, and 26% when compared with political action committees.

About a third believed such contributions would not make a difference, and a quarter did not have a particular candidate they would endorse.

Motivations, Expectations and Challenges

Why do high-net-worth people engage in philanthropy? In 2015, wealthy households cited the following among the primary reasons they give: 

  • Believing in the mission of the organization:54%
  • Believing their gift can make a difference: 44%
  • Experiencing personal satisfaction, enjoyment or fulfillment: 39%
  • Supporting the same causes annually: 36%
  • Giving back to the community: 27%
  • Adhering to religious beliefs:23%
  • Tax benefits: 18%

Wealthy donors in the study expressed strong feelings about how the nonprofits they support should use their contributions and conduct themselves. After making a charitable gift, 89% said it was important that the nonprofit spend only a reasonable amount of their donation on general administrative and fundraising expenses.

Large majorities of respondents also said that it was important that the organization demonstrate sound business and operational practices, acknowledge donations by providing a receipt for tax purposes, not distribute their names to others, and honor their requests for anonymity and for how their gift was to be used.

Seventeen percent of wealthy individuals said they had stopped giving to at least one nonprofit last year. Forty-one percent of these complained of too frequent solicitations from the organization, 40% said household circumstances had changed, 18% said the organization was ineffective or did not sufficiently communicate its effectiveness and 14% felt the organization had asked for an inappropriate amount.

Two-thirds of wealthy individuals said the greatest challenge to their charitable giving was identifying causes they cared about and deciding where to donate. Others said it was understanding how much they could afford to give, finding time to volunteer and monitoring their giving to ensure it had the intended impact.

Interestingly, the study also found that among the 33% of respondents who said they participated in impact investing, 61% did so in addition to their existing charitable giving, whereas 34% did so in lieu of at least some of their charitable giving.

Just 5% of wealthy donors’ impact investing accounted for all of their charitable giving.

The study found that higher levels of charitable giving knowledge on the part of wealth donors directly correlated with whether individuals monitored the impact of their giving, believed their giving was having its intended impact, consulted with advisors and used giving vehicles, such as a private foundation or a donor-advised fund.

Overall, 44% of respondents believed their giving was having the impact they intended, while 54% were unsure. UBS said this may be partly due to the fact that 78% of wealthy donors do not monitor or evaluate the impact of their charitable giving.

Nearly all wealthy individuals in the study said they would like to be more knowledgeable about at least one aspect of charitable giving.

“Nonprofits that understand the priorities and expectations of their wealthy donors, engage them in meaningful and fulfilling ways, and communicate the organization’s impact can effectively partner with donors to achieve their mutual goals for a better world,” Una Osili, director of research at the Lilly Family School, said in the statement.

Family Affair

The found that 79% of high-net-worth households surveyed had children, grandchildren or other younger relatives, yet only 21% had family traditions around giving, such as volunteering as a family or giving together to charity during the holidays.

African Americans, Asian Americans, Hispanics and women were significantly likelier to report family traditions around giving. Younger individuals were twice as likely to have such family traditions as those over the age of 50.

Similarly, 72% of individuals reported not involving their younger relatives in their giving. And again, African Americans, Hispanics, women and younger individuals were much likelier to say they had involved younger relatives.

Asked how they would like to ultimately distribute their wealth, 75% of respondents reported that they intended to leave the majority to their children and grandchildren, with other heirs receiving 14%. Respondents said they intended to leave 12% of their wealth to charities.

--- Related on ThinkAdvisor:

Page 1 of 3
Single page view Reprints Discuss this story
We welcome your thoughts. Please allow time for your contribution to be approved and posted. Thank you.

Related

Does Client Philanthropy Pose a Conflict for AUM Advisors?

If your client reduces his assets under management through charitable giving or other means, does that make the flat-fee approach...

Most Recent Videos

Video Library ››