Nine in 10 wealthy American households gave to charities last year, and 48% volunteered time to nonprofit organizations and causes, according to the biennial U.S. Trust study of high-net-worth philanthropy, released in mid-October in partnership with the Indiana University Lilly Family School of Philanthropy.
In 2017, average giving amounts rose by 15% to $29,269, compared with two years ago. One-quarter of wealthy donors gave to disaster relief efforts, motivated by media coverage of the devastation and lack of confidence in government relief efforts, the study found.
Wealthy donors supported a wide range of charitable causes with basic needs organizations receiving support from 54% of high-net-worth households, religion from 49% of households, healthcare or medical research from 36% and educational causes from 36%.
The study population comprised 1,646 respondents, 51% of which identified themselves as female and 49% male. Respondents had a median annual household income of approximately $350,000 and median net worth of $2 million.
Two-thirds of respondents were baby boomers and older, while one-third were Gen Xers or millennials. In terms of race and ethnicity, 78% were Caucasian/whites, 9% Asian-American/Pacific Islanders, 6% Black/African-Americans, 6% Hispanics/Latinos and 1% other race. In addition, 7% of households identified themselves as LGBTQ.
“The giving patterns and preferences revealed by this year’s study point to an evolving philanthropic landscape driven by a younger and diverse group of donors who are reshaping the future of giving,” Ann Limberg, head of philanthropy and family office solutions at U.S. Trust, said in a statement.
Una Osili, professor of economics and philanthropic studies at the Lilly School, pointed out that while the contribution of women, minority racial and ethnic groups, and the LGBTQ community were gaining greater recognition and importance, “these groups have long been an important part of philanthropy and the nonprofit community.”
The study found that women were at the forefront of philanthropic engagement and impact. Ninety-three percent of wealthy women reported giving to charity, 56% volunteered, 6% participated in impact investing and 23% serve on the board of a nonprofit organization.
One-quarter of high-net-worth female donors supported causes or organizations aimed at benefiting women and girls. Their chief motivation for this giving was their belief that it was a way to solve societal problems.
A recent report by the Women’s Philanthropy Institute at Indiana University said that women increased their giving to organizations with “a perceived liberal or progressive political leaning” in the immediate aftermath of the 2016 presidential election.
According to the U.S. Trust findings, 84% of millennials gave, compared with 90% of older generations, but were likelier to participate in impact investing, with 16% saying they did so. Among Hispanic respondents, the volunteering rate was 60%, the highest level found among any demographic.
Asked to rank seven types of philanthropic activity that could have the greatest impact, charitable giving and volunteering ranked first and second on the list.
Despite a strong belief that their charitable giving could have a great impact, 54% of wealthy donors said they did not know whether their giving had the effect they intended. This pointed to an opportunity for nonprofits to more fully communicate the effect of their donors’ generosity, U.S. Trust said.
Fifty-six percent of donors in the study rated themselves as expert or knowledgeable about charitable giving, and these were likelier to have a giving strategy than those who said they were novices.
The study found that donors had high expectations of the organizations they supported, wanting them to demonstrate sound business and operational practices, spend only a reasonable amount on general administrative and fundraising expenses, and honor and protect donors’ privacy.
Eighty-four percent of wealthy donors in the study said they expected to maintain the amount they give to charity in 2018 under the new federal tax law, and 4% said they would increase the amount.
Just 17% of respondents said they were always motivated to give because of tax benefits, while another 51% said tax benefits sometimes prompted them to give.
Eighty-six percent of high-net-worth donors reported having most confidence in nonprofit organizations to solve societal or global problems. By comparison, confidence in the federal government and the public sector declined since 2015:
- State or local governments: 65%
- The president/federal executive branch: 46%
- Congress/federal legislative branch: 40%
“Nonprofit organizations, and the wealth advisors who serve them, will be rewarded for paying greater attention to the distinct interests and needs of all donors, both as individuals and through the values that motivate their charitable giving goals and expectations,” Limberg said.
According to the study, 38% of donors said they wanted to learn about how to identify the right volunteer opportunities, 28% to become more familiar with nonprofits and how they serve their constituents’ needs, and 19% to explore how to engage the next generation in philanthropic giving.
— Check out Donors May Not Understand How Tax Reform Affects Giving on ThinkAdvisor.