Upper-Income Investors Say Charitable Giving Is a Top Priority: Wells Fargo

Charitable giving is a top priority of many American investors, according to a Wells Fargo/Gallup study released Wednesday.

Ninety-three percent of upper-income investors said they had made donations to a non-faith-based organization in the past year, and 59% said they had given to a faith-based one. In total, 97% of study participants gave to one or the other.

Asked to value several activities in terms of their financial importance, nine in 10 investors each said living within their means or accumulating emergency funds were highly important. Six in 10 said they considered contributing or spending a portion of their income to help others a very or extremely important financial value.

Donating ranked above ensuring that companies they invest in align with their values, cited by 42% of investors, or having a positive societal impact, mentioned by 35%.

“These numbers confirm that giving is a top priority for many in the U.S. today,” Beth Renner, national director of philanthropic services for Wells Fargo Private Bank, said in a statement. “We see that in our business each day, as more and more people are seeking advice on how to make a difference with their charitable giving.”

Gallup conducted the poll in early October among 525 U.S. adults with at least $10,000 in stock or bond investments who reported annual earnings of $240,000 or more. This group, Gallup said, is equivalent to the top 5% of U.S. households.

Volunteering time to a charitable cause in the past year was less robust than donating among survey respondents. Sixty-four percent said they had put in time at a non-faith-based group, 37% at a faith-based organization and 25% at neither.

The poll sought to find out where donating to charity ranked in importance as a goal for upper-income investors’ children:

Becoming financially self-sufficient, 99%
Learning how to invest, 89%
Attending college, 86%
Donating to charity, 66%
Owning their own home, 62%
Volunteering in their community, 59%
Getting a high-paying job, 54%

U.S. Political Climate Effect

The current U.S. political climate is significantly influencing upper-income investors’ financial giving, according to the poll. Forty percent of respondents said it was causing them to donate more than they did before, and 7% said it was causing them to donate less.

By contrast, 26% said current economic conditions were affecting their giving, 25% pointed to the 2007–09 recession and 25% cited recent tax changes.

The survey found that in the intersection of charitable giving and values, the political climate was having its greatest influence on upper-income investors who self-identified as Democrats, with 54% of this group saying they were giving more to charitable groups today.

Thirty-nine percent of self-identified independents also reported bigger donations, while only 18% of those who self-identified as Republicans said they had increased their giving based on the political climate.

“Philanthropy has often times been considered a ‘guardian of values’ in our society,” Renner said. “This survey tells us people are now giving or planning to give to causes that represent some type of philanthropic value they hold sacred.”

According to investors’ self-reports, current economic conditions have had a net positive effect on their giving and the recession and tax changes have had a net negative effect. Overall, upper-income investors gave an average $5,500 to non-faith-based organizations in the past year, with the median amount being $2,000.

Parental Influence

About one in five upper-income investors in the study said their parents had been extremely or very active volunteers when they were young. Another 36% said their parents were somewhat active, and 40% said their parents were not active.

Among those whose parents were at least somewhat active, four in 10 reported that their parents had involved them a lot or a fair amount in volunteer work at the time.

The survey findings showed that upper-income investors whose parents were highly active in volunteerism were much likelier than those whose parents were only somewhat or not at all active to rate donating to charity as an extremely important financial value. They were also more likely to stress how important it was that their children donate to charity and volunteer in their communities.

Upper-income investors whose parents were extremely or very active volunteers reported giving $8,203 to charity in the past year, compared with $5,482 for those whose parents were only somewhat active and $4,179 for those whose parents were not active.

“Parents want their children to be good citizens and active in giving back,” Renner said. “When parents are more active in volunteering and giving back, their children will most likely continue that trend.”

Reasons for Giving

Why do upper-income investors volunteer or donate money? Seventy-eight percent of survey participants said they strongly believed in the causes they support, 71% said they wanted to make a difference and 62% said they simply enjoyed helping others.

Beyond these fundamental motives, 56% of respondents rated having a personal connection to the issues or organizations they are involved with as a major reason for their giving. According to the survey, examples of these associations were health-based charities, membership in a nonprofit group or a person’s alma mater.

In addition, 37% of upper-income investors said they had donated time or money as a way to give back for help they had received in the past from others.

Other key reasons for charitable giving or volunteering pertained to a sense of duty: 38% said they felt a moral obligation because of their financial position and 34% wanted to set an example for their children. Only 21% cited a religious commitment or obligation.

A quarter of respondents said a major reason they donated or volunteered was that their parents or other family members had taught them to do so. Half as many cited being asked by someone they knew or worked with as a major reason. Only 2% said social pressure was as important.

Nearly half of respondents acknowledged that taxes were at least a minor reason for their giving, but just 7% said tax savings was a major reason.

When investors were asked which financial values were important to them, men and women placed equal importance on basic money management goals. However, 64% of women attached high importance to donating to help others, versus 56% of men.

The gender gap was starker with respect to wanting the companies they invest in to have the right values — a 20-point difference — and for those companies to have a positive societal impact — 23 points.

Women also were likelier than men to say it was highly important that their children donate to charity — 74% of women versus 60% of men — as well as volunteer in their community — 68% versus 51%.

And 74% of women said they donated because they enjoyed helping others and 44% felt it was their moral obligation, compared with 54% and 34% of men.

According to Renner, these findings are typical: “Most women are hardwired for nurturing and want their children to represent compassion and empathy in their actions. That’s not to say men don’t want the same for their children. However, women tend to be very vocal about this.”

‘Philanthropic Inflation’

Twenty-three percent of upper-income investors in the survey said they did not give more because their donation was not enough to make a difference. Greater doubts about impact were evident in another response, however: 58% said they wished their charitable efforts had had more impact, and 42% were satisfied that they were having enough impact.

Sixty-four percent of women versus 53% of men said they wished their charitable activity had more impact. “They worry about this idea of ‘philanthropic inflation,’ where the dollar doesn’t go as far as they’d like toward creating change,” Renner said.

Although savings goals and paying bills competed with making donations, upper-income investors still expected to give back, with two-thirds of survey respondents saying they expected to donate more in the future.

Of these investors, 73% mentioned saving for retirement as the main expense that prevented them from donating more, followed by 60% each who cited household bills and living expenses.

Another 40% cited debt or loan payments, 35% paying for a child’s college or 11% providing support to an adult child as the main reasons for not donating as much now as they would like.

“What I see here is that giving is a core value that is growing by each generation,” Renner said. “People want more guidance in this area, and they’re ready to act on it.”

Charitable Investing