Wealthy keep giving in downturn, plan to give more

Wealthy households in the U.S. continue to give and volunteer, despite the ailing economy, and they are giving strategically and plan to give as much or more in coming years than they have in recent years, a new study says.

They also say tax breaks are not the main reason they give, and they plan to keep giving even if those breaks are eliminated.

Averaging giving as a percentage of household income among 700 wealthy households held steady at 9 percent between 2009 and 2011, says the 2012 Bank of America Study of High Net Worth Philanthropy.

The study, prepared through an ongoing partnership with the Center on Philanthropy at Indiana University, is based on surveys with households with net worth of $1 million or more, excluding the value of their home, or with annual household income $200,000 or more, or both.

In 2011, 95 percent of high net worth households donated to at least one charity, compared to 65 percent of the general population of U.S. households that donate to charity, says the study.

Also in 2011, 89 percent of wealthy individuals volunteered at nonprofits, up 10 percentage points from 2009.

And 76 percent of wealthy donors plan to give as much or more through 2016 than they have in the past, while only 9 percent plan to give less.

The wealthiest 3 percent of U.S. households give roughly half of all giving by individuals, who account for over 70 percent of the nearly $300 billion donated to charity last year.

Taxes and donor expectations

Only 32 percent of wealthy donors cited tax advantages among the chief motivations for giving, compared to 50 percent who said they would keep giving at current levels even if income tax deductions for donations were eliminated, and 95 who said they would keep or increase their bequest giving even if tax deductions for estate giving were permanently eliminated.

Eighty-two percent of wealthy donors expect nonprofits they support to spend an appropriate amount of their donation on general administration and fundraising, 76 percent expect them to demonstrate sound business and operating practices, 75 percent expect them to honor their request for privacy and anonymity, and 78 percent expect them to not distribute their name to others.

Loss of donors

In 2011, 30 percent of wealthy donors stopped giving to at least one nonprofit they previously supported.

Asked why they stopped giving, 38 percent said they were solicited too often or the nonprofit asked for an inappropriate amount, 29 percent said the nonprofit they supported changed leadership or activities, 27 percent said they personally changed their philanthropic focus or decided to support other causes, 22 percent said their household circumstances had changed in terms of their finances, relocation or employment, and 12 percent said they no longer were personally involved with the nonprofits.

“Nonprofit organizations that understand what matters most to donors, that have a clearly articulated mission, and are transparent in the reporting of both their financials and the sustainability and efficiency of their operations, have a significant advantage in attracting and maintaining relationships with wealthy donors,” Claire Costello, philanthropic practice executive for U.S. Trust, Bank of America Wealth Management, says in a statement.

Giving and volunteering

Fifty-four percent of wealthy individuals volunteered over 100 hours, and 35 percent volunteered over 200 hours, with high net worth individuals who volunteered more generally giving more.

Wealthy individuals who volunteered over 100  hours last year gave more than $78,000 on average, for example, compared to $39,000 given by those who volunteered fewer than 100 hours.

Sixty-one percent of wealthy individuals who volunteered served on a nonprofit board of directors, the most common volunteer activity in 2011,  compared to 48 percent each who volunteered for event planning and fundraising activities, and 40 percent who provided professional services, such as business and marketing support, to nonprofits they support.

High net work individuals increasingly contribute to nonprofits where they both volunteer and believe their gift will have the biggest impact, with the average gift to those organizations growing 40 percent to $102,642 in 2011 from $73,301 in 2009.

Giving strategies

Seventy-one percent of wealthy donors have a specific strategy in place to guide their charitable giving, the study says, and 81 percent target specific organizations based on geography or a specific cause or issue, compared to 16 percent who give with no specific focus to a large number of groups.

Forty-three percent have charitable provisions in their will, which remains the most common giving vehicle, although others are increasing, with 19 percent of wealthy households giving through a private foundation or donor advised fund in 2011, up from 16 percent in 2009.

Twenty-six percent of wealthy donors say they have a private foundation or donor advised fund, and another 5 percent plan to create one in the next few years.

Todd Cohen

Boomer women bigger donors, study says

Single women who are Baby Boomers and older give more to charity, and are more likely to give, than single men the same age when education, income and other factors are equal, a new study says.

At all income levels, and no matter what share of permanent income they give, Boomer and older women give 89 percent more to charity than their male counterparts, says Women Give 2012, a study from the Women’s Philanthropy Institute at the Center on Philanthropy at Indiana University.

Among  women in the top 25 percent of permanent income who give at the highest level, or 3 percent or more of income, Boomer and older women give 156 percent more than men the same circumstances.

The U.S. is home to 76 million Boomers, or Americans born from 1946 through 1964, a group that represents the biggest generation in the country.

Boomers hold over 90 percent of net worth in the U.S. and account for 78 percent of all financial assets.

Based on 2007 projections, women accounted for 51 percent of Boomers in the U.S., a share expected to grow to 54 percent by 2030.

And women age 50 and older control net worth of $19 trillion and own over 75 percent of financial wealth in the U.S., it says, while women age 50 to 70, or roughly the age of Boomers, hold 47.2 percent of the gross assets of the top female wealth holders in the U.S.

“Boomers and people of older generations are more likely to give and give more on average than younger generations,” the study says,

And Boomer women, it says, are “transforming philanthropy through innovative new charitable organizations and ways to engage in charitable activity.”

The number of nonprofit women’s funds, often public foundations, which are governed mainly by women and raise money from public sources to support programs for women and girls, now totals 165 in 27 countries on six continents, the study says.

A recent study by the Women’s Philanthropy Institute that included women of all ages found that, generally, households headed by single females are more likely to give, and to give more, than households headed by single males, when factors that affect philanthropic behavior are equal.

That study and the new study looked only at households headed by single females and single males to explain gender differences.

Married couples tend to pool income and decide together about charitable giving, it says, so studying married couples does not allow for testing gender differences in giving.

The new study also says Boomer and older women are more likely than men to be concerned about their economic future and funds available for retirement as they age.

Women generally have lower incomes and spend less time in the work force than men, it says.

In particular, it says, women as they age are affected more adversely than men by aversion to risk in making financial decisions, by longer life expectancy, by being single as they age, and by having less money in retirement.

So women tend to set aside more money as “precautionary savings,” limiting any spending, including charitable giving, the study says.

And more conservative investment by women of accumulated wealth, it says, likely will yield a lower level of permanent income.

Greater aversion to risk suggests that the tendency to spend out of a “certain flow of income and stock of wealth” will be lower among women than men.

“Women, in general, earn less and have less money in retirement than men, and then have a greater life expectancy,” Debra J. Mesch, director of the Women’s Philanthropy Institute, says in a statement.

“Although some may have concerns about their financial security,” she says, “our study suggests that Boomer and older women share their  resources with others more generously than their male peers.”

Previous research by the Institute also found that strong networks among women “may keep them more connected to both the needs of others and to opportunities to give,” Mesch says.

“The giving habits of Boomer and older women are a powerful reminder about the importance of gender in philanthropy,” she says. ‘These insights help nonprofits better understand their female donors and remind fundraisers of the importance and value of seeking gender balance in their fundraising strategies.”

— Todd Cohen