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Press release from Business Wire

2012 Bank of America Study of High Net Worth Philanthropy Finds Donors Firmly Committed to and Highly Engaged With Nonprofits

<p class='bwalignc'> <i>New Study Offers Unique Insights Into the Giving Forecasts, Motivations and Shifting Behaviors of Wealthy American Philanthropists</i> </p>

Monday, October 29, 2012

2012 Bank of America Study of High Net Worth Philanthropy Finds Donors Firmly Committed to and Highly Engaged With Nonprofits09:00 EDT Monday, October 29, 2012 NEW YORK (Business Wire) -- Among wealthy households, average giving as a percentage of household income held steady at approximately 9 percent between 2009 and 2011, despite the challenging economic environment, according to the 2012 Bank of America Study of High Net Worth Philanthropy. Through an ongoing partnership with the Center on Philanthropy at Indiana University, the fourth in this series of biennial studiesreveals a strong commitment to charitable causes among high net worth households. This is manifest in several findings, including: Last year, the vast majority (95 percent) of high net worth households donated to at least one charity. This high rate of giving among the wealthy is consistent with the previous studies in the series, and compares with 65 percent of the general population of U.S. households who donate to charity1. In 2011, 89 percent of wealthy individuals volunteered their time and talent to nonprofit organizations – up 10 percentage points from 2009. For the first time, this study asked wealthy donors to forecast their giving for the next several years – an area of concern for nonprofits operating amid economic uncertainty. The findings offer an optimistic outlook, with 76 percent of wealthy donors planning to give as much as or more during the next three to five years (through 2016) than they have in the past; just 9 percent plan to give less. To put the importance of giving by wealthy donors into context, of the nearly $300 billion donated last year more than 70 percent was given by individuals2, of which roughly half was given by the wealthiest 3 percent of American households3. “Since 2006, this has become the largest and one of the longest running studies of its kind, offering key insights that help to inform nonprofit organizations' donor engagement strategies,” said Claire Costello, philanthropic practice executive for U.S. Trust, Bank of America Private Wealth Management. “The latest study offers a deeper understanding of giving trends, strategies and traditions among America's wealthiest households.” The following are key findings from the 2012 study, which reveal significant shifts as well as consistent trends in the attitudes and giving priorities of the wealthy, including: the nonprofit sectors they support, how they direct their largest gifts, what motivates them to give, why they stop giving, and their family and holiday giving traditions. The study also examines new areas of inquiry, including the rate at which wealthy donors contribute to political causes as well as the level of fulfillment and satisfaction they derive from their charitable activities. Giving where engaged Last year, more than half (54 percent) of wealthy individuals 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 that, generally speaking, the more high net worth individuals volunteered, the more they gave. For example, last year, those who volunteered more than 100 hours gave more than $78,000 on average, 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). Meanwhile, 40 percent provided professional services to the nonprofits they support, such as volunteering their business and marketing skills. Increasingly, high net worth individuals are giving their contributions to organizations where they both volunteer and believe their gift will have the largest impact. In instances where both were true, the average gift to these organizations grew by 40 percent between 2009 and 2011 (from $73,301 to $102,642). “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. “They are more focused, more engaged through volunteerism, and their commitment is strongest when they are personally involved with the nonprofits to which they give.” Donors give strategically The majority of wealthy donors (71 percent) have a specific strategy in place to guide their charitable giving. This is further evidenced by the fact that 81 percent of donors apply a certain level of focus to their charitable activity, giving to a targeted set of organizations based on geography or a specific cause or issue. This is compared to 16 percent who give with no particular focus to a large number of organizations. While charitable provisions in a will continue to be the most commonly used giving vehicle (43 percent), the use of other vehicles is on the rise. For instance, 19 percent of wealthy households gave to such giving vehicles as a private foundation or donor-advised fund in 2011, compared to 16 percent in 2009. Today, one out of four (26 percent) wealthy donors report having a private foundation or donor-advised fund, and an additional 5 percent plan to establish one during the next few years. Forty percent of wealthy donors consulted with an outside adviser about their charitable giving last year. Those who sought advice from at least one source consulted most with accountants (53 percent), followed by their financial or wealth advisors (37 percent) and nonprofit personnel (33 percent). Nonprofit sectors receiving the greatest gifts Last year, the greatest percentage of high net worth 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. Consistent with findings in 2009, the three areas receiving the largest proportion of gift dollars in 2011 were education (28 percent), giving vehicles (23 percent) and religious organizations (13 percent). Though not a large drop, the average dollar amount given per high net worth household declined 7 percent between 2009 and 2011, from $56,621 to $52,770 (adjusted for inflation). Last year, wealthy households tended to direct their largest gift to religious (36 percent), education (25 percent) and health (8 percent) organizations. Consistent with their priorities reported in 2009, when asked about the objectives for their largest gifts in 2011, 61 percent of high net worth households gave to fund a nonprofit's general operations, 30 percent gave to fund a particular program or activity, and 21 percent gave their largest gift to support organizational expansion and innovation. Motivated and feeling groovy Nonprofits the world over benefit from knowing what motivates wealthy donors to give. Similar to the last study, the 2012 study found that wealthy donors give under the following circumstances: 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. In fact, half (50 percent) reported they would maintain their current charitable giving levels 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. In the context of this study, fulfillment relates to feelings that donors' charitable activity engender, while satisfaction relates to the perception that donors have about the positive outcomes of their charitable activity. The majority of donors (78 percent) enjoy a sense of fulfillment through philanthropic engagement (giving or volunteering), and gain satisfaction from the impact their charitable activities have on the people and world around them (75 percent). Meanwhile, just 18 percent feel the need for visibility or recognition based on these activities. Donor expectations and why they stop giving Wealthy donors have strong feelings about how the nonprofits they support should use their contributions and conduct themselves. For instance, these donors expect the nonprofits they support to spend an appropriate amount of their donation on general administration and fundraising (82 percent), and to demonstrate sound business and operational practices (76 percent). They also expectnonprofits to honor their request for privacy and anonymity (75 percent) and, similarly, to not distribute their name to others (78 percent). 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 following were the top reasons cited for why these donors stopped giving to a particular charity: 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 (e.g., financial, relocation, employment) (22 percent). The donor was no longer personally involved with the organization (12 percent). “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,” added Costello. Family traditions and preparing the next generation Many wealthy families have giving traditions (41 percent), such as volunteering as a family and giving to charity during the holidays. The spirit of the holidays often encourages more generous giving, with 43 percent of these donors confirming that they make more charitable contributions during the “giving season” (between October and December) than during the rest of the year – while 44 percent spread their giving evenly throughout the year. “Heightened levels of charitable activity during the last few months of the year present additional opportunities for nonprofits to engage donors in their work and mission,” added Osili. “However, these findings underscore the importance of fostering engagement with donors throughout the year, not just 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). When it comes to decision making, respondents from nearly half (46 percent) of high net worth households reported that they make decisions about their giving jointly with their spouse or partner – even when deciding where to give their largest gift (48 percent). This is consistent with decision making about the broader management of their wealth, with 48 percent citing that wealth management decisions are made jointly. Societal issues and confidence in those working to address them Among the leading societal and public policy issues that matter most to wealthy donors today are education (60 percent) and health care (45 percent), followed by the economy (38 percent), poverty (34 percent) and the federal deficit (33 percent). The study asked wealthy households about their confidence in various societal groups and institutions to solve domestic and global problems. The vast majority said they have faith in nonprofits (91 percent) and individuals (90 percent) to influence and enact positive change. Fewer have confidence in the private sector, and far fewer have faith in various areas of government. Noteworthy in the lead up to the election, half (51 percent) of wealthy households gave to political causes in 2011 for the purpose of electing or defeating a candidate. By comparison, approximately 13 percent of the general population tends to make political contributions4. To view a detailed summary of key findings from the 2012 Bank of America Study of High Net Worth Philanthropy and to access the full 75-page report, visit http://newsroom.bankofamerica.com/press-kit/bank-america-high-net-worth-philanthropy-study. Sources 1 The Center on Philanthropy Panel Study, 2009 2 Giving USA: The Annual Report on Philanthropy for the Year 2011, 2012, Giving USA Foundation 3 The Center on Philanthropy at Indiana University – percentage of giving by high net worth households is an estimate derived from the percentage of households that itemize and the top income earners in the United States 4 American National Election Study, 2009 – a collaboration of Stanford University and the University of Michigan, producing data on voting, public opinion and political participation Methodology This study represents a comprehensive analysis of data gathered from a 12-page survey randomly distributed to 20,000 households in high net worth areas of the U.S. The latest in this series of studies builds on those completed in 2010, 2008 and 2006, with the full report once again written and researched in partnership with the Center on Philanthropy at Indiana University. Results are based on a nationwide sample of 700 households with a net worth of $1 million or more (excluding the value of their home) and/or an annual household income of $200,000 or more. Conducted between April 2012 and September 2012, the survey asks respondents about giving and volunteering behaviors for the year 2011. Unless otherwise specified, charitable giving for 2005, 2007, and 2009 was adjusted for inflation to 2011 dollars. The Center on Philanthropy at Indiana University The Center on Philanthropy at Indiana University is a leading academic center dedicated to increasing the understanding of philanthropy and improving its practice worldwide through research, teaching, training and public affairs programs in philanthropy, fundraising, and management of nonprofit organizations. For more information, visit www.philanthropy.iupui.edu. Bank of America Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving more than 55 million consumer and small business relationships with approximately 5,500 retail banking offices and approximately 16,300 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to more than 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. For more Bank of America news, visit the Bank of America newsroom. www.bankofamerica.com U.S. Trust operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation. Bank of America, N.A., Member FDIC. © 2012 Bank of America Corporation. All rights reserved. Reporters May Contact:Matt Card, Bank of America, 1.617.434.1388matthew.card@bankofamerica.com