PJ staff report
Wealthy Americans are making smaller gifts to charity, with more than half of them making their largest gift to fund nonprofit operations, a new study says.
They also are volunteering more, and those who volunteer more are giving more, says the 2010 Bank of America Merrill Lynch Study of High Net Worth Philanthropy.
Overall average gift amounts from wealthy Americans fell 35 percent from 2007, after adjusting for inflation, although several sectors saw average gift amounts grow 4 percent to 21 percent, including the arts, environment/animal care and international giving.
Over 55 percent of over 800 high-net-worth households surveyed gave their largest gift in 2009 to fund general operations at nonprofits, while 24 percent made their biggest gift to support the growth of an organization, down from 40 percent in 2007; 14 percent made it for capital campaigns, down from 23 percent; and 11 percent made it or for the long-term needs of the organizations, down from 37 percent.
“As the economy recovers and donors begin to look beyond short-term needs, nonprofit organizations will need to consider adjusting their messaging to better capture the critical support needed for sustainability and growth,” Claire Costello, national foundation executive at Bank of America Merrill Lynch, says in a statement.
“Their challenge will be striking a balance between successfully engaging donors around both long- and short-term needs,” she says.
The study, part of an ongoing research partnership with the Center on Philanthropy at Indiana University, is based on responses of over 800 households randomly surveyed in affluent neighborhoods across the U.S.
Households surveyed have income of over $200,000 or net worth of at least $1 million, excluding the value of their main residence, or both.
The average wealth of respondents was over $10 million, and half of all respondents had a net worth between $3 million and $20 million.
Thirty-five percent of high-net-worth households in 2009 stopped giving to at least one organization they previously supported, and 27 percent stopped giving to at least two organizations.
Of those that stopped giving to a particular charity, 59 percent said they received solicitations too often or that the organization asked for an inappropriate amount; 34 percent decided to give to other causes; 29 percent had had changes in their household circumstances; and 29 percent reported changes in the leadership or activities of the organization.
“Nonprofits may have asked for too much at a time when donors were more constrained due to the downturn,” Una Osili, director of research for the Center on Philanthropy, says in a statement. “The message for nonprofits is that they should be aware of donors’ circumstances.”
Nearly 79 percent of high-net-worth individuals volunteered in 2009, with 39 percent of them volunteering over 200 hours a year, up from 27 percent in 2007.
High-net-worth individuals who volunteered over 200 hours donated $75,662 to charity last year, compared to $46,414 from high-net-worth individuals who did not volunteer.
Seventy-two percent of high-net-worth individuals say they give because they can make a difference, while 71 percent say they give because they feel financially secure, 71 percent because an organization will use their donation efficiently, and 66 percent because they support the same cause or organization annually.
Sixty-seven percent of wealthy households would decrease their charitable donations somewhat or dramatically if they received no income-tax deductions for their donations, up from 47 percent in 2007.
If the estate tax were repealed, 43 percent of wealthy households would increase the amount they leave to charity in an estate plan somewhat or dramatically, up from 36 percent in 2007.
Eighty-three percent of wealthy households sometimes or usually make a donation in response to disasters.
Of those that do, over 92 percent gave to disaster relief in addition to their regular charitable giving.