In a year marked by a global pandemic and other crises, the vast majority of wealthy households – 88% – donated to charity in 2020, according to a study by Bank of America and the Lilly Family Indiana University School of Philanthropy.
âThere was a high level of commitment to charitable giving that was maintained during these very difficult times,â said Una Osili, associate dean for research and international programs at Lilly School. “Wealthy households have remained generous and constant in their donations.”
The study is based on a survey of 1,626 households with a net worth of $ 1 million or more, excluding the value of their principal home, or annual household income of $ 200,000 or more. The median income of survey participants was $ 350,000 and the median level of wealth was $ 2 million.
Most affluent donors responded to the pandemic with unrestricted giveaways that allowed organizations to spend the money on whatever leaders thought was most important. About three-quarters said their contributions to nonprofits related to health and higher education were unrestricted, and more than 83% said they made unrestricted donations to arts and culture groups.
Philanthropy advisors have worked for years to get wealthy donors to understand the logic of giving more unrestricted gifts, says Dianne Chipps Bailey, who, as managing director of Philanthropic Solutions at Bank of America, advises on both wealthy donors and nonprofit organizations. She believes the 2020 crises have helped donors better understand the importance of unrestricted giving and lifting restrictions on previous donations.
âThe pandemic has exposed the uncertainty in our world in a very dramatic way and has shown that giving unrestricted gifts can really allow leaders of nonprofits to direct that money to what is most needed. Bailey said.
Almost 75% of affluent donors said they did not expect the pandemic to change their giving behavior. Just over 5% said their future giving would be âless restrictiveâ and almost 20% said they would be more focused on specific issues.
In 2020, 57% of affluent households gave to nonprofit organizations that provide for basic needs, and nearly 47% gave to religious organizations. About a third said they donated to health groups, and 36% gave to education.
One issue that rose to prominence among wealthy households in 2020 was social and racial justice. Almost 9% of wealthy households said social and racial justice was important to them; in 2017, this figure was 5.8%. About 11% of those surveyed said they gave to black causes or organizations in 2020, up from 6.5% in 2017.
Almost 25% of wealthy households said they donated to social and racial justice causes last year, and 19% said they wanted to learn more about support from these groups. Osili says researchers will need to track the data over time, but she hopes these numbers indicate that philanthropy can play a significant role in building a more equitable world.
“Given the engagement in this area that we see from foundations and corporations, having individual donors at the table will help to maintain it and ensure that it doesn’t go away after a while.” , said Osili.
The pandemic has prompted many affluent donors to slow down and open their eyes to the ‘world of suffering’ caused by racial and social injustices, says Danielle Oristian York, executive director of 21/64 and expert in multigenerational and next-gen philanthropy . .
She says many wealthy people are now finding out how to build on what they’ve learned and use their wealth to start helping to solve more of these issues. His organization organized a workshop to help wealthy people put their wealth and privileges at the service of good.
âIt’s an issue that a lot of people struggle with more than ever, and it’s not some sort of self-centered ‘poor me, I’m a rich person’ experience,â Oristian York says. âIt’s really about how do people understand their privilege and do something with it? How do you think about it and relate it to a goal? “
Over the past year, the wealthiest donors have switched from giving to organizations to giving focused on problematic, meaning they were more likely to give to a charity that works for a cause they care about than to give to a charity simply because they have supported it in the past.
Forty-five percent said they gave last year because of their affinity with an organization or because they gave it year after year. This is down from 54% in 2017. Additionally, 55% of wealthy donors aged 40 and under were much more likely to say that problems motivated their decisions to give, compared to 40% of wealthy donors over 40. 40 years old. Meanwhile, 48% of older donors said nonprofits were the driving force behind their giving decisions, compared to 34% of younger donors.
âFor younger or new generation donors, they start with the issues they are most interested in and then give to organizations working in those areas rather than giving over and over to the same organizations,â says Osili. âWhat this means for organizations is that when they connect with donors it needs to be more about understanding what issues are most important to that donor and then tailoring engagement around them. that. “
Thanks to the Internet, information about donations and nonprofits is more readily available to donors than it was 20 years ago, says Oristian York. Today, donors can learn more and then use their own sensitivities and values ââto assess the work of nonprofits, whereas previously they had to rely on organizations to provide this information, she says.
âGood decisions are based on our values, not necessarily on what’s popular or what someone else is doing, so young people who are discovering who they are, they are developing what we call their philanthropic identity. Â», Explains Oristian York. “If they start to sit at fundraising tables with family members, the values ââare a way of coming together and figuring out how to align rather than sitting down on issues separately.”
Almost 80% of the charitable donations of affluent households in 2020 came directly from their personal property and income. About 20% reported making donations through charitable trusts, donor-advised funds, family foundations, or other donation vehicles, and some have increased their use of these vehicles in previous years .
The most popular form of donation among respondents was a will with special charitable provisions. Almost 17% of respondents said they had one, and 8% said they had given through a qualifying charitable distribution from an individual retirement account, the second most popular way to give.
Giving through an IRA is effective – and its popularity will only increase in popularity because of the tax advantage it offers, Bailey says. She says IRAs and other giving vehicles are âwhere the real wealth is and where the real opportunity to transformational giving isâ, so nonprofits should keep this in mind when seeking out. gifts from major donors.
This article was provided to The Associated Press by the Chronicle of Philanthropy. Maria Di Mento is a senior journalist at The Chronicle. Email: email@example.com. The AP and The Chronicle receive support from the Lilly Endowment for coverage of philanthropy and nonprofit organizations. The AP and the Chronicle are solely responsible for all content. For all of AP’s philanthropic coverage, visit https://apnews.com/hub/philanthropy.