Through an ongoing research partnership with the Center on Philanthropy at Indiana University, the Bank of America and Merrill Lynch have sponsored their third extensive study of philanthropy by high net worth families. The study has lots of great information and provides comparison with the 2006 and 2008 studies so that we can see the trends. This series of studies are a major resource in understanding the philanthropic behavior of wealthy donors. You can read a summary and download the full 75 page report here.
Framework and scope of the study
• More than 800 respondents throughout the United States with household income greater than $200,000 and/or net worth (excluding the value of their residence) of at least $1,000,000
• Average wealth of respondents was $10.7 million
• Respondents were asked about their giving for 2009
• Charitable giving by high net worth households to nonprofit organizations accounts for about two-thirds of all individual giving in the U.S.
Basic Highlights
• 98% of respondents donated to charity.
• 66% donated to same charities year after year
• Average giving dropped 35 percent from $83,034 in 2007 to $54,016 in 2009, after adjusting for inflation
• As reported in other studies for all donors, these respondents (64%) gave more to meet basic needs and for general operating support than they did in 2008. • When wealthy donors also volunteer they give significantly more.
Data that I Found Particularly Interesting
The most frequent categories that high wealth individuals gave to were:
- Basic needs
- Education
- Arts
- Religious
- Health
In 2007 those “managing or selling a business” and “currently working” had the highest average gifts. But both have significantly dropped and those who are “retired” had the highest average gift in 2009.
How Donors Give – Cash is still king but nonprofits need to be cognizant of changing trends. 94% said they made a donation with a check in 2009 but only 78% said they plan to do so in the future. 41% said they plan to donate with a credit card and 33% said they plan to donate online. Respondents could make multiple choices. (Marion’s two cents – It is a bad idea for nonprofits to fret over the small percentage charge for paying by credit cards and online. We need to accept this as the preference for some donors. People want to make their donations in the same way they pay their bills. So – GET OVER IT!)
73% say they have a strategy for their giving and 61% say there are two or more people involved in the decision making. 85% say they instruct their children in philanthropic values and this manifests itself in a variety of ways. More than 70 percent of wealthy families have family traditions of involving children/younger relatives in charitable giving. Providing an opportunity for children – including adult children – to learn about the impact of their philanthropy may be a frontier for smaller locally based organizations to explore.
75% say that their personal experience with an organization influenced their giving. This really confirms how important it is to get a potential wealthy donor to come through your door. This can be a particularly tough challenge for small urban based charities but one that they should not overlook. Having events where people “visit your home” rather than a suburban catering hall may be something to look at.
Top reasons that motivate giving: Moved at how gift can make a difference (72%) and giving to an organization that is efficient (71%). An interesting piece of data in this category is “Being Asked” dropped from 48% in 2008 to 31% in 2010. So the lesson here is it isn’t enough to just ask – you better be prepared to say how their gift will make a difference.
Why Wealthy Donors Stop Donating - In 2009, almost all households stopped giving to at least one organization that they previously supported. The top four reasons cited for why they stopped giving to a particular charity last year included:
59% Too frequent solicitation/organization asked for inappropriate amount
34% Decided to support other causes
29% Household circumstances changed
29% Organization changed leadership or activities
A couple of lessons here - Frequently we are coached to not “leave money on the table” and make sure you ask for enough. Be careful in this area and make sure you know what you are doing. Also, when you have a change in leadership, take care to introduce the new person and develop confidence in their leadership.
There are lots more so download and read the whole study. Let’s discuss it - please leave your comments on the study here.
This article provides some key highlights and data analysis that is of particular interest to me. And as always – comes with my own commentary. Since many of the organizations I work with are small to medium sized and locally based my highlights and comments are those that I think are most pertinent for them. 
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