Stocks Have Bounced Back but Giving by the Nation’s Wealthiest Has Not, Study Finds

The wealthiest Americans have cut their charitable donations by 70 percent since the stock-market boom ended, a new report shows. Average contributions from households with a net worth of at least $5-million (excluding primary residences) fell from $600,000 in the three-year period 1998-2000 to $180,000 in 2002-4, says a report by Spectrem Group, a research and consulting firm in Chicago.

The report, “Charitable Giving and the Affluent Market,” is based on data gathered from 500 responses to a mail survey of wealthy households in spring 2005. The margin of error is plus or minus 4.4 percentage points.

It shows that wealthy donors substantially cut back on charitable giving after the stock market fell in 2000, and that their overall contributions have continued to fall even though the market has improved.

Ann Mahrdt, a director at Spectrem, said that wealthy people who have participated in the company’s focus groups say they are feeling cautious about all kinds of spending. They cite concerns, for example, about world events such as terrorism and the war in Iraq and about health-care issues, including the future of Social Security, she said.

93% Decline in Donations

The survey found that those with the smallest net worth — $5-million to $10-million — pulled back the most. Their average contributions fell 93 percent, from $575,000 in 1998-2000 to $41,000 in 2002-4. Average donations fell 79 percent from households with a net worth between $10-million and $25-million, from $462,000 to $96,000; and 38 percent from households with a net worth of more than $25-million, from $1.14-million to $710,000.

The latter group was the only one to show signs of recovery. Its average donations during 2002-4, while still below 1998-2000 levels, were up from $598,000 in 2000-2.

The report also includes data about a broader set of affluent households, those with more than $500,000 of investable assets. The information came from more than 500 telephone interviews in spring 2005 and a mail survey of more than 300 households in fall 2004. Findings include:

• Affluent people said they gave an average of $7,748 to charity in 2004, with unmarried people and those older than 65 giving the most ($10,165 and $9,073 respectively).
• Fifty-three percent agreed with the statement “I feel I give all I can to charitable purposes.” Sixty-four percent said their level of giving would stay the same during the next year. Younger donors are most likely to increase their giving during the next three years; 48 percent said they somewhat or strongly expected to give more, compared with only 18 percent of retired people.

Copies of the report, “Charitable Giving and the Affluent Market,” can be purchased for $2,500 each at http://www.spectrem.com.