New Poll Shows How Wealthy View Estate Tax, Other Giving Issues

Eliminating the federal estate tax would not cause most people, including

the wealthiest Americans, to change their charitable-giving habits, according to the results of a newly released poll on philanthropic behavior and motivations.

Seventy-three percent of wealthy people said the estate-tax repeal wouldn’t change their behavior, while 89 percent of the entire population said the loss of the estate tax wouldn’t alter their donation patterns.

President Bush has vowed to make repeal of the tax one of his highest priorities. Many in philanthropy have expressed concern that giving will decline if he succeeds in persuading Congress to go along. They fear that, without the tax, wealthy people would not have as much incentive to reduce their estate’s size by making gifts to good causes.

The estate-tax issue was included in a survey designed to gather views of the wealthiest Americans on a wide range of philanthropy issues, and compare them to the responses of the total population. The survey was commissioned by HNW Digital, which runs Worth.com, a Web site aimed mainly at affluent Americans; it was conducted online by Harris Interactive.

To determine the views of the wealthy, the polling company gathered responses from 1,024 adults who had a household income of $150,000 or more and net assets of at least $500,000 (not including the value of their primary residence). About 8.4 million Americans fall into that category, according to a report on the survey results. The polling company said it sampled 2,005 additional people at all income levels to determine the views of the total population.

No Big Differences

For the most part, the study did not find major differences between the views of wealthy people and those of all Americans. For instance, a quarter of the wealthy, and the same share of the total population, said that, in making their charitable donations, they had come to believe that nonprofit groups were poorly managed or organized.

But among the well-to-do, differences emerged depending on how people came by their wealth. Forty-four percent of small-business owners, for example, said they lacked confidence in nonprofit management, while only 18 percent of people who inherited money expressed such concern. Views also varied by age: Only 17 percent of people age 25 to 34 said they believed nonprofit groups were poorly managed, while 50 percent of those over 65 felt that way.

Perhaps the only topic on which wealthy people and the total population diverged significantly was the influence of tax and estate laws on giving. More than half of wealthy people said tax benefits induce them to give, while 28 percent of the total population cited taxes as a motivation. That is not surprising, since people who don’t itemize on their tax returns — a large segment of the American population — are not eligible to deduct their charitable gifts.

Among the wealthy, small-business owners and people who acquired their wealth through stock options were more likely to be swayed by tax benefits than people who became rich from other sources. Seventy-five percent of wealthy people age 65 or older cited tax benefits as a key reason for giving, compared to 48 percent of people under 34.

Other key findings of the survey:

Online donations. Eighty-four percent of wealthy people said they had never given online, compared to 92 percent of the entire population. Wealthy people cited two main reasons for the relatively few online gifts they made: The charities they want to support don’t offer an online option, and they want greater personal interaction with a charity than they can achieve making a gift via the Internet. For the total population, the main obstacle to Internet giving was lack of comfort in making financial transactions online.

Causes. More than half of wealthy people said they had given to at least five types of causes in the past year; only three of ten Americans said they had supported that many different causes. Education was the top cause for the wealthy, supported by 53 percent, while religion was the top cause for all Americans, commanding gifts from 49 percent.

Obstacles to giving. Asked what keeps them from giving, the primary reason offered by most Americans was lack of sufficient discretionary income and uncertainty about their future finances. For wealthy people, the prime reason for not giving was concern that their money would not be used well.

Anonymous giving. About a third of all Americans, as well as a third of the wealthy, have given anonymously at least once in the past year. But wealthy people, more than other citizens, tend to prefer to attach their names to their gifts. Half of all Americans said they preferred to give anonymously; two out of three wealthy people preferred to give with their name attached.

Religion. Religious belief is a key motivator both for the wealthy and the total population. About half the wealthy, as well as half of all Americans, said their gifts were motivated by their beliefs. However, the influence of religion changes with age among the wealthy. Slightly more than half of all people over 65 said they were motivated to give by religious beliefs, while only 9 percent of people age 25 to 34 said the same. Another indicator of the importance of religion: One-quarter of the wealthy, and 27 percent of the total population, said they had tithed their income in the past year.

Board service. One in four wealthy people said they served on a nonprofit board; 11 percent of the total population said they played such a role at a charity.

Bequests. Affluent people plan to leave 11 percent of their assets to charity when they die; the average for all Americans is 4 percent. Wealthy people said their children would receive 87 percent of their wealth, on average, while others said their offspring would receive 91 percent.

For copies of the report, “Worth.com Wealth Pulse: Wealth and Giving,” write to James Kerwin, Director of Wealth Pulse Sales, HNW Digital, One Gateway Center, Suite 402, Newton, Mass. 02458; the cost per copy is $1,295 for nonprofit organizations; $1,950 for other types of organizations. The report can also be ordered from http://www.hnwdigital.com.