Wealthy Americans Increased Their Giving by 20% Last Year

The wealthiest Americans increased the amount they gave to charity by 20 percent last year, according to a new study of households with assets of at least $1-million.

In addition, among households with assets of at least $10-million, donations jumped by an average of 50 percent, says the survey by Northern Trust, a banking company in Chicago. Responses were gathered online from 1,002 people in November and December 2006.

However, the outlook for charitable donations this year is less upbeat.

Only 27 percent of survey respondents said they planned to increase their contributions in 2007, compared with 44 percent who had planned increases for 2006. And 59 percent said charitable donations were a part of their household budget, down from 70 percent the year before.

The results are somewhat surprising given respondents’ confidence in the stock market: Nearly half of respondents said they expected it to rise 6 to 10 percent in 2007, spurred by corporate earnings and economic growth.

Marguerite Griffin, national director of philanthropic services for Northern Trust, was taken aback by the finding. “Giving is happening and it’s happening at a pretty consistent clip,” she says.

Ms. Griffin speculates that the result may have been skewed by the fact that the majority of respondents, 822, had liquid assets in the range of $1-million to $5-million. “Even though the market is going up, they still don’t feel they have enough of a cushion to give more,” she says.

The response also surprised Patrick M. Rooney, director of research at Indiana University’s Center on Philanthropy, in Indianapolis, who conducted a survey of wealthy individuals and their giving patterns for Bank of America last year (The Chronicle, November 9, 2006).

The fact that people would have confidence in the stock market but rein in their giving is “entirely inconsistent with any research we have ever done or that I have ever read about anywhere else,” he says. “We have found that giving is positively and strongly related to changes in the stock market.”

Also on the decline was respondents’ interest in personal involvement with the groups to which they give money: 38 percent said they wanted a personal connection, down 10 percent from the year before.

Wealthy people also felt it was less important to donate time and money to charities. In 2005, 71 percent felt it was important; that figure fell to 60 percent in 2006.

However, the survey results offer good news for charities courting younger donors.

More than one-fourth of millionaires age 27 to 41 made charitable contributions last year in excess of $20,000, compared with 15 percent of donors 42 to 60, and 12 percent of donors 61 and older. In addition, households with donors age 40 or younger were the ones most likely to increase donations in 2007.

The same group of donors also felt more strongly about being personally involved in the charities they support.

“Younger donors living now have a different idea of what is possible in the world,” says Ms. Griffin. “There is less time between when they see an issue or problem or challenge and when they can start rallying resources to address it.”

Among the survey’s other findings:

• The average amount given by households worth at least $1-million was $17,400, up from $14,400 in 2005. People whose wealth topped $10-million gave $46,400, on average, up from $30,000 in 2005. Three percent of respondents did not donate at all last year.
• Female donors were more interested than their male counterparts in giving away their wealth during their lifetime.
• Nearly one-fourth of households reported that they had already made plans to leave a charitable bequest, up from 18 percent in 2005.

And more than 10 percent said that, while they had not yet included that type of gift in their will, they planned to do so.

A copy of the survey results, “Wealth in America 2007: Findings From a Survey of Millionaire Households,” is available free on the company’s Web site. Go to: http://northerntrust.com and click on “knowledge center” and then “personal finance.”