A report on attitudes about philanthropy suggests wealth advisors prove their worth and value proposition by helping clients shape their own goals and come to grips with the complexities of this area.

Wealth advisors have a great opportunity to educate clients, especially among the millennial population, about philanthropy and tap a hunger among this group to cause meaningful impact to society, US Trust tells this publication as it reveals new findings from a study today.

“There is a Renaissance in philanthropy across multiple jurisdictions,” Ann Limberg, head of philanthropic solutions and the family office at US Trust, which is part of Bank of America, told Family Wealth Report.  

Her firm today published its Study of High Net Worth Philanthropy in full – preliminary findings, which revealed attitudes towards areas such as political campaign contributions, were issued to FWR a few days ago (see here). Among the headline takeaways is that 91 per cent of high net worth households gave to charity last year, ahead of the US general population average share at 59 per cent. On average, HNW donors gave to eight different non-profits in 2015, with the amount varying based on age. Donors aged over 70 gave to an average of 11 organizations, baby boomers gave to seven and younger donors (50 or younger) gave to five.

In terms of amount, HNW donors gave an average of $25,509 to charity last year, ahead of a general population figure of $2,520, US Trust’s report said. The report is upbeat, finding that 83 per cent of HNW donors intend to give as much as 55 per cent or more in the next three years than in the past. A mere 3 per cent intend to contribute less.

“Giving levels are high and they remain high,” Limberg said. 

There has been a fall in the number of survey respondents saying they are knowledgeable about philanthropy, Limberg continued. The rising importance of millennials, who may have less experience in the field and think that there are so many complex issues, may be a reason for this, she said.

Results are based on a survey of 1,435 US households with a net worth of $1 million or more (excluding the value of their primary home) and/or an annual household income of $200,000 or more. Since 2006, the study has been written and researched in partnership with the Indiana University Lilly Family School of Philanthropy.

Restructure
US Trust recently restructured part of its business, creating a new consulting and advisory group, developing resources to offer advice to groups such as non-profit organizations and endowments, among other bodies, she continued.

“We wanted to make a significant investment here and we are doing that. We are trying to create real relevance by going deeper into the client conversation and no longer just using the word `philanthropy’ but going into the subsectors of that,” she continued.

The world of modern philanthropy and investment where financial considerations aren’t always paramount can cause so many different terms – socially responsible investing, venture philanthropy, impact investing, etc – that there could be some confusion. However, this issue is usually addressed by having a clear conversation with clients about their goals and objectives, Limberg said.

FWR asked Limberg about an eye-catching finding that 67 per cent of respondents said a challenge was to clarify what they cared about and what they wanted to donate to. “People might be clear about what they fell but not clear about actual giving. There is also, I fear, a lot of misinformation out there. We help clients operationalize how they feel…..we help them to make decisions,” Limberg said.
 

Where the money went
Among details about contribution end-destinations, the report showed that 63 per cent of donors gave to “basic needs organizations” last year, making the sector the largest supported by such donations. Additional causes included religion (50 per cent), education (45 per cent), the environment (42 per cent) and health (40 per cent). On education, some 31 per cent of respondents gave to higher education and 33 per cent donated to K-12 education.

Religion took the largest share of dollars (36 per cent) among all charitable sub-sectors – more than giving to basic needs (28 per cent), higher education (8 per cent), health (7 per cent) and arts and culture (5 per cent).

Time and money
Besides monetary donations, the survey found that many HNW individuals are contributing their time. Last year, the survey found that 50 per cent of respondents volunteered time and abilities to charitable causes, twice the rate of the general population (25 per cent). Volunteering had a big impact on the amount of money given; volunteers gave 56 per cent more money on average than those who didn’t volunteer.

US Trust’s report shows high net worth philanthropy has a variety of motivations. Some 44 per cent of respondents, for example, think their gifts can make a difference, and 39 per cent said support and donations created personal satisfaction and fulfilment. 

After making a charitable gift, 89 per cent of wealthy donors said it is important that the organization spend only a “reasonable amount” of their donation on general administrative and fundraising expenses. Wealthy donors also indicated that it is important that the organization demonstrate sound business and operational practices (89 per cent), acknowledge donations by providing a receipt for tax purposes (88 per cent), not distribute their names to others (84 per cent), honor their requests for anonymity (83 percent) and for how their gift is to be used (83 per cent). And 61 per cent would appreciate a thank you note.

Nearly all wealthy donors (94 per cent) would like to be more knowledgeable about at least one aspect of charitable giving, with the highest percentages of these individuals interested in learning how to identify the right volunteer opportunities (42 per cent), becoming more familiar with non-profits and how they serve their constituents’ needs (29 per cent), and how to engage the next generation in philanthropic giving (20 percent). 

In 2015, 24 per cent of HNW individuals consulted with at least one advisor regarding their charitable giving. 

 Impact investing has some impact on giving levels. This study found that, among the 33 per cent of wealthy donors who participate in impact investing, three out of five (61 per cent) approach it as something they do in addition to their existing charitable giving, whereas 34 percent do so in place of at least some of their charitable giving. And 5 per cent of wealthy donors participate in impact investing in place of all of their charitable giving.