How can donors make a greater impact in the communities they care about and how can nonprofit organizations increase engagement with wealthy donors? As a vital part of the philanthropic community, high net worth individuals cite a variety of motivations—as well as challenges and expectations—that shape and influence their giving, according to the 2016 U.S. Trust Study of High Net Worth Philanthropy.
Conducted in partnership with the Indiana University Lilly Family School of Philanthropy, the study examines the giving and volunteer trends, behaviors, attitudes and priorities of wealthy American households. This research series is one of the most comprehensive and longest running of its kind, and an important barometer for wealthy donors’ charitable engagement and perspectives.
According to the study, believing in the mission of the organization (54 percent) is the top motivation driving HNW philanthropy. Other primary reasons cited for giving include believing that their gift can make a difference (44 percent), experiencing personal satisfaction, enjoyment or fulfillment (39 percent), supporting the same causes annually (36 percent), giving back to the community (27 percent) and adhering to religious beliefs (23 percent). Just 18 percent of wealthy donors said they gave largely because of tax benefits in 2015.
The research also shows that wealthy donors have strong feelings about how nonprofits should utilize their contributions. After making a charitable gift, 89 percent 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 individuals reported their greatest challenge when it comes to charitable giving is identifying what causes they care about and deciding where to donate (67 percent). Other charitable giving challenges include understanding how much they can afford to give (50 percent), allocating time to volunteer with the organizations they care about (45 percent), and monitoring giving to ensure it has its intended impact (37 percent).
Wealthy donors who are more knowledgeable about and engaged with their giving are more personally fulfilled from their charitable activity and tend to me more generous as well. The study also found that wealthy individuals’ level of knowledge about giving correlated with other giving behaviors and characteristics. When comparing individuals by levels of charitable giving, higher levels of knowledge directly correlate with whether individuals monitor the impact of their giving, believe their giving is having its intended impact, consult with advisors, and utilize giving vehicles (e.g., private foundation, donor-advised fund).
Nearly all wealthy individuals (94 percent) would like to be more knowledgeable about at least one aspect of charitable giving, with the highest percentages interested in learning how to identify the right volunteer opportunities (42 percent), becoming more familiar with nonprofits and how they serve their constituents’ needs (29 percent), and how to engage the next generation in philanthropic giving (20 percent).
Furthermore, volunteering with a nonprofit organization has a strong correlation with giving to that organization, as a large majority of HNW individuals (84 percent) give financially to at least some of the organizations with which they volunteer, while half (49 percent) give to most, if not all, of the organizations where they volunteer.
It's clear that nonprofits that understand the priorities and expectations of their wealthy donors and engage them in meaningful ways can better achieve their mutual goals. With 83 percent of wealthy donors planning to give and 90 percent planning to volunteer as much or more in the next three years, nonprofits face a tremendous opportunity to further their missions.
In summary, wealthy donors continue to be incredibly generous with their time and money in support of social change in their communities and in the world. And while their charitable activity is driven to a large extent by their personal values and convictions, donors are also listening closely to the needs of nonprofits as they make their giving and volunteering decisions.
This content represents thoughts of the author and does not necessarily represent the position of Bank of America or U.S. Trust.