The Great Recession ended in June 2009, but average charitable giving from wealthy households still took a significant tumble after that, according to the 2010 Study of High Net Worth Philanthropy from Bank of America Merrill Lynch.
Giving dropped to $54,016 in 2009, a 34.9% decrease from 2007, the study found, and health organizations took the brunt of the pullback. Average giving to health decreased by 63.7%, and health giving as a share of all high-net-worth giving dropped from 10.4% to 6%.
The study, released in November, examined the issues driving charitable giving among affluent households. The bank teamed up with The Center on Philanthropy at Indiana University to do the study, which sampled 801 households last May and June.
As bracing as those numbers might seem, there were further enlightening findings. Among wealthy households that stopped donating in 2009, 35.4% stopped supporting one charity, and 26.4% held back from supporting at least two. Respondents said the main reasons were that the groups solicited them too often and asked for an inappropriate amount of money, 58.9%; other causes won their support, 34.2%, or their household circumstances changed.
That doesn’t mean opportunities for financial advisors in this area have dried up. High-net-worth households consulted attorneys (32.8%) for advice on setting up foundations, trusts or donor-advised funds. After the initial setup, they went to advisors at banks and trust companies (37.3%) and independent advisors (28.5%) to manage their charitable decisions.
High-net-worth households said they were strongly committed to non-profit organizations, as 98.2% of that group said they donated to charity in 2009. Also, 70.5% of households surveyed gave towards religious organizations and 98.2% donated to secular groups. When the wealthy stopped giving, they rarely did so because they were no longer involved with an organization or because they believed it kept inaccurate records. The findings suggest that wealthy donors believed the organizations they supported demonstrated sound operational practices.
The study did uncover several heartening findings. In fact, 38.9% of respondents said they put a lot of confidence in individuals to solve society’s problems, whether domestically or globally. Meanwhile, 36.3% of high-net-worth households said the same about non-profit organizations.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access