Study shows how the rich diverge in charitable giving
The Washington Post
WASHINGTON ” We’ve long known that the rich are different from the rest of us; F. Scott Fitzgerald told us that. But a new study shows that the rich are different from one another, at least when it comes to charitable giving.
Amid what some call the golden age of philanthropy, as high-tech entrepreneurs and financiers amass extraordinary wealth and emerge as philanthropic players, a study released Thursday reveals specific behavioral patterns and motivations among the nation’s wealthiest donors.
The study’s authors randomly surveyed 1,400 of the country’s most affluent households ” defined as those with an income above $200,000 or a net worth higher than $1 million ” and discovered distinct philanthropic characteristics among donors grouped into 12 profiles.
Researched and written by the Center on Philanthropy at Indiana University and sponsored by Bank of America, the report, titled “Portraits of Donors,” is believed to be the first quantitative study of high-dollar philanthropists.
Among the findings:
” The “very wealthy,” households with a net worth above $50 million, donate more money than other affluent households to every type of organization except disaster relief groups. They give to charity largely as a means to leave a legacy and are more concerned than others about determining the impact of their gifts.
” Entrepreneurs demand greater accountability for their gifts and donate to charities because it is “expected in their social network” and “makes good business sense.” They are more likely than other affluent people to give to educational, environmental and international organizations.
” “Dynasty” households, in which fortunes are passed through generations, give the most to arts and cultural organizations. “Setting an example” is a key motivation for giving, and they are the most likely to include their children and grandchildren in philanthropic decisions.
A few characteristics transcended the profiles. For example, many of the households surveyed indicated that they were motivated to give because of a “galvanizing event” in their lives, said Cary Grace, managing director of Bank of America. She cited as an example a man who lost a brother to cancer and later gave $12 million for cancer research.
“That becomes the core part of their philanthropic mission,” Grace said.
The survey found that many of the nation’s most affluent households involve their children in philanthropy.
“We saw a great deal of interest in these donors providing their children with philanthropic budgets to give money on their own,” said Michele Courton Brown, a senior vice president at Bank of America.
While all donors listed “meet critical needs” and “help those with less” as their chief reasons for giving, those worth $1 million to $5 million were more likely to donate because of religious beliefs than their more affluent counterparts.
With the retirement of baby boomers, the nonprofit sector is anticipating a massive transfer of wealth to charitable causes.
“Understanding what that’s likely to mean in terms of philanthropy and how these portraits are likely to behave” is timely and helpful, said Patrick Rooney, research director at Indiana’s philanthropy center.
Tracking the philanthropic motivations of the wealthy is important because they tend to be trendsetters, nonprofit leaders said.
“It used to be that people went to the country club and saw what other people at the country club were giving to,” said Daniel Borochoff, president and founder of the American Institute of Philanthropy. “Now there are a lot of wealthy people who are mavericks and are less influenced by others.”
Major philanthropists such as Bill and Melinda Gates, Warren Buffett and George Soros ” as well as those who made fortunes in the dot-com boom, such as AOL’s Steve Case and Ted Leonsis ” are finding innovative ways to donate.
Paul Light, a New York University professor who is studying such donors, dubbed social entrepreneurs, said they are drawing interest because they are “the new kids on the block.”
“The charitable organizations are paying a lot of attention to changing their operations to anticipate where new funders might be going, and they’re drawing inspiration and insight from the new funders,” Light said.