New research shows many donors are impact investors and engaging rising generation

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By: Bruce DeBoskey, Philanthropic Strategist

Important information about trends in individual and family philanthropy is revealed by two recent studies. These findings help us understand the nature of philanthropy in the U.S. They are pertinent to philanthropists and nonprofit organizations alike.

The 2016 U.S. Trust Study of High Net Worth Philanthropy is a survey of 1,435 U.S. households with a net worth of $1 million or more (excluding the value of their primary homes) and/or an annual household income of $200,000 or more. This study was conducted in collaboration with the Indiana University Lilly Family School of Philanthropy.

The First National Benchmark Survey of Family Foundations is a survey of a nationally representative sample of 2,500 family foundations with assets of at least $2 million and annual giving of at least $100,000. This study was conducted for the National Center for Family Philanthropy by the Urban Institute.

Strong ongoing engagement:

• In 2015, 91 percent of high-net-worth households donated to charity — compared with 59 percent of the general population.

• Eighty-three percent of wealthy individuals plan to give as much (or more) over the next three years as they have in the past. These percentages are even higher among women, African Americans and individuals age 50 or younger.

• Fifty percent of wealthy individuals volunteered their time for charitable organizations — compared with 25 percent of the general population.

• Among these volunteers, 90 percent say they plan to do so as much (or more) over the next three years as they have in the past.

• In 2015, volunteers donated an impressive 56 percent more on average than those who did not volunteer.

Reasons for giving:

• In 2015, the majority of wealthy households gave to an organization because they believed in its mission. Other reasons included making a difference (44 percent); experiencing personal satisfaction, enjoyment or fulfillment (39 percent); supporting the same causes annually (36 percent); wanting to give back to the community (27 percent); and inspiration by religious beliefs (23 percent). Just 18 percent of wealthy donors said they gave largely because of tax benefits.

• Two-thirds of individuals report that the greatest challenge of charitable giving is identifying personally meaningful causes and the nonprofits that support these causes. More than half are not sure that their gifts are having an impact. More than a third are unsure how to monitor their giving to determine its impact.

Additional highlights:

• A third of wealthy donors now participate in impact investing. Of those, 61 percent do so in addition to their established charitable giving. Thirty-four percent do so as a replacement for at least some of their previous charitable giving.

• One study observed strong relationships between donors’ level of knowledge about their philanthropy and their giving behaviors. 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 make use of giving vehicles (such as private foundations and donor-advised funds). Such donors also cite greater personal fulfillment from giving and higher average giving amounts.

• Seventy-two percent of individual donors do not involve younger relatives in their giving. Most of the 28 percent who do find the experience personally rewarding.

Family foundations:

• Of the nation’s more than 42,000 family foundations, nearly 70 percent have been created since 1990. More than 60 percent of these newer family foundations expect to receive additional assets in the next four years.

• More than half of family foundations report that they currently engage younger family members in decision-making. Of these, nearly two-thirds say younger family members add “vibrancy and new ideas” to their work.

• Sixty-two percent of family foundations report an annual payout of five to six percent of their assets. Thirty percent pay out more. Half of those pay out more than ten percent.

These two recent studies offer a gold mine of information – highlighting in particular the low priority given to taxes by current donors as well as the growth of both multigenerational leadership/engagement and impact investing.

In addition, optimistic predictions for giving and volunteering — along with extremely high levels of commitments to philanthropic endeavors — bode well for the immediate future of the nonprofit sector.