Charitable Donations by Wealthy Fall 35%, Bank of America Says
Wealthy U.S. households made smaller charitable donations last year, while the number of those giving remained the same, according to a Bank of America Corp. study.
Average giving by survey respondents decreased 35 percent to $54,016 last year compared with 2007, after adjusting for inflation, the biennial report found. About 98 percent of the 801 households in the survey donated to philanthropies in 2009, unchanged from two years earlier. Bank of America surveyed households with an income greater than $200,000 or a net worth of at least $1 million, excluding primary residences.
The percentage of income dedicated to giving fell to about 9 percent from 11 percent in 2007, today’s report said. High- net-worth households account for about two-thirds of all individual giving in the U.S., according to the Center on Philanthropy at Indiana University, which co-wrote the report.
“They’re still giving with the same kind of loyalty and longevity and deliberateness,” Claire Costello, private philanthropy executive at Bank of America Merrill Lynch in New York, said in a telephone interview. “They’re just doing so with less money.”
A loss of assets and feelings of financial insecurity resulted in smaller charitable gifts, Costello said. A separate June report by the Giving USA Foundation in Glenview, Illinois, said that total charitable giving, including by corporations, declined 3.6 percent in 2009 to $303.6 billion.
For the 35 percent of households that stopped giving to at least one organization, the majority said the reason was because of too frequent solicitations or inappropriate amounts requested, the Bank of America report said.
Donations to health organizations fell about 64 percent to $4,511, the biggest decline among charity categories. The drop may be the result of a decrease in capital campaigns, which health organizations tend to use to raise money, and a switch in giving to charities that support more basic needs such as food and shelter, Costello said.
Donors gave more money to private foundations, donor- advised funds and charitable trusts, with the average amount increasing by 21 percent to $75,867. That’s because investors are getting more sophisticated and structured with their giving, Costello said.
They were also more risk averse when investing money that would be used for charitable giving compared with their own personal investments, the report said.
“Donors understand that their philanthropic assets are in fact not their own, but rather are to be used for the common good,” Costello said.
The percentage of high-net-worth donors who volunteered more than 200 hours a year increased to 39 percent from 27 percent as baby boomers reduced their working hours and had more free time, according to the study. Volunteering was also a way for wealthy individuals to give if they had financial constraints.
Wealthy households were more sensitive to the effects of tax policies on their giving, the report said. Sixty-seven percent of respondents said they would somewhat or dramatically decrease their contributions if they didn’t receive any tax deductions for donations, compared with 47 percent in 2007. If the estate tax were repealed, 43 percent of wealthy households would increase the amount they leave to charity in an estate plan, compared with 36 percent two years earlier.
The estate tax, repealed for this year only, will affect estates exceeding $1 million and have a top rate of 55 percent next year, unless Congress acts.
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