IU Center on Philanthropy and Donors and Gifts and Philanthropic Research and Philanthropy

Study: Rich still giving to charity, but in smaller amounts

November 19, 2010

Despite the recession, wealthy Americans still gave to charitable causes last year, a new study by the Center on Philanthropy at Indiana University reveals. The overall amount of giving, however, fell dramatically. 

Study results show 98 percent of high net-worth households donated to charity in 2009—a figure consistent with findings from studies done before the economy soured.

But those donors scaled back their contributions by nearly 35 percent in 2009. The study found that average charitable giving dropped from $83,034 in 2007 to $54,016 in 2009, after adjusting for inflation.

This is the center’s third such study, which started in 2005 and is published every other year in a report for Charlotte, N.C.-based Bank of America to gauge wealthy giving trends.

“What we have often stressed is that high-net-worth donors have remained committed to giving,” said Una Osili, the center's director of research.

Although total charitable dollars fell, giving as a portion of income remained somewhat steady at 9 percent, compared with 11 percent in 2007.

Wealthy philanthropists appeared to adjust their priorities in response to the recession. The portion who gave to basic human needs rose from 75 percent in 2007 to 85 percent in 2009.

Results of the study were taken from 800 households randomly surveyed in affluent neighborhoods across the country. Households in the sampling had an annual income of more than $200,000 and/or a net worth of at least $1 million, excluding the value of a primary residence. The average net worth of respondents was $10 million.

Sectors on the rise in attracting more money were the arts, environment/animal care and international giving, which includes disaster relief. Contributions to health- and education-related causes declined last year.

More than half, about 55 percent, of wealthy households gave their largest gift in 2009 to fund a not-for-profit’s basic operations. Far fewer households (24 percent) made their largest gift to support the growth of an organization, capital campaign (14 percent), or for long-term needs (11 percent) compared with 2007.

Tax considerations also play a role in decisions to give, the study found. Two-thirds said they would cut their contributions if they were not tax-deductible, up from 47 percent in 2007. And if the federal estate tax is repealed, 43 percent said they would increase the amount they designate to an estate plan, compared with 36 percent in 2007.

Giving to charity, however, means more than just financial support. Volunteering is important, as well, and the wealthy are more than generous with their time, the study found.

About 79 percent volunteered last year. And the percentage who gave more than 200 hours of their time rose significantly, from 27 percent in 2007 to 39 percent in 2009.

Osili attributed the increase to job loss and baby-boomer retirements in addition to a general interest in volunteering.

Volunteering time and giving money seem to go hand-in-hand, according to the study. Those who volunteered more than 200 hours donated an average of $75,662 to charity in 2009, while those who volunteered less time contributed an average of $46,414.

Though the wealthy continue to give, Osili said, the economy still affects decisions.

“When economic conditions improve, charitable giving improves as well,” she said.

In fact, 35 percent of households last year stopped giving to at least one organization, and 27 percent stopped giving to at least two.

The top reasons cited for stopping donations:

— Too frequent solicitations, or asking for inappropriate amounts;

— Decided to support other causes;

— Household circumstances changed;

— Charity changed leadership or activities.


 

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