Donations by the Wealthiest Americans Plunged 35% in Downturn
By Debra E. Blum
Gifts to charities from
wealthy Americans plummeted
by an average of nearly 35 percent from 2007 to 2009, according to a new study on the giving
habits of the rich.
Affluent donors who had donated an average of more than
$83,000 in 2007 gave only about
$54,000 on average two years
later during the heart of the
economic downturn, according
to the study by Bank of America Merrill Lynch and the Center
on Philanthropy at Indiana University. Health-related charities
took the biggest blow, as donors
cut their giving to such organizations by nearly 67 percent.
The study is based on responses to a survey about giving and philanthropic habits in 2009 answered by 800
households that earned at least
$200,000 a year or had liquid
assets of at least $1-million. The
average wealth of people in the
study was nearly $11-million
each. Similar surveys were conducted in 2005 and 2007.
As in past studies, almost
all—98 percent—of the respondents reported making charitable gifts, and about two-thirds
said they supported the same
organizations or causes year
after year. But average giving
as a proportion of total income
dropped slightly from 2007 ( 11. 1
percent) to 2009 ( 9. 1 percent),
and the average total giving
tumbled by 34. 9 percent after
adjusting for inflation.
The median drop in gifts
from 2007 to 2009 was 7. 6 percent after inflation is taken into
account.
or not donors are going to give.
Those other factors are what
we are learning more and more
about.”
Frequent Solicitations
Along with gathering data
on gifts and volunteering, the
study examined the reasons and
the ways that affluent households decide to give.
The three reasons donors
most often cited as a major mo-
tivation for donating to a char-
ity:
Giving as a result of a solici-
tation fell as a motivator, cited
by only 31 of the wealthy donors
in 2009, down from 48 percent
in 2007.
Similarly, too-frequent solici-
tations or requests for an inap-
propriate amount was by far the
most cited reason donors gave
for no longer supporting an or-
ganization. Other top reasons
were that the donors decided
to support other causes or that
their “household circumstances
changed.”
“What this means is that
more than ever, nonprofits
should be careful to tailor their
level of requests, know their do-
nors, and engage them at the
right level,” says Una Osili, di-
rector of research at the Center
on Philanthropy. “Nonprofits al-
ways need to be sensitive about
the individual circumstances of
donors, but in these uncertain
times there needs to be even
more sensitivity about people’s
concerns about their financial
situations.”
demand for social services
among those hardest hit by the
recession. More than 84 percent
of wealthy people gave to orga-
nizations that provide “basic
needs.” That’s up from about 75
percent in 2005.
‘Keep the Lights On’
More than 55 percent of
wealthy people made their largest gift in 2009 to support the
general operations of a nonprofit group. Only about 14 percent
awarded their largest gift to
a capital project—down from
nearly a quarter who did so in
2007; 11 percent made their
largest gift to support the long-term needs of an organization, a
drop from more than 37 percent
in 2007.
“These donors knew that it
was time to keep the lights on,
the doors open, and the phones
ringing, and they responded to
that,” Ms. Costello says. “The
challenge moving forward will
be to also make sure donors are
responding to the critical needs
for sustainability and growth.”
A growing number of wealthy
donors also helped nonprofits
last year by volunteering. Near-
ly 40 percent reported volun-
teering for at least 200 hours in
2009, a jump from the 27 per-
cent who reported that amount
of work in 2007.
Tax Considerations
Amid strenuous political debates about taxes, the study
also found that affluent donors
are increasingly sensitive to the
effect of tax policies on their
charitable giving.
Two-thirds of wealthy Ameri-
cans said their giving would de-
crease if income-tax deductions
for charitable donations were
eliminated, including nearly
19 percent who said their gifts
would drop “dramatically.”
In 2007 less than half of
wealthy donors said that their
gifts would fall if such deduc-
tions were eliminated. As for
the estate tax, 43 percent of the
wealthy donors—up from 36
percent in the 2007 poll—said
they would donate more money
if they were not subject to it.
Claire Costello, an executive in Bank of America Merrill Lynch’s philanthropic management group, is not surprised
that feelings about tax policies
are heightened these days. But,
she says, she doesn’t expect it to
have too much of an impact on
philanthropy.
“Tax considerations are not
a huge indicator of people’s
decisions to give,” she says.
“They may impact the structure of gifts but not whether
How Couples Give
For the first time, the survey
asked questions about household decision making, and it
found more collaboration than
expected, Ms. Osili said.
More than two out of five
couples confer with their partner or spouse and then make a
joint decision about philanthropy, and about one quarter confer before one person usually
makes the final decision. More
than half the couples said they
contributed to causes both partners found important.
“In the past, there may have
been a tendency for nonprofits
to determine who has made the
money or controls the money
and focus their attention there,”
Ms. Osili says. “This research
suggests that it’s increasingly
important to involve both partners in building relationships
and to engage various members
of the household.”
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Changes in Giving Patterns
Affluent donors changed their
giving patterns somewhat from
2007 to 2009, according to the
survey, to respond to increased
