A new study has reported that affluent donors have increased their charitable gift contributions in 2020. According to a study by Bank of America and the Lilly Family School of Philanthropy at Indiana University in the midst of a global pandemic wealthy households have donated an average of $43,195.
This is a 48% increase from 2017 which previously reported an average donation of $29,269. The household surveyed in the report had a minimum net worth of $1 million and average household income of $200,000 or more. “There was a philosophical shift that occurred in how donors approached their giving, the urgency around giving, the consistency…Charitable activities last year and into this year reflect unwavering commitments by philanthropists to give in good times and bad, and to address societal issues as well as challenges faced in their local communities,” according to Katy Knox, president of the Bank of America.
It can’t be overstated that last year was troubling time for our society. The ongoing pandemic, several social justice issues, racial injustice awareness and movements were brought into the forefront. These are some of the contributing factors to the rise of the wealthy in giving more. Many local businesses were shut down, unemployment was at a high, health care cost was on a steep rise. One in four affluent households increased donations to local communities and businesses due to these devastating effects.
The survey stated that donations to religious organizations received the highest share of dollars contributed by affluent donors. Arts and culture 83%, Health 75%, Education (both K-12 and higher education) 74% and basic needs (food, clothing, shelter) got the most funding from wealthy donors. The support for African American causes and/or organizations went up in 2020 to 11.4%, compared to 6.5% in 2017.
Furthermore, researchers have seen a trend in the past year that the average amount of charitable gift contributions given by affluent donors were 17.5 times more than the general population in the year 2018. Even though affluent households are a tiny part of the general population, they have an unequivocal larger impact on charitable giving. They account for about two-thirds of households donating in the United States. Nearly eight out of 10 households with wealth levels of $200,000 or more gave to charity, while less than four in 10 households with wealth levels of $50,000 or less did.
Affluent donors are more likely to donate. For instance, this can be reiterated with the recent news of Warren Buffet contributing $3.4 billion to five charities with a total of $31 billion as of now.
Aside from the reasons for moral responsibility and feelings of generosity in the wealthy donating more, another factor contributing is the incentive to save on taxes. In the United States, if you donate money to a qualified 501(c) organization, a donor can claim a “deduction” on their tax return. The value of giving is recognized by the U.S. tax code, which provides a variety of tax incentives to taxpayers who wish to use their funds to do good. Charity donations are a tremendous tax-saving opportunity and benefit charitable organizations in their cause to help those in need.
To conclude, according to the Bank of America Study of Philanthropy, 90% of affluent households continued to give to charities, and 74% of surveyed wealthy families do not anticipate changing their philanthropic efforts. Different motivations drive them: support causes they resonate with, a sense of moral responsibility, make an impact, be part of a cause that brings goodwill, or simply put, achieve tax benefits. The generosity of the wealthy increased in 2020 and is forecasted to remain more substantial in the future.
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