The FINANCIAL — According to Bank of America, Research Reveals Differences in Giving Behaviors among Younger Affluent Households. Average giving to charities by affluent Americans increased by 48% last year compared to 2017 ($43,195 vs. $29,269), according to the 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households, released today.
Amid pandemic challenges, nearly 90% of affluent households gave to charities in 2020, comparable to past years. At the same time, the study found notable shifts in the way donors give across different generations, representing significant implications for philanthropists and the nonprofit sector going forward.
“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,” said Katy Knox, President of Bank of America Private Bank. “We’re also seeing a next generation of change-makers beginning to transform how giving gets done and philanthropy’s role in society.”
The study, a collaboration between Bank of America Private Bank and the Indiana University Lilly Family School of Philanthropy at IUPUI, is based on a survey of 1,626 affluent U.S. households about their giving in 2020. The findings build on insights about giving patterns, priorities and attitudes from studies conducted in 2015 and 2017, as part of a research collaboration that began in 2006.
Key findings show:
Issues-based philanthropy is becoming increasingly important. The affluent are nearly as likely to base their giving decisions on issues (44%) as they are on organizations (45%). This is a departure from previous studies in this series in which clear majorities of affluent households indicated that organizations drove their giving decisions and/or strategies. Among donors ages 38 and younger, 55% say they are more focused on the issues or causes they consider most important than on organizations (34%).
Social and racial justice issues drew interest and support. One in five (22%) affluent households supported social and racial justice causes through their giving. Eleven percent said social justice was one of their top three most important cause/issue areas, and 19% wanted to know more about this area, indicating potential room for growth.
Participation in sustainable/impact investing nearly doubled. The number of affluent donors who participate in sustainable/impact investing grew to 13% in 2020 vs. 7% in 2017. Additionally, 59% of these donors said that their sustainable investing was in addition to their existing charitable giving. Just 5% of donors said that impact investing was in lieu of all other charitable giving.
Direct digital giving is growing in popularity. Nearly three in five (57%) donors gave via a nonprofit’s website in 2020. Almost one in five (18%) used digital tools such as GoFundMe and other crowdfunding platforms, and 17% used payment processing apps such as Zelle and Venmo. Younger and diverse donors were more likely than others to use such channels to give, for example, 74% of Asian Americans gave via a nonprofit’s website, and 31% of Blacks/African Americans used a payment processing app.
Younger, diverse donors embrace structured giving vehicles. In 2020, younger donors, ages 38 or younger, were more than two and a half times as likely as older donors to have made a donation to a giving vehicle (18% vs. 7%), such as donor-advised funds, charitable trusts and private foundations. Use of giving vehicles was also popular among Black/African American (21%) and Hispanic/Latino (16%) donors.
Affluent individuals who volunteer give twice as much as those who don’t volunteer. Although fewer people volunteered last year due to the pandemic, affluent donors who did spend time volunteering donated more than double the amount to charity on average than those who did not volunteer.
Charitable giving knowledge is positively associated with other giving-related factors. Donors who report being knowledgeable (48%) or expert (5%) about giving are more likely to monitor the impact of their giving, report that it is having their intended impact, and utilize giving vehicles. Conversely, more than half of all affluent donors do not have a strategy for their giving (56%) and/or a giving budget (55%). The top challenges faced by donors include:
Identifying what they care about and deciding where to donate (40%)
Understanding how much they can afford to give (32%)
Monitoring their giving to ensure it has its intended impact (24%)
Seventy-two percent say their charitable giving would stay the same even without income tax deductions. When asked if they received no income tax deductions for charitable giving, would their household charitable giving increase, decrease or stay the same, 72% said, “stay the same,” 6% said “increase” and 22% said “decrease.”
“Innovative forms of giving are being embraced by a diverse donor population whose influence, expectations and priorities are expanding traditional notions of philanthropy,” said Una Osili, Ph.D., Efroymson Chair in Philanthropy, Professor of Economics and Philanthropic Studies and Associate Dean for Research and International Programs at the Indiana University Lilly Family School of Philanthropy. “Financially empowered and technology-enabled, these affluent donors are looking to deepen their impact, using a range of tools and vehicles available to them to advance the issues they are passionate about.”
The top charities supported were broadly consistent with those in previous years. The types of charities most supported were those providing for basic needs (contributed to by 57% of affluent households), religious institutions (47%) and healthcare organizations (32%). The highest aggregate dollar amounts were donated to organizations focused on religion (32% of dollars donated), basic needs (20%) and education (16%, combining K-12 and higher education).
Nonprofits generate the most confidence among donors to solve societal or global problems, with nearly nine in 10 placing their highest confidence in nonprofits. However, other institutions are rising. Affluent individuals’ confidence broadly increased with respect to the ability of small to midsized businesses and branches of government to solve societal or global problems. Government institutions saw substantial jumps, including the president and executive branch (60%, up from 46%); the Supreme Court and federal judiciary system (60%, up from 53%); and Congress (52%, up from 40%).
In a year dramatically disrupted by the pandemic, nearly half (47%) of affluent Americans donated to charitable organizations or financially supported individuals or businesses in direct response to the pandemic. Additionally, 93% of households maintained or increased their giving to frontline organizations providing basic needs, healthcare and medicine. Read more study findings specific to the pandemic.
The 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households is the latest in a series of studies that have set the benchmark for research on the giving practices of affluent households in the United States.
Bank of America and the Indiana University Lilly Family School of Philanthropy partnered on the development of the survey. The survey was conducted using data obtained by Ipsos, including responses from its KnowledgePanel®, a nationally-representative, probability-based panel offering highly accurate and representative samples for online research. Ipsos engaged with the online panel, administered the survey and analyzed the responses for data validity. The Lilly Family School of Philanthropy analyzed the responses for data validity and generated the statistical output, with analysis of survey results being a joint effort between the partners.
The survey was conducted in January 2021, asking about charitable giving during 2020. It is based on a nationally representative random sample of 1,626 wealthy households, and includes in-depth analysis based on age, gender, race and sexual identity. The households in the study have a net worth of $1 million or more (excluding the value of their primary home) and/or an annual household income of $200,000 or more. The average income and wealth levels of study respondents were approximately $523,472 and $31.1 million respectively, with median income and wealth levels of study respondents were approximately $350,000 and $2.0 million, respectively, and respondents’ average age was 52.5 years.