Study: Wealthiest donors are giving less to nonprofits

JVA Consulting often hears its clients say that their financial situation would improve if they could only find some deep-pocket donors. While that may be true, research shows that there are fewer of those big donors out there.

According to Philanthropy Journal, a new study found that the wealthiest donors in the U.S. are giving less.

Among those making $5 million or more a year, giving dropped to $855,200 a year in 2007 from $995,192, says a study of high-net-worth donors by Bank of America and the Center on Philanthropy at Indiana University. The study defines high-net-worth donors as those who make $200,000 a year or more, or have net worth of at least $1 million, or both. The survey reflects responses from almost 700 high net-worth people from across the country.

While the share given to foundations fell from 24.7 percent in 2005, arts groups were the biggest losers, receiving only 4.2 percent of gifts from the wealthy, down from the 13.2 percent in 2005.

Entrepreneurs are the most generous wealthy givers, the study says, donating an average of $248,871 a year. In a distant second, people whose wealth comes from real estate gave an average of $96,773 a year.

Wealthy donors expect much from the charities they support, with more than nine in 10 wanting to see sound business practices, and almost as many expecting an “appropriate” amount of donations to be spent on overhead.

Personal benefits and public recognition in return for donations were considered important to only about one in 10 wealthy donors.

For those who stopped giving in 2007, “no longer having a personal connection” to the charity they once supported was the reason cited most often for ending a funding relationship.

Giving appears to be a family affair among the wealthy, the study says, with virtually all respondents saying they learned about philanthropy from their parents, and more than half saying they involve their children in choosing charities to support. And donors who have children actively involved in grantmaking decisions give on average of almost three times as much as families who do not get input from their kids.

Volunteering has a positive effect on giving, with those giving the most hours also donating the most.

Those who volunteered more than 200 hours a year gave an average of $132,315 in 2007, while people volunteering only one to five hours gave an average of $45,318. But volunteering overall among the wealthy took a hit in 2007, with only three in four wealthy donors volunteering, compared with nine in 10 who gave their time in 2005.

The study also found a big increase in donors’ use of legal and financial advisers to help them make charitable decisions. While the 2006 study found donors relied more on nonprofit personnel and their own peers more than any source for advice, the 2008 study found they relied mainly on accountants, lawyers and financial advisers.

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