What makes the wealthy charitable?

Charitable organizations seeking funds to support a variety of causes will now have access into the minds of the nation’s wealthiest donors, sort of.
Thanks to a report recently released by Bank of America and the Center on Philanthropy at Indiana University, those nonprofits will have better knowledge and resources to tap into a significant group of donors.
The data allows nonprofits to not only see the charitable practices of high net-worth households with incomes greater than $200,000 or assets exceeding $1 million, but the motivation behind them.
This small group of high net-worth donors, approximately 3.1 percent of all U.S. households, has a huge impact on charitable giving and provides two-thirds of all household charity in the nation. In fact, more than 98 percent of high net-worth households gave to charity in 2005, compared to 67 percent of all U.S. households.
“The data in these types of reports could certainly help inform fundraising strategies and either justify changes in current approaches or validate the organization’s current course of action,” said Melanie Coon, spokesperson for The Rhode Island Foundation, one of the nation’s largest and oldest charitable groups which holds more than a half-billion dollars in assets.
The two most prominent types of donors are the “entrepreneur” and the “very wealthy.”Although these donors give the most, they have different practices and reasons for giving.
The very wealthy, those households with a net-worth of $55 million or more, gave the most on average to foundations and donor-advised groups and are more likely to give to leave a legacy, because it made good business sense and to set an example. Entrepreneurs, however, were more likely to start their own foundation or donor-advised fund. Entrepreneurs, unlike the very wealthy, give to meet critical needs, give back to society and to give to those less fortunate.
One finding showed high net-worth households allocate contributions very differently than the average household.
The general population gives to religious groups, while the high net-worth household gives to organizations that serve a number of purposes, such as the United Way, and also give a disproportionate amount of their wealth to education, arts and cultural organizations.
“There are not many high-end donors in Rhode Island but [the ones we have] tend to support different things and are engaged in the arts and the colleges,” said Anthony Maione, president of the United Way of Rhode Island.
There are several points a nonprofit should consider that may help during fundraising efforts:
&#8226 High net-worth households are concerned about the high administrative costs. Nonprofits can use this information as a way to better communicate why expenditures are necessary and how they strengthen the group’s cause. These households also said if charities spent more on helping the constituencies they serve and less on administrative and fundraising expenses, then they would donate more.
&#8226 Nearly 60 percent of high net-worth households said they would give more to charity if they were able to determine the impact of their gifts.
“What we find especially in the high end of our giving range is that they aren’t so much worried about the agencies. They are interested more in the investment,” Maione said.
&#8226 The report also found that these top donors want to not only financially support the organizations they care about but also want to devote their time. By creating opportunities for volunteerism, a nonprofit can give donors an insight into the charitable group and a personal view of how it works. After 50 hours of volunteering, higher levels of volunteer hours translates into more giving.
“On average, wealthy donors are more likely to volunteer more than 200 hours of their time annually,” said Claire Costello, Bank of America’s philanthropic management national practice executive. “The report showed high-volunteerism rates across a number of donor categories, dispelling the myth that people with the means to donate might have less time to devote to charity.
Bank of America is sharing its findings with a number of audiences, including nonprofit organizations, donors, and industry groups.
“The more organizations know about what motivates their donors, the more effectively they should be able to communicate with them, building relationships that result in positive outcomes,” Coon said. &#8226