Giving big in the recession?
A new report published last month by Barclays Wealth reveals how much of a priority philanthropy has become for the wealthy in the UK and America. Unlike those of us tightening our belts and cutting back because of the global downturn, 75% of wealthy philanthropists have not decreased their contributions, whilst more than one in four (26%) have increased their giving in the last 18 months.
Entitled “Tomorrow’s Philanthropist”, the study polled 500 high net worth investors in the UK and US, emphasising that respondents are still highly committed to giving, despite their assets and businesses being under strain. When asked where they would make cuts if the downturn continued, respondents identified luxury goods, eating out, holidays and travel and staff as more expendable than charitable giving.
The report also reveals the emergence of the ‘Go Giver’, a new, ambitious and younger breed of wealthy philanthropists. This entrepreneurial donor has a stronger commitment to philanthropy than older generations and feels more responsibility to support charities and causes. Evidence of this attitude is reflected amongst the high number of younger respondents who believe that giving will become more incumbent on the wealthy because governments are overburdened with debt.
The next generation philanthropist is also increasingly interested in supporting global causes. 59% of 18-34 year olds stated more interest in global charitable causes, compared to less than a quarter (24%) of 35-44 year olds and a fifth of 44-45 year olds.
Emma Turner, Head of Client Philanthropy at Barclays Wealth commented: “These findings give us an insightful and encouraging snapshot of how we can expect people to engage in philanthropy in the future. In the past, the typical approach was for people to give money and then step away. This new generation of philanthropists are a lot more ambitious and proactive and have perhaps been stimulated by adversity. The findings also show that our younger generations are more socially aware and tuned into global issues.”
The report sheds light on how the wealthy see their philanthropic role changing in light of stretched government resources and distrust in political parties. Half of the respondents (49%) said that because governments are overburdened with debt, giving will become more incumbent on wealthy individuals. This view rose sharply to almost three-quarters (72%) amongst younger philanthropists.
The report also revealed that the wealthy would like a greater say in the way public money is spent to drive change. Nearly two thirds (59%) of high net worth individuals feel that they could make a bigger impact by donating directly to charities and causes rather than indirectly through taxation.
Findings from the report show how donors are looking to make as big an impact as possible. Rather than just contribute to charities and causes, respondents emphasised how much they want to see the impact of their giving. Almost half (45%) of high level donors stated that they would prefer to have donated their wealth before they die in order to witness its impact on society.
Wealthy donors expressed the importance of ensuring their money is put to good use and the majority of respondents feel their donations could be managed more effectively. 40% agree that charities are efficient in the management of money, whilst 53% disagree. In addition, the majority of respondents are becoming more specific about how they want their donations spent. More than half (51%) said that giving would become more about investing in individual projects rather than just giving to large charities.
Emma Turner continued: “In some ways, the recession and its knock on effects have galvanised the attitudes and approaches taken by wealthy donors, who are in a bullish mood to not only carry on giving, but make an even bigger impact in the future. Because many of them have an entrepreneurial streak, they take risks, want value for money, solve problems and generally do things differently. This is changing the philanthropy landscape and the results should benefit charities and causes.”
This is not doubt good news for charities with major gift programmes and supports the notion that in hard times philanthropy steps up to fill the void. Interestingly a slightly contrasting view was found by Radio 4’s The World At One who spoke to several of the country’s wealthiest benefactors about how the recession has affected them and about how the charity sector needs to change. Snippets from Dame Vivien Duffield, Sir Tom Farmer and John Studzinski, although not entirely representative of the philanthropic community, do highlight the affect the recession is having on wealth distributed via trusts and foundations. Many are bracing themselves for the financial shockwave that will hit many trusts in the next 12 months or more as investment income begins to decline. Yet it would be rather myopic to think that all trust will be affected. After all the sector is a patient and conservative mistress and has proven to weather many previous financial storms.
Women rise to the fore
The report gives a strong insight into how philanthropic approaches vary depending on demographics and gender, shedding light on how we might expect to see people engage with charities and causes in the future.
Findings revealed that women are playing an increasingly important role in driving the charitable agenda and that women are more generous than men, giving away a higher percentage (2.3%) of their net investable assets than their male counterparts (1.3%). This trend was accentuated in the US where women give almost twice as much in percentage of their investable assets.
The report also suggests that women’s role in the future of philanthropy goes beyond being more generous than men and that they will also play a key role in influencing future generations’ attitudes towards giving. The findings showed that women (38%) were much more likely than men (25%) to involve their children in general conversations about charity. They would also be more likely than men to involve their children in the processes of choosing the charity their family contributes to. [Source: Barclays Wealth]
You can download the full Barclays Wealth report here.