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MY NICHOLS’ WORTH by Judith Nichols
THE TENUOUS LINK BETWEEN WEALTH & CHARITY

A relatively small group of truly wealthy individuals is currently responsible for the majority of giving in the United States and Canada, as well as most of the rest of the world:

In the U.S., the 4.9% of families with net worth of $1-million or more make 42% of the total during-life contributions to charitable organizations. Of this small but wealthy group, those families with $1-million or more in net worth plus annual incomes exceeding $1-million comprise only 0.2% of the population, yet contribute 14% of all during-life ("inter vivos") giving, while 4.7% with income less than $1-million contributed 28% of all current giving.   Paul G. Schervish and John J. Havens, "The New Physics of Philanthropy:  The Supply Side Vectors of Charitable Giving/ Part 1:  The Material Side of the Supply Side."

The top one-quarter of donors (21% of Canadians) who gave CAN$325 or more during 2004 provided 82% of the value of all donations, the survey showed. Nationally, more than 22 million Canadians — 85% of the population aged 15 and over — made a financial donation to a charitable or other non-profit organization during the 12-month period covered by the survey. They donated an estimated CAN$8.9-billion, an average of CAN$400 each. During the same one-year period, nearly 12 million Canadians, or 45% of the population aged 15 and over, did some volunteering through a group or organization. Their contributions totaled almost 2 billion hours, which was equivalent to one million full-time jobs. On average, volunteers contributed 168 hours each. Canada Survey of Giving, Volunteering and Participating 2004 reported in Statistics Canada’s The Daily, June 5, 2006. Subscribe free at http://www.statcan.ca/english/dai-quo/subs.htm.

Fortunately, donating to charity is an integral part of both the budgets and financial plans of most affluent households. In the U.S., nearly half of households plan to increase their charitable giving in 2006 according to the study Wealth in America conducted by Chicago-based Northern Trust (www.northerntrust.com). Most wealthy Americans (71%) surveyed said that donating time and/or money to charities or non-profit organizations is embedded in their family life, and nearly half (47%) want to be personally involved in the charities to which they donate.

But charities should not be complacent. Statistics from the I.R.S. show that, Warren Buffett’s $37 billion in gifts notwithstanding, the richest and highest-earning Americans have cut back on donations since 1995:
 

CHARITABLE GIFTS AS A PORTION OF INCOME	1995	2003
Incomes less than $1 million	2.8%	3.5%
Incomes more than $1 million	4.1%	3.6%
GIFTS AT DEATH	1995	2004
Estates worth $1 million +	8.8% -- 73% gave nothing	7.9% -- 78.1% gave nothing
Estates worth $20 million +	25.3% -- 42.4% gave nothing	20.8% -- 47.7% gave nothing

"The Ultra-Rich Give Differently From You and Me", New York Times, July 2, 2006

Wealthy Americans say they feel more compelled to give to charities than they did three years ago, but most do not plan to increase the amount they give to charity according to The Wealth and Values poll 2003, which focused on people with both $500,000 or more in assets and an annual household income of at least $150,000

Perhaps, it’s time to encourage those defined as "affluent" rather than "wealthy" to boost their philanthropy. According to the study, Ownership of Household Wealth in the United States, by Responsible Wealth (www.stw.org), American affluents total more than 27.9 million households including:

Most charities have a poor track record in upgrading donors, especially from the initial, modest gifts many affluents make to test an organization’s commitment to its donors. According to a Money magazine study, most affluents are conservative regarding money. When asked to describe themselves from a list of 25 adjectives, very few respondents said they consider themselves "impulsive" (17%), "a risk taker" (18%) or even "entrepreneurial" (24%). Rather, the greatest share of affluent Americans (65%) chose "independent" as a description. "Well-organized" (55%), "goal-oriented" (54%) and "confident" (51%) also ranked high on the list.

The bottom line? To convince affluents to increase their giving to your organization, you will need to provide them with the appropriate information. They want to feel that partnering with you is a good investment with quantifiable results.