Bill and Melinda Gates brace the rain as they visit the township of Khayelitsha on October 25, 2019 in Cape Town, South Africa.
Brenton Geach | Gallo Images | Getty Images
A version of this text first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Enroll to receive future editions, straight to your inbox.
While donations to charity have been rising, the pool of donors is shrinking, as philanthropy becomes hyper-concentrated amongst a small group of ultra-wealthy mega-donors, based on a latest study.
A latest report from Altrata finds that ultra-high-net-worth individuals (those value $30 million or more) now account for 38% of all individual giving on the planet. Put one other way, 400,000 people account for greater than one-third of the world’s charity.
It’s much more extreme while you have a look at billionaires. The world’s 3,200 billionaires (or 0.00004% of the worldwide population) account for 8% of individual philanthropy.
The giving by those at the highest is, after all, a positive. While it’s worthy to debate whether the rich are giving enough (see the recent annual letter from Gates Foundation CEO Mark Suzman on how the rich must step it up), giving on the entire continues to grow.
The general level of giving from ultra-high-net-worth individuals in 2022 was 25% higher than it was in 2018, although it was a down yr for financial markets, based on Altrata. North Americans remain essentially the most philanthropic on the planet, accounting for nearly half of worldwide giving from that upper echelon.
The challenge for wealth advisors and nonprofits is adapting to a latest, highly top-heavy landscape for philanthropy. Nonprofits, which for years benefited from a broad range of donors, now should rely upon a smaller collection of super-donors, who’re already barraged with requests. Charitable causes will rise and fall depending on the interests and goals of a small group of mega-funders. And overall giving will develop into more volatile, because the benevolence of billionaires and the ultra-wealthy is driven largely by stock prices.
Amir Pasic, dean of the Indiana University Lilly Family School of Philanthropy, says the so-called “dollars up, donors down” phenomenon has caused nonprofits to rethink their fundraising and techniques.
“A variety of nonprofits are pivoting to focus more on those major gifts and attempting to work out learn how to access wealthy donors and foundations,” he said.
At the identical time, he said, some nonprofits are attempting to show the tide of wealth and use technology and more creative outreach programs to tap a bigger community of smaller, younger donors.
“It’s a Catch-22,” he said. “Everybody is rushing to the highest of the pyramid, however it’s becoming so concentrated they could be neglecting the importance of reaching out to tomorrow’s donors.”
Based on Altrata, today’s ultra-wealthy mega-donors are largely male, with a majority over the age of 70 and with a better share of liquid wealth (i.e., money) than the broader ultra-high-net value population. Women, nevertheless, are a rising force. While women make up11% of the ultra-high-net-worth population, they account for 22% of the larger givers, based on the study.
Today’s ultra-wealthy donors also prefer to present through private foundations and donor-advised funds — which give them more control — relatively than simply writing checks to the Red Cross or United Way. The assets held in private foundations have greater than doubled since 2005, to greater than $1.2 trillion, based on Federal Reserve data.
Almost 1 in 5 of all ultra-high-net-worth individuals has a non-public foundation, and 30% of those value $100 million or more have a foundation, based on Altrata.
The giving priorities of the rich are also different from those of the broader public, which may lead to extra money flowing to causes which might be particular to the rich or perhaps a subset of just a few individuals. The highest charitable cause for ultra-wealthy donors was education (at 54%), based on Altrata. That was followed by arts and culture (32%), health care and medical research (28%), social services (23%) and the environment/conservation/animals (14%).
While religion is much and away the highest charitable cause for Americans, Altrata said religion didn’t rank in the highest seven causes for the ultra-wealthy, though Altrata noted that because giving to religion is commonly “anonymous and disparate in nature,” the actual number may very well be higher.
“There’s some evidence that the ultra-high-net-worth population has different skews from the broader population,” Pasic said. “And that may also be skewed by a small variety of very large gifts to at least one cause.”
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