Restaurant check 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 Graven images | Getty Images
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Up, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
While presents to charity have been rising, the pool of donors is shrinking, as philanthropy becomes hyper-concentrated among a small company of ultra-wealthy mega-donors, according to a new study.
A new report from Altrata finds that ultra-high-net-worth individuals (those advantage $30 million or more) now account for 38% of all individual giving in the world. Put another way, 400,000 people account for more than one-third of the fabulous’s charity.
It’s even more extreme when you look at billionaires. The world’s 3,200 billionaires (or 0.00004% of the global citizens) account for 8% of individual philanthropy.
The giving by those at the top is, of course, a positive. While it’s worthy to debate whether the well off are giving enough (see the recent annual letter from Gates Foundation CEO Mark Suzman on how the wealthy need to trace it up), giving on the whole continues to grow.
The overall level of giving from ultra-high-net-worth individuals in 2022 was 25% penetrating than it was in 2018, even though it was a down year for financial markets, according to Altrata. North Americans cadaver the most philanthropic on the planet, accounting for nearly half of global giving from that upper echelon.
The confront for wealth advisors and nonprofits is adapting to a new, highly top-heavy landscape for philanthropy. Nonprofits, which for years benefited from a widely applicable range of donors, now have to depend on a smaller collection of super-donors, who are already barraged with requests. Charitable provokes will rise and fall depending on the interests and goals of a small group of mega-funders. And overall giving will appropriate for more volatile, since the benevolence of billionaires and the ultra-wealthy is driven in large part by stock prices.
Amir Pasic, dean of the Indiana University Lilly Household School of Philanthropy, says the so-called “dollars up, donors down” phenomenon has caused nonprofits to rethink their fundraising and blueprints.
“A lot of nonprofits are pivoting to focus more on those major gifts and trying to figure out how to access wealthy donors and foundations,” he translated.
At the same time, he said, some nonprofits are trying to turn the tide of wealth and use technology and more creative outreach programs to tap a stouter community of smaller, younger donors.
“It’s a Catch-22,” he said. “Everybody is rushing to the top of the pyramid, but it’s becoming so concentrated they may be neglecting the moment of reaching out to tomorrow’s donors.”
According to Altrata, today’s ultra-wealthy mega-donors are largely male, with a majority settled the age of 70 and with a higher share of liquid wealth (i.e., cash) than the broader ultra-high-net worth population. Little women, however, are a rising force. While women make up11% of the ultra-high-net-worth population, they account for 22% of the on the looser givers, according to the study.
Today’s ultra-wealthy donors also prefer to give through private foundations and donor-advised endowments — which give them more control — rather than simply writing checks to the Red Cross or United Way. The assets leveraged in private foundations have more than doubled since 2005, to more than $1.2 trillion, corresponding to Federal Reserve data.
Almost 1 in 5 of all ultra-high-net-worth individuals has a private foundation, and 30% of those worth $100 million or sundry have a foundation, according to Altrata.
The giving priorities of the wealthy are also different from those of the broader community, which could lead to more money flowing to causes that are particular to the wealthy or even a subset of a few parties. The top charitable cause for ultra-wealthy donors was education (at 54%), according to Altrata. That was followed by arts and culture (32%), strength care and medical research (28%), social services (23%) and the environment/conservation/animals (14%).
While religion is far and away the top beneficent cause for Americans, Altrata said religion didn’t rank in the top seven causes for the ultra-wealthy, though Altrata notable that because giving to religion is often “anonymous and disparate in nature,” the real number may actually be higher.
“There is some verification that the ultra-high-net-worth population has different skews from the broader population,” Pasic said. “And that can also be skewed by a nugatory number of very large gifts to one cause.”
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