A majority of wealthy donors plan to give differently from their families. Women, in particular, are more likely than men to form a giving identity that diverges from that of their parents, according to a new study that examines the attitudes of wealthy people.
When making big charitable giving decisions, 76% of respondents in the study said they are likely to donate to causes and nonprofits that are different from those of their parents and give in a different way to how the older generation donates to charity.
In contrast, 82% of parents in the survey who donate believe that they and their children share the same philanthropic goals.
Women surveyed were particularly keen to differentiate their giving: 88% of women said they already plan or give differently than their parents, compared to 69% of men.
About 60% of rich people of color said they would give differently than their parents, which the study authors interpret as evidence that the philanthropic identities of rich people of color are more rooted in heritage and traditions. gifts from their families than those of their white counterparts.
On the one hand, this finding makes sense because traditions and ways of giving among people of color are still deeply rooted in supporting nonprofits or causes that help their communities, says the historian of philanthropy Tyrone McKinley Freeman. But on the other hand, he says, donors of color have also been at the forefront of new types of giving.
“We see communities of color emphasizing giving to educational groups, religious organizations and others,” says Freeman, associate professor of philanthropic studies at Indiana University’s Lilly Family School of Philanthropy. “But there are also the recent social movements where we’ve seen communities of color lead the way in racial equity donations and crowdfunding.”
Freeman says data showing that women are more likely than men to give differently than their parents might have something to do with the focus in recent years on women in philanthropy and the important role they have played. in creating and leading donor circles. There has also been an increase in research focused on female donors, and these factors may contribute to wealthy women wanting to take a different philanthropic path than their families.
“It may also be a reflection of the greater visibility of wealthy women philanthropists that we see in the news media — more than 15 or 20 years ago,” Freeman says. “This is a study focused on affluent individuals, so there is reason to believe that these women in particular would be moved by these more public examples, as they are on a higher level than the American typical in terms of gifting ability, even if they’re not at the level of MacKenzie Scott.
The Bank of America Private Bank 2022 High Net Worth Americans Study surveyed 1,052 affluent US respondents over the age of 21 with at least $3 million in investable assets, excluding their primary residence.
The report also shows some variation in how different generations give or plan to give. The study found that wealthy donors between the ages of 21 and 42 are overall more likely to donate through a structured giving vehicle: half of younger donors said they would donate through a charitable trust, compared to only 15% of older donors.
Additionally, young donors in the study were twice as likely as older philanthropists to give through a donor-advised fund. Thirty percent of younger doors said they preferred DAFs, compared to just 14 percent of older donors. Foundations received the least love from donors in this study. Less than a quarter of younger respondents – 23% – showed a preference for giving through a foundation, and only 11% of older donors said they would donate through a foundation .
“It was once said with some condescension of donor-advised funds that they were supposed to be the private foundation of the middle class because they’re easy to set up and more flexible compared to a private foundation, but we have seen robust growth [in the use of donor-advised funds] within our own ranks of wealthy families,” says William Jarvis, managing director and philanthropic leader of Bank of American Private Bank.
“While they may have a private foundation that acts as the public face of the family’s philanthropy, it’s not unusual for each adult family member to also have a donor-advised fund,” Jarvis says. .
Such arrangements offer family members the opportunity to donate to favored causes and charities that other family members might not be interested in, Jarvis says. He notes that giving through a donor-advised fund allows for more personalized giving and frees individual donors from the constraints of giving through their family foundation, where grantmaking can support causes that might not be of interest to all members. of the family.
More than 80% of people surveyed said they were willing to donate to charity. Yet there were clear differences by generation and family background in how these wealthy families view this preparation. When it comes to feeling pressured to give to charity, nearly 70% of people who have become wealthy said they feel pressured to give back, compared to 44% of people from already wealthy families.
According to the study, people who created their own wealth were the least confident about their readiness to support philanthropy, while people from wealthy families were the most confident. Freeman says it’s because autodidacts build their wealth at the same time they try to keep and maintain it. Many self-made wealthy individuals also have obligations that people from families with generations of accumulated wealth do not.
“It’s a different dynamic at play when you’re not only new to wealth, but you’re still creating it,” Freeman says. “This group, in particular, is likely to have been in a situation where there was no family cushion for failure, and they also tend to have a greater sense of who is responsible. You are supporting and caring for more people beyond your immediate household.
Younger and older respondents disagree on whether members of the younger generation are ready to undertake philanthropy and how effective they are. Unsurprisingly, almost 90% of young people in the study were extremely confident that they are not only well prepared to play the role of a wealthy philanthropist, but that they will also be more effective in it than their elders.
Jarvis and Freeman say that confidence has less to do with youthful arrogance than with optimism about the future. Jarvis says his younger clients are optimistic about the future and their ability to continue building their wealth even as they give it away to support causes close to their hearts.
Freeman says young people will always be the ones who want to save the world and think they can – and he says it’s important for them to think that way.
“They haven’t yet encountered the kinds of nuances and complexities that arise when you’re tackling social issues, whereas older people are more aware of the challenges of really moving the needle on big issues,” Freeman says. . “This youthful exuberance is what has fueled social movements throughout time.”