High-Net-Worth Philanthropy: Trends in giving during 2020
What can we learn from trends in giving among the wealthy last year?
Last June, Beacon launched a quarterly survey of 300-500 high-net-worth individuals, to understand patterns of giving by the wealthy on a continuous basis.
It asks just two questions – how much they gave to charitable causes in the previous three months, and whether this was more or less than planned. Over time, the research will show the ebbs and flows of giving in different sections of the wealthy population. It will also help to determine the influence of external stimuli, like the pandemic, on philanthropy.
With the results, so far, following the course of the COVID-19 pandemic, there are already some useful lessons about how to engage wealthy people in giving.
Understanding the findings
The research indicates that the overall amount of money given to charitable causes by high-net-worth individuals increased throughout 2020, in line with the first wave of COVID in the UK. Quarterly median donations were £200 in June*, growing to £410 in September, before reducing to £170 in December.
This demonstrates that, while wealthy people do respond in times of national emergency, increased giving tails off once solutions are on the horizon. It raises questions around how we ensure philanthropy remains a strong part of civil society at all times, not just in emergency situations.
Exploring the research in more detail indicates that high-net-worth giving trends manifest differently across different demographics. The younger group, aged 18-34, gave median donations of £500 in June, £325 in September and £300 in December. Interestingly, their median June giving, covering the period from the start of lockdown in March up until June, was £200 more than 35-54 year olds, and £400 more than those aged 55 and over. A trend emerges from this, that wealthy young people respond faster to crises than their older counterparts.
However, the drops in the younger demographic’s donations should not be ignored. These may have been influenced by the UK’s redundancy rate, which increased by over 240% between June and September 2020**. With many of those at a younger age still in the formative stages of a career, their giving could have been curtailed by the perception of a threat to their employment status.
By contrast, the 34-55 year old demographic grew their giving significantly in September 2020. Their median donations more than tripled, from £300 to £1,000. At a more senior point in their careers, early philanthropy for this group may have been hampered by additional professional leadership responsibilities; organising their company responses to COVID-19 would have taken primacy over engaging in individual philanthropy. Once the impact of the crisis was better understood and responses had been actioned, this group were the ones with the means to increase their philanthropic activity substantially.
A similar pattern emerges between women and men as between older and younger donors. Women gave more to charitable causes early in the crisis, with men giving later and in larger amounts. Akin to younger donors, this suggests a first responder tendency among wealthy women, with men responding later, once clear areas of need surface.
Interestingly, consistently through the year around one-fifth of wealthy people reported giving less than they planned, highlighting that even among wealthy people economic uncertainty does have an impact on giving.
What is clear from the data, across all demographics, is that around half of high-net-worth individuals have made a concerted effort to keep donating at their normal rate to their chosen charities in a time where many of these charities may have slipped from public consciousness. A further quarter have continued to give more money than planned, showing that a sizable portion of wealthy people have responded to the crisis with sustained higher levels of giving overall.
What does this teach us?
There are a few useful conclusions we can draw from this insight in order to try and sustain higher giving levels from the wealthy over the coming months and years. Firstly, with the quarterly median level of giving among high-net-worth individuals varying between £170 and £410, it is clear that there is considerable scope to raise the bar for giving among the wealthy.
The median shows us that at the height of the crisis a greater number of wealthy people were giving more money than previously, showing they do respond in times of need. Raising giving levels will require a consistent narrative about the role philanthropy can play in response to critical issues like COVID-19.
Secondly, the research highlights that some high-net-worth demographics react quickly, while others make more considered decisions. There will not be a one-size-fits-all solution for engaging wealthy people in philanthropy, nor will there be consistency in their patterns of giving. We need to welcome this variety and recognise what each donor brings to a wider effort, while realising that different pain points exist for various groups.
Lastly, we also need to acknowledge that wealthy people are not immune to wider economic factors. There will be those who can go above and beyond, and those who cannot. Understanding their constraints paves the way for honest conversations about when is a good moment for them to give more. In learning to incorporate these considerations, we can work to engage wealthy people in more and better philanthropy.
*’June’ denotes the giving period between March to June; ‘September’ covers July to September giving; ‘December’ covers October to December giving.
**At the time of writing, the most recent redundancy statistics publicly available are for September 2020.