Study highlights giving trends for ultra‐high‐net‐worth individuals

• DOI: http://doi.org/10.1002/nba.30719
• Date: 01 February 2020
• Published date: 01 February 2020

FEBRUARY 2020 NONPROFIT BUSINESS ADVISOR

7

© 2020 Wiley Periodicals, Inc., A Wiley Company • All rights reserved

DOI: 10.1002/nba

Industry News

Study highlights giving trends

for ultra-high-net-worth individuals

A new study of ultra-high-net-worth individuals

shows that this group of donors is growing in size

and importance to the charitable sector. The study,

from marketing rm Wealth-X, focuses on individu-

als with a net worth in excess of $30 million and a

demonstrated commitment to philanthropy. Accord-

ing to The New Normal: Trends in UHNW Giving

2019, this group gave some $153 billion to charity

in 2018, or roughly the equivalent of what the U.S.

federal government spent on health care, education

and energy that year.

As the report shows, the number of ultra-wealthy

individuals has grown considerably in the last decade,

from about 174,000 globally in 2009 to an estimated

275,000 or so today. Their combined wealth has also

grown substantially, from about $21.4 trillion in 2009

to an estimated $33.4 trillion in 2019. But as their

numbers have risen, so too have expectations that

they give back. Per the report, a growing awareness of

global issues, changing societal attitudes toward civic

engagement and a more widespread public percep-

tion of wealth inequality are key drivers of increased

philanthropic engagement among the ultra-wealthy,

along with high-prole initiatives like the Giving

Pledge and the Founders Pledge, both of which call

for the ultra-wealthy to commit sizable stakes of their

fortunes to charitable causes. The result is an uptick

in the share of charitable giving derived from the

ultra-wealthy—according to Wealth-X, this group

is now responsible for 20% to 30% of all individual

charitable giving in the United States.

Considering their importance to the charitable

sector, the report lays out several insights nonprots

may nd useful as they craft approaches to cultivating

this donor group. For example:

• Education is by far their favorite cause. Almost

nine in every 10 ultra-wealthy individuals direct at

least part of their giving to this area. After education,

social services, health care and medical research, and

arts and culture all garner support from about 60%

of ultra-wealthy donors.

• The ways in which they engage with philanthropy

are evolving. These donors are increasingly amenable

to using innovative nancial instruments, such as

development impact bonds, as well as collaborative

relationships with charitable partners where donors

have greater input on decision-making and crafting

solutions to social challenges—a concept termed co-

creation. These donors are also increasingly holding

nonprots accountable in terms of governance and

nancial management and, ultimately, impact.

• Younger ultra-wealthy donors take a more target-

ed approach to their giving. The ultra-wealthy aged 45

and under tend to be especially engaged with one or

two key causes, and want to be involved in ways that

go beyond money—they want to volunteer their time,

whether that means serving on a board or mentoring

some of the organization’s staff, or actively leveraging

their networks to garner additional support for the

causes they care about. Notably, the report said, this

younger group’s approach to philanthropy is inuenc-

ing their families, who are increasingly taking on the

engagement and opinions of their younger members

when it comes to their philanthropic giving.

The report offers a number of tips for nonprots

as they seek to engage this group, including:

• Target the right individuals and prioritize net-

working. According to Wealth-X, approaching the

ultra-wealthy about new opportunities for philan-

thropic engagement requires “meticulous preparation

and a leveraging of the right engagement/connection

points. Ensure you know what their passions and

hobbies are, and what makes them tick. Needs and

necessities play a minor role in the ultra-wealthy’s

decision-making processes so they need to connect to

the cause, product or service that is being discussed,”

the report notes. Charities should also work to un-

derstand and leverage the relationship networks of

their current ultra-wealthy donors, as these personal

(See WEALTHY on page 8)

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