A majority of wealthy donors plan to give differently than their family. Women, in particular, are more likely than men to forge a giving identity that diverges from their parents, according to a new study that examines the attitudes of high-net-worth people.
When making big charitable-giving decisions, 76 percent of the study’s respondents said they are likely to give to different causes and nonprofits than their parents and to give in ways that differ from how the older generation donates to charity.
By contrast, 82 percent of parents in the survey who give believe that they and their children share the same philanthropic goals.
Women respondents were especially keen to differentiate their giving: 88 percent of women said they plan to or are already giving differently than their parents, compared with 69 percent of men.
Roughly 60 percent of rich people of color said they would give differently than their parents, which the study’s authors interpret as evidence that wealthy people of color’s philanthropic identities are more rooted in their family’s giving legacies and traditions than that of their white counterparts.
On the one hand, that finding makes sense because the traditions and avenues of giving among people of color are still deeply rooted in supporting nonprofits or causes that help their communities, says the philanthropy historian Tyrone McKinley Freeman. But on the other hand, he says, donors of color have been at the forefront of new types of giving, too.
“We see communities of color emphasizing giving to education groups, religious organizations, and others,” says Freeman, associate professor of philanthropic studies at the Indiana University’s Lilly Family School of Philanthropy. “But then there’s the recent social movements where we saw communities of color leading the way for racial-equity giving and in crowdfunding.”
Freeman says the data showing that women are more likely than men to give differently than their parents might have something to do with the emphasis in recent years on women in philanthropy and the important role they have played in creating and leading giving circles. There has also been an increase in research that focuses on women donors, and those factors may be contributing to wealthy women wanting to take a different philanthropic path than their families.
“It may also be a reflection of the higher profiles now of wealthy women philanthropists that we’re seeing in the news media — more so than we did 15 or 20 years ago,” Freeman says. “This is a study focused on high-net-worth individuals, so there’s reason to believe these women in particular would be moved by these more-public examples because they’re at a higher level than the typical American in terms of their giving capacity, even if they’re not at a MacKenzie Scott level.”
The 2022 Bank of America Private Bank Study of Wealthy Americans surveyed 1,052 high-net-worth U.S. respondents over the age of 21 with at least $3 million in investable assets, excluding their primary residence.
Giving Vehicles
The report also shows some variation in how different generations are giving or thinking about giving. 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 the younger donors said they would give through a charitable trust, compared with only 15 percent of older donors.
What’s more, younger 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 favored DAFs compared with only 14 percent of older donors. Foundations got the least amount of love from donors in this study. Less than a quarter of the younger respondents — 23 percent — showed a preference for giving through a foundation, and only 11 percent of older donors indicated they would give through a foundation.
“It was once said somewhat condescendingly of donor-advised funds that they were supposed to be the private foundation for the middle class because they are easy to set up and more flexible compared to a private foundation, but we’ve seen robust growth [in the use of donor-advised funds] in our own ranks of wealthy families,” says William Jarvis, managing director and philanthropic executive at Bank of American Private Bank.
“Although they may have a private foundation that acts as the public face of the family’s philanthropy, it’s not unusual for each adult member of the family also to have a donor-advised fund,” Jarvis says.
Such arrangements provide individual family members flexibility to give to favored causes and charities that might not interest other family members, Jarvis says. He notes that giving through a donor-advised fund enables more personalized giving and frees individual donors from the constraints of giving through their family foundation, where grant making may support causes that might not be of interest to all family members.
More than 80 percent of respondents in the study said they are prepared to give to charity. Yet there were clear differences by generation and family background in how these wealthy families view that readiness. When it comes to feeling an obligation to give to charity, nearly 70 percent of people who made their own wealth reported feeling an obligation to give back, compared with 44 percent of people who come from already-wealthy families.
People who created their own wealth were the least confident about being prepared to support philanthropy, while people from wealthy families were the most confident, according to the study. Freeman says that’s because self-made people are building their wealth at the same time they are trying to hold onto and maintain it. Many self-made wealthy individuals also have obligations that people from families with generations of built-up wealth don’t have.
“It’s a different dynamic at play when you not only are 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 wasn’t a family cushion if they fail, and there also tends to be a larger sense of to whom one is responsible. You’re supporting and caring for more people beyond your immediate household.”
Younger and older respondents disagreed about whether members of the younger generation are prepared to take on philanthropy and how effective they will be. Perhaps unsurprisingly, nearly 90 percent of the younger people in the study were extremely confident that they are not only well prepared to step into the role of wealthy philanthropist but that they will also be more effective at it than their elders.
Both Jarvis and Freeman say this confidence has less to do with the arrogance of youth than with optimism about the future. Jarvis says his youngest clients are optimistic about the future and their ability to continue to build their wealth even as they are giving it away to support the causes they care about.
Freeman says younger 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 have not yet met with the kinds of nuance and complexities that arise when you take on social issues, while 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 across time.”
