Big Donors Want Self-Sustaining Projects

October 7, 2014       Zach Halper      

Charitable giving by the wealthiest individuals in the world has increased to levels not seen since before the Great Recession, according financial research firms Wealth-X and Arton Capital.

The inaugural “Wealth-X and Arton Capital Philanthropy Report 2014” found that the average ultra high net worth individual (UHNW) donates about $25 million during the person’s lifetime. This put the Wealth-X and Arton Capital Major Giving Index at a level of 220 in 2013, just 12 points behind the all-time high level of 232 in 2006.

The average UHNW has a net worth of $240 million and is 64 years old, according to the report. They also account for just 0.003 percent of the world’s total population but hold 13 percent of the world’s total wealth.

The United States was ranked as the number one source of UHNW philanthropy, taking first in the categories of most numerous, most generous, and most frequent donors. The ranks were based on total amount given during the past 10 years, drawing from each UHNW individuals gift size, recipient, cause, and date. According to the report, a UHNW household in the U.S. with assets between $30 million and $49 million donated $60,000 annually. The average American household, meanwhile, donated $3,000 annually.

In terms of global generosity (total amount given during the 2004-2013 period), Indian UHNW philanthropists were ranked second after United States. Other most “generous” countries include United Kingdom, China and Canada.

While major giving remains a big factor in their contributions to charities, the report found that wealthy donors are shifting their dollars towards more self-sustaining projects. For instance, major gifts to educational causes accounts for 40 percent of all UHNW donations, three times more than health causes.

“Globally, we are witnessing an evolution of philanthropy as it expands from ‘traditional’ philanthropy — involving financial contributions and donations — to cutting-edge approaches such as venture philanthropy, microfinance, impact investing and job creation,” said Mykolas Rambus, CEO, Wealth-X.

“Ultra wealthy philanthropists are increasingly focusing on philanthropic initiatives that provide long-term solutions by enabling the less fortunate to seize opportunities through entrepreneurialism, and using their own business acumen to measure the effectiveness of their philanthropic endeavors and to maximise their returns,” he continued.

Other key statistics from the report include:

  • Individual gifts by UHNW female major donors, on average, are 26 percent larger than their male counterparts;
  • Nearly 70 percent of UHNW philanthropists are self-made and actively contribute to programs that aim to increase entrepreneurialism;
  • Impact investments, such as social bonds, will account for 1 per cent of professionally managed assets within the next 10 years;
  • Billionaires give the most to charity. On average, members of this top-tier wealth segment have donated (U.S.) $108 million in their lifetime; and,
  • Philanthropic bequests are expected to reach (U.S.) $86 billion in the next 10 years.

You can download the full “Wealth-X and Arton Capital Philanthropy Report 2014” for free at http://www.wealthx.com/articles/2014/wealth-x-and-arton-capital-philanthropy-report-2014/