Younger, affluent philanthropists in the U.S. care more about supporting specific issues than about giving to an organization, and the issues they care most about are education and climate change, a biennial study from Bank of America Private Bank and the Indiana University Lilly Family School of Philanthropy said on Tuesday.
According to the study, 44.6% of donors born in 1981 or later, said their charitable giving in 2022 was driven by issues important to them compared with only 36.1% of donors aged 43 and older.
“That’s a big shift over time,” says Una Osili, associate dean for research and international programs at the Lilly Family School. “In 2006, when you asked donors why do they give, it was this idea of supporting organizations that mattered to them—whether those were the universities and colleges they attended or the organizations in their communities.”
Overall, the Bank of America Study of Philanthropy found average gifts by affluent households fell 19% last year to US$34,917 from US$43,195 in 2020, which had reflected a boost of giving during the pandemic. Last year’s level, however, was 19% above US$29,269 before the pandemic.
The somewhat modest results are not surprising for an economically destabilizing year marked by inflation, rising interest rates, the war in Ukraine, and a decline in investment portfolios from volatile markets. Forty-four percent of those who abstained from giving last year said they needed to take care of their family, compared with only 27% who said that in 2017.
“That does affect some segments, maybe the lower tier of the affluent donors,” Osili says.
The study was the fourth in a series the two institutions have conducted together of affluent donors in the U.S. Those surveyed in January and February this year had an average income of US$523,472 and average wealth of US$31 million.
Among affluent households in this group who were under the age of 42, 79% gave to charity compared with 87.2% of older affluent households. These groups diverge further in the issues that mattered to them the most. Younger donors favor education (28%) and climate change (25.7%), while older donors favor religious life (24.4%) and education (20.7%).
The fact that young donors are taking the lead on climate “certainly makes sense,” Osili says. “This is more of a longer-term issue. It’s going to have more of an impact on those younger donors.” There’s also more awareness among these donors of how to make a difference through philanthropy in addition to advocacy, volunteering, and consumer choices, she says.
Although religious life is ranked as the most important issue for older donors, and, overall, it gets the largest share of charitable dollars—39%, according to the study—giving to religious/spiritual service or development has steadily declined since 2015, the study found. In that year it received nearly half of all philanthropic donations.
“You’ve seen a drop of 10 percentage points over five years,” says William Jarvis, national philanthropic executive at Bank of America Private Bank.
The trends are most striking on a regional basis across the U.S. In dollars spent, donors in the West gave 50% of total annual giving to religious and spiritual causes as did 46% of donors in the South; donors in the Midwest and Northeast gave only 25% of their annual giving to religion. Midwest donors favored basic needs (representing 42% of annual giving), while donors in the Northeast favored higher education (47%).
Of course, “religious institutions are themselves often vectors for the distribution of basic needs,” Jarvis says. The decline in religious giving “is a fact that we are observing and sort of seeing where this might go.”
Though the younger generation is driving a shift to funding organizations that are addressing specific issues rather than focusing on the organizations themselves, the trend is also one being driven by women, Osili.
That’s particularly significant considering the report’s finding that 85% of charitable decisions in affluent households are made by women. According to the survey, affluent women are more likely to give to women’s and girls’ causes than men are (24% and 17%, respectively). Of those who gave to these causes last year, 51% did so to support reproductive health/rights, the report said.
“There’s clearly a role for women in leadership and philanthropy, and we’re seeing that, perhaps more than ever, as they control more assets through their own income and wealth, but also as part of couples and families, whether they inherit from their parents or from their spouses or their own businesses,” Osili says.
Many of these donors are “all-in” givers, too—they don’t just provide dollars, they give time and resources to organizations they care about, and are conscious consumers, meaning they aim to align their purchases with their values, she says.
Overall, the study found volunteering is on the rise, with 37% of affluent households saying they gave their time to charitable organizations and causes last year. That’s up from 30% in 2020—when the pandemic kept volunteers at home—but down from 48% who said they volunteered before the pandemic.
Although volunteering may not be back at full strength, Jarvis notes that the pandemic was still a factor for donors last year, especially for more susceptible older populations.
“In perspective, this is very encouraging,” Jarvis says. “There are some people who say, [volunteering] is never going to come back. … Well, let’s wait. Human beings like to be with each other.”
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