While the world continues to grapple with the fallout from the COVID-19 pandemic, philanthropic giving by the ultra-wealthy continues to expand for many nonprofit and education organizations’ fundraising departments. Indeed, global philanthropy and the major role played by the ultra-wealthy is manifest — as are society’s growing expectations of this group’s responsibilities, given rising inequality and surging UHNW wealth, even during the global pandemic.
In its latest report on the subject, Wealth-X shines a spotlight on UHNW donors in North America, Europe and Asia, analyzing ultra-wealthy donors’ favorite causes, and drawing distinctions by region, gender, age, sources of wealth and primary industry.
To wit: Ultra-wealthy philanthropists tracked by Wealth-X gave $175 billion to philanthropic causes during 2020, the most recent statistical year available. The ultra-wealthy, those sporting a net worth of $30 million or more, accounted for 36 percent of all global giving during the year, with an average total donation of $590,000 per individual.
What’s more, growth in giving by the ultra-wealthy outpaced that derived from other sources in 2020, says the report, the organization’s sixth on philanthropic giving and titled Ultra High Net Worth Philanthropy 2022. This increase, in spite of the effects of the pandemic, emphasizes this group’s robustness as a source of financial contributions. Total giving by the ultra-wealthy rose by a solid 4.1 percent, outpacing growth of 2.9 percent in non-UHNW individual giving and a 1.5 percent increase in donations from institutions and public foundations.
North America accounted for more than half of all global ultra-wealthy donations. Total donations of $91 billion — including $85 billion from the U.S. ultra-wealthy alone, reflect the region’s elevated wealth and its longstanding tradition of public giving.
Europe’s ultra-wealthy gave $52 billion in 2020, equating to one-third of global UHNW giving. A strong tradition of state-backed welfare systems in many countries has typically constrained U.S.-style public giving in some areas. However, changes to individual expectations and the capacity (and desire) of some governments to fulfill this traditional role are causing a gradual shift. Despite having a larger ultra-wealthy population than Europe, Asia accounted for a 12 percent global share in UHNW giving, with a total of $21.5 billion.
UHNW donors in North America, Europe and Asia show characteristic differences. While across all three regions the vast majority of these donors are men and are mainly self-made (though somewhat less so in Europe), their average age in North America (68) is eight years older than in Asia. Banking and finance is the most common primary industry. A full-time focus on nonprofit and social organizations comes second in North America and Europe, but does not feature highly among Asia’s ultra-wealthy donors. Education is, by some distance, the most popular philanthropic cause and this preference is particularly pronounced in Asia.
UHNW individuals with private charitable foundations are different from other major philanthropists. While both groups clearly have a strong charitable focus, the ultra-wealthy with private foundations tend to be older and wealthier on average than their major philanthropist counterparts. Among the latter, a greater proportion have created their own wealth.
Through education is easily the most popular philanthropic cause, the targeting of those dollars vary by region. In Asia, those dollars are aimed particularly at improving educational facilities, teaching standards and learning opportunities. In North America, the largest gifts tend to go to higher education. This underscores the region’s longstanding alma mater tradition, which is now extending to more universities around the world as schooling becomes increasingly globalized.
Social services and healthcare/medical research are also causes that commonly attract donations from the ultra-wealthy across all regions. North America’s relatively higher share is influenced both by its advanced research capabilities and the privatized nature of the U.S. health system. While evidence of the huge improvements to quality of life and health outcomes from vaccine development, for example, has long been clear, the current pandemic will certainly have encouraged a partial shift in UHNW donations toward more medical- and social services-related causes. And the gradual increase in the number of female UHNW philanthropists is encouraging another trend, as more funds are directed to tackle issues of gender equality and social justice.
The main regional variation among the leading charitable causes relates to arts and culture, which is far more popular among UHNW donors in North America and Europe than in Asia.
At the time of this report’s publication, there was still little firm data available for the trends in philanthropic giving during 2021. However, Wealth-X reports that what evidence there is suggests that donation levels either remained stable or strengthened moderately.
Given concerns that the pandemic has likely amplified already widening social and economic inequalities in many countries, the need for charitable giving is clear and the importance of the nonprofit sector can be expected to increase in the coming years.
This story was excerpted from the Ultra High Net Worth Philanthropy 2022 report published by Wealth-X. Download a complete copy of the Wealth-X report at this link: https://bit.ly/3HXTlPK