While the Warren Buffetts and Bill Gates of the world pledge billions to solve  problems that face our world, media outlets write about their foundations, and possibly do a few follow up stories. Often, these High Net worth Gifts are either squarely criticized or lauded as the best thing that the super-rich can do. But how well do most of us understand the “Million dollar giving,” phenomenon? With wealth being increasingly concentrated in a few hands, and the rapid rise of millionaires and billionaires around the world, the Million dollar question is : How do these high net worth donors decide to donate, or not donate? What are the motivators and drivers for their philanthropy and what impact does their philanthropy have on our society?

There are a few well-known initiatives that look at the phenomenon of High Net worth Giving in the U.S, the most prominent of them being the Million Dollar List, maintained by the Lilly School of Philanthropy, Indianapolis, where I conducted research this summer. Based on all publicly announced gifts over a Million dollars, this list is one of the most comprehensive ones in the country and captures some key insights into how and where these large gifts are given. As the MDL website points out,

“We see that the million dollar giving of individuals (primarily men, women, couples, and families) tends to be greater on a gift-to-gift basis than that of foundations and corporations. In fact, the average gift value for individuals is nearly five times higher than that of the other types of donors. We also find that gifts to higher education institutions dominate the number of gifts received, but these gifts tend to be relatively small as a fraction of total dollars given on the MDL. There are significant differences in per capita giving and receiving by state, due in large part to the geographic dispersion of large foundations and nonprofits. There are numerous opportunities for future studies using the MDL data, including detailed investigations into donor networks, gift dispersion based on source of donor wealth, and a study of institutional characteristics that attract million dollar plus gifts.”

With the linkage between High Net worth Giving and certain sectors such as Higher Education and Healthcare having been somewhat established, grant seekers and others who are in this field can use this information for their fund-raising campaigns as well as for other insights. More findings and methodology used to gather data in the MDL can be found here.

 

Why do high impact donors give?

There are several motives for people to give. Some give for trigger reasons, as Ms.Rosqueta points out. For example, Imran Khan, the Pakistani political leader started his cancer hospital since his mother died. Political philanthropy is perhaps the least popular among the types of philanthropy and George Soros stands out among the handful of billionaires who has stuck his neck out to support transition of post-Soviet countries to become healthy democracies, through his Open Society Foundation.

 

Speaking of the impediments to giving, “I am not Rockefeller” study, conducted at the Center on High Impact Philanthropy pointed out that lack of confidence that they are able to make a difference is one factor that stops many wealthy donors from giving. Linked to this is the lack of data that they can use to make informed decisions.

Bank of American Study (BoA) at the Lilly School of Philanthropy, that found out the reasons why High Net Worth donors give. Some of the key findings, as stated in the report are:

• Last year, the vast majority (95 percent) of high net worth households donated to at least one charity. This high rate of giving among the wealthy is consistent with the previous studies in the series, and compares with 65 percent of the general population of U.S. households who donate to charity¹.
• In 2011, 89 percent of wealthy individuals volunteered their time and talent to nonprofit organizations – up 10 percentage points from 2009.
• For the first time, this study asked wealthy donors to forecast their giving for the next several years – an area of concern for nonprofits operating amid economic uncertainty. The findings offer an optimistic outlook, with 76 percent of wealthy donors planning to give as much as or more during the next three to five years (through 2016) than they have in the past; just 9 percent plan to give less.
• To put the importance of giving by wealthy donors into context, of the nearly $300 billion donated last year more than 70 percent was given by individuals, of which roughly half was given by the wealthiest 3 percent of American households.

 

While critics of High Net worth Giving point out that this is all about publicity or boosting one’s ego, those who give anonymously are the best refutation of this thesis. IN a conversation a few weeks ago, a senior officer at the Fund Raising Institute, IUPUI pointed out that this is not the case. “The truth is that it is a mix of both factors, both ego as well as altruism that motivate very wealthy people to give. To stress one over the other is to be reductionist in our thinking, he added.

While uncertain economic conditions, cut back in government spending in certain social services puts additional focus on individual donations, knowing how Foundations and the High Net worth donors donate is helpful in many ways. While their dollars may not entirely supplement the need or replace what has been lost in terms of government support, we do know that they can make an impact, if directed and channeled properly and with the right intentions. A closer study of this phenomenon, I argue is indispensable, if we are to be smart about philanthropy.