One feel-good advantage of significant wealth is the ability to give funds to charitable groups to benefit others who need financial support.
Wealthy individuals are not required to donate funds to charity groups, but most of them do, at least among those with a net worth of $25 million or more, according to Spectrem’s new Perspective, The Charitable Giving Habits of Wealthy Investors. While the report extends its focus to all investors with a net worth over $100,000, it is the research related to those with great wealth that provides a precise examination of the relationship between great wealth and charitable giving.
The investors were asked to estimate their charitable giving over a 12-month period, and 41 percent gave at least $25,000, 23 percent gave at least $50,000 and 15 percent gave at least $100,000 to charitable organizations. It is noteworthy in the study that 8 percent said they did not make any charitable donations in the 12-month period.
Many charitable donations are done with the benefit of being untaxable. That law is beneficial to the charities, who thus get to enjoy the benefit of the full amount donated, and beneficial to those who donate, knowing that their full sum will go to help the people and causes that need the charitable donations.
Charities also benefit from the transfer of wealth upon the death of wealthy investor. Many Americans place demands for charitable donations to come from their estate. According to the Spectrem report, 5 percent of the average wealthy investor’s estate will go to religious organizations, and 7 percent more go to other types of charitable organizations.
For many wealthy investors, the most significant problem that comes from obtaining great wealth is ensuring that their own net worth does not ruin the lives of their children and grandchildren by making them secure enough financially that they lose focus on the value of hard work. Explaining the situation to offspring is a difficult task for some wealthy investors.
When asked to detail the efforts they make regarding the lesson of wealth transfer, 13 percent of $25 million plus investors said they would participate with their children in charity events in order to make them understand the value of giving back to those less fortunate, or to organizations trying to benefit the world.
The Charitable Giving Habits of Wealthy Investors looks at the level of donations among all investors, examines their motivations for donating, and considers the appeal of impact investing and donor advised funds, which allows some return on investment when funding groups aimed at benefitting mankind.
©2019 Spectrem Group