TV coverage of regular Americans with little flat-bottomed boats saving other regular Americans and their pets from flooded homes has caused many of us to pause and wonder how we might be able to help. Millions of people are texting their donations to the Red Cross or donating in other ways. And while the government will be providing significant aid, it’s unlikely to be enough to restore these families to their pre-Harvey lifestyle. (Plus, remember, government assistance will ultimately come from our tax dollars.) If ever there was a time when wealthy households should step up to the plate and donate, it is now. I’m confident that that will happen. Why?
According to Fox News Entertainment, numerous celebrities from the Kardashians to Beyonce to Dwayne “the Rock” Johnson are donating large sums of money to the Hurricane Harvey relief efforts. It’s even rumored, but not confirmed, that Floyd Mayweather is going to donate a very large amount of money to relief efforts. While some could argue that many of these movie stars might donate to generate publicity for themselves, most will be doing this from a genuine willingness to want to give back.
While now it is often a media event to donate to charitable causes, wealthy households have been donating to charitable causes for generations. Even today, multiple wealthy…and not so wealthy…households will donate to Harvey relief efforts. Why? Spectrem’s research with investors regarding charitable donations indicates that charitable giving is important to affluent households. And events such as disasters (like Hurricane Harvey) represent the types of charitable causes to which wealthy households prefer to donate.
For example, our recent research indicates that 19% of households with more than $25 million of net worth will donate more than $100,000 annually to charitable causes. Households with lower net worth amounts also donate, but obviously not at the same high levels as the super wealthy. And to what causes are they the most likely to donate? The largest percentage of donations will go to religious organizations at 20%, followed by colleges/schools at 16%. Social service organizations (such as Red Cross, United Way) are third at 14%. Nine percent donate directly to disaster relief.
Clearly Hurricane Harvey assistance falls within many of these areas…..religious organizations are gathering donations for Harvey victims, social service organizations such as the Red Cross are beneficiaries of Harvey donations, and direct donation to disaster relief efforts also falls within the purvey of Harvey donations. Important factors when choosing how to make a donation? Seventy percent of wealthy investors feel more comfortable giving to causes if they can insure that the donations are being spent in the most productive way. At the same time, wealthy investors like to choose an organization that they trust (such as a church or the Red Cross) and allow them to allocate donations as they see fit (44%).
Why do wealthy individuals donate? For the same reasons that everyone else does.
• Personal sense of responsibility (54%)
• It’s a worthwhile thing to do with my money (43%)
• Faith or religion (41%)
• Family encouragement (22%)
• To leave a legacy (21%)
• To set an example for others (21%)
Two of the primary goals of wealthy households are to raise financially responsible children and to teach them the value of philanthropy.
For these reasons, I believe and hope that wealthy households across America will donate generously to Hurricane Harvey relief efforts. I also believe the rest of us, because we all should feel a sense of responsibility towards our communities and our country, will donate what we can.