The global upheaval of 2020 didn’t inspire more wealthy people to give to charity, but it did change where and how they did their giving.
The share of affluent Americans who donated to charity last year held steady at nearly 90%, according to the 2021 Bank of America Study of Philanthropy: Charitable Giving by Affluent Households.
That’s about the same percentage as the last edition of the study, which looked at 2017 charitable giving and found that 90% of affluent households donated that year.
‘This sustained commitment by donors shows the importance of a strategic approach to philanthropy that is still flexible enough to respond to a sudden surge in need.’
— Ann Limberg, head of Philanthropic and Family Office Solutions, Bank of America Private Bank
“Philanthropic households rose to the extraordinary challenges presented by the pandemic”, said Ann Limberg, head of Philanthropic and Family Office Solutions, Bank of America Private Bank.
“This sustained commitment by donors shows the importance of a strategic approach to philanthropy that is still flexible enough to respond to a sudden surge in need,” she added.
The 2021 study surveyed 1,626 households and defined affluent as those with an annual household income of more than $200,000 and/or a net worth greater than $1 million, not including the value of their primary home.
The study was conducted in collaboration with the Indiana University Lilly Family School of Philanthropy.
The percentage of affluent households giving to charity has dropped since 2013, when 98.4% donated, according to previous editions of the study dating back to 2005.
Affluent households changed their giving behavior in 2020
As the pandemic cost millions of people jobs and long lines formed at neighborhood food banks, wealthy donors focused more on their own communities in 2020, increasing donations to local charities, individuals and businesses, the study found.
In fact, 90% of the affluent households that increased their giving for basic needs (such as food, shelter and medicine) in 2020 donated to organizations in their own communities.
Nearly 1 in 4 affluent households (23%) increased their giving at a local level by “donating money or goods directly to individuals or local businesses in their community, more than twice as many as those who increased their giving to individuals or businesses outside their community (10%),” according to the study.
Some of America’s wealthiest philanthropists zeroed in on their own backyards in 2020, according to the Chronicle of Philanthropy’s Philanthropy 50.
Jeff Bezos, founder of Seattle-based Amazon
pledged $50 million to pandemic relief in Washington State; former New York City mayor Michael Bloomberg’s Bloomberg Philanthropies funded meals for 30,000 New York City healthcare workers; Phil Knight, co-founder of Oregon-based Nike
teamed with a few other Nike executives to donate $2 million to the Oregon Community Foundation Recovery Fund.
More ‘unrestricted’ giving
Wealthy donors were also more likely to make “unrestricted” gifts in 2020, the study found, meaning that donors told nonprofits to decide for themselves how best to use their contributions, rather than requiring that a donor’s money only be used for certain purposes of the donor’s choosing.
This style of charitable giving became more popular in 2020, with high-profile philanthropists such as MacKenzie Scott, the former wife of Jeff Bezos, handing out billions in unrestricted gifts to nonprofits across the country.
“During the pandemic, unrestricted giving by affluent Americans supported continuing operations at many nonprofits, enabling them to continue serving their communities, and was a significant aspect of giving behavior during the pandemic,” said Una Osili, professor of economics and philanthropic studies at the Lilly Family School of Philanthropy.
Charitable giving in 2020 increased by 5.2%
Overall, taking into account donors at all income levels, charitable giving grew by an estimated 5.2% in 2020 compared to 2019, according to a recent Giving Tuesday Data Commons report.
2020 also saw a 1.3% increase in donors, reversing a multi-year trend where the number of donors to charity had been declining, thanks in part to people who donated relatively small amounts compared to their higher-net-worth peers.
The increase in donors was driven “almost completely by an 11% growth in small donations between $101 and $500, the highest growth for this donor size in five years,” Giving Tuesday found.
The Bank of America and Lilly Family School of Philanthropy haven’t yet released figures for the average giving amounts of affluent households in 2020. In 2017, those high-net-worth donors gave $29,269 on average.