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5 charity surprises for wealthy families

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Family philanthropy is a key driver of social change and a great way for Wealthy Families (HNWs) to clarify their values, engage in a mission, and work collaboratively across generations to build and protect their legacy.

We recently analyzed the grantmaking activities of over 1,000 private foundations over the past 24 months to understand how and where wealthy families are focusing their giving. Our results provide a benchmark for high net worth philanthropists and the advisors who support them.

Here are our top five findings about HNW donors:

If you think wealthy families only use their foundations to park assets and get tax breaks, think again. While foundations are required to cede 5% of their assets each year, those in our research sample ceded an average of 7.4% – a trend that has been consistent over the 12 years we have conducted this analysis. Even more impressive, the smallest foundations, or those with less than a million dollars in assets, were the biggest heroes in 2020: they gave on average 15% of their assets.

The foundations we studied collectively funded approximately 1,000 additional grants and distributed $ 15 million more in 2020 than in 2019, or an average of $ 339,032 per foundation. They also doubled their Individual Grants (GTI), a giving capability unique to private foundations that allows donors to issue emergency funds directly to those in need instead of granting to a public charity.

Judging by their actions in 2020, foundation donors will act quickly to help in times of urgent need. After the United States declared a national emergency in March 2020 due to COVID-19, foundations nearly doubled their grant volume in April, from 5.6% to 9.7% of total activity. They also increased their giving to human service and public / social benefit charities, which saw the highest year-over-year increases of any charitable sector tracked.

In addition, the dollars donors gave to charities only exceeded the funds they invested in their foundations for the second time in 20 years (the first being in 2019), demonstrating a strong commitment to the community. philanthropy during a time of heightened need.

Typically, philanthropists are careful about how they want their foundation’s money to be used by providing “specific purpose” grants. However, as they scrambled to meet the onslaught of urgent needs in 2020, they relaxed their restrictions and made more ‘general purpose’ grants to give charities maximum flexibility in how they use. funding. At 46% of all grants in 2020, this is the most balanced distribution we’ve seen since 2010, when general purpose grants made up only 32% of donations.

The Foundation’s endowments saw double-digit growth in 2020 and 2019, helping to fund increased grants in 2020 and set the stage for future donations. Some of the growth was fueled by investment returns (around 55% of endowment assets are allocated to equities) and some was a factor in new contributions from donors who replenished an average of 57 cents for every 83 cents. that they have disbursed in grants and expenses – a sure sign of continued charitable intent.

Despite the headlines that are given to mega-donors, such as the Gates Foundation and the Ford Foundation, 98% of the 100,000 or so private foundations in the United States have endowments of less than $ 50 million and 63% have less than $ 1 million. Great work is fueled by people sheltered from the spotlight who quietly and perseveringly pursue their philanthropic missions and effect change.

To see our full study on HNW giving, visit here.

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