5 Trends in High-Net-Worth Philanthropy
Wealthy families and organizations are giving more to charity but also targeting funding to fewer grants in their efforts to create bigger impacts.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Philanthropy is an increasingly important part of people’s financial pictures. It allows individuals to link their personal goals and values to the way they save, invest and spend their money. For “high-net-worth” families, it’s an opportunity to unify a shared legacy for generations to come. Let’s look at some recent trends in high-net-worth philanthropy.
We recently examined the giving activities of nearly 1,000 private foundations with assets between $1 million and $500 million over the past two years to understand how wealthy families are pursuing their philanthropy.
While some of the highs and lows we experienced in that period may feel like incomparable moments in time, they’ve had a lasting impact that sets the stage for future giving.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
These top five findings provide a benchmark for established and aspiring philanthropists.
1. Philanthropists Are Giving Away More.
Supported by double-digit endowment growth and the residual effects of 2020, private foundations increased their giving in 2021. The foundations we analyzed gave away a total of $689 million in 2021, an increase of $40 million over the prior year, and an average of $727,129 per foundation.
2. Philanthropy Is Becoming More Concentrated.
At the same time, these foundations funded 500 fewer grants in 2021, indicating a shift from getting aid to as many recipients as possible during the intense and rapidly changing needs of 2020 to increased targeting of their dollars in an effort to create greater impact.
3. Foundations Are Going Above and Beyond More Often.
Our data indicates that a large number of foundations regularly give more than the annual mandatory distribution requirement of 5%, signaling a strong commitment to go above and beyond for charitable causes.
In 2021, the foundations in our study disbursed an average of 7.2% of their assets, with smaller foundations (those with assets between $1 million and $10 million) giving away 8.9% of their assets.
4. Prepandemic Norms Are Reemerging.
In addition to fewer, more concentrated grants, there is other evidence that philanthropists are starting to revert to prepandemic giving patterns.
First, there was a notable decrease in grants to human services and public/societal benefit organizations, which both saw sharp increases during 2020 as donors focused on the public health emergency and tackling systemic racial inequities.
Second, we observed less use of general-purpose grants, which were especially useful during the pandemic, and more specific-purpose grants that have long been favored by major donors, as they allow them to ensure their gifts align with their mission.
Third, during the recovery of 2021, there was a 64% decrease in grants to individuals, which were used abundantly in 2020 to get aid quickly and directly to the people and places that needed it most.
5. Foundation Size Influences Makeup of Endowment Portfolio.
Smaller foundations have the highest allocation to equities, ending 2021 with 61.5% exposure. They also maintain the highest level of cash at 12.4%, as the increased liquidity enables higher levels of giving.
Conversely, larger foundations have more complex portfolios. They have an average allocation of 23.5% to alternative investments, such as private equity and hedge funds, which is nearly five times the exposure of smaller foundations, and 8.4% of their assets are in a unique mix of life insurance, program-related investments, closely held stock, receivables, annuities, inventory and other nontraditional assets.
Learn more in the complete 2022 Report of Private Philanthropy.
-
Quiz: Do You Know How to Avoid the "Medigap Trap?"Quiz Test your basic knowledge of the "Medigap Trap" in our quick quiz.
-
5 Top Tax-Efficient Mutual Funds for Smarter InvestingMutual funds are many things, but "tax-friendly" usually isn't one of them. These are the exceptions.
-
AI Sparks Existential Crisis for Software StocksThe Kiplinger Letter Fears that SaaS subscription software could be rendered obsolete by artificial intelligence make investors jittery.
-
Social Security Break-Even Math Is Helpful, But Don't Let It Dictate When You'll FileYour Social Security break-even age tells you how long you'd need to live for delaying to pay off, but shouldn't be the sole basis for deciding when to claim.
-
I'm an Opportunity Zone Pro: This Is How to Deliver Roth-Like Tax-Free Growth (Without Contribution Limits)Investors who combine Roth IRAs, the gold standard of tax-free savings, with qualified opportunity funds could enjoy decades of tax-free growth.
-
One of the Most Powerful Wealth-Building Moves a Woman Can Make: A Midcareer PivotIf it feels like you can't sustain what you're doing for the next 20 years, it's time for an honest look at what's draining you and what energizes you.
-
I'm a Wealth Adviser Obsessed With Mahjong: Here Are 8 Ways It Can Teach Us How to Manage Our MoneyThis increasingly popular Chinese game can teach us not only how to help manage our money but also how important it is to connect with other people.
-
Looking for a Financial Book That Won't Put Your Young Adult to Sleep? This One Makes 'Cents'"Wealth Your Way" by Cosmo DeStefano offers a highly accessible guide for young adults and their parents on building wealth through simple, consistent habits.
-
Global Uncertainty Has Investors Running Scared: This Is How Advisers Can Reassure ThemHow can advisers reassure clients nervous about their plans in an increasingly complex and rapidly changing world? This conversational framework provides the key.
-
I'm a Real Estate Investing Pro: This Is How to Use 1031 Exchanges to Scale Up Your Real Estate EmpireSmall rental properties can be excellent investments, but you can use 1031 exchanges to transition to commercial real estate for bigger wealth-building.
-
Should You Jump on the Roth Conversion Bandwagon? A Financial Adviser Weighs InRoth conversions are all the rage, but what works well for one household can cause financial strain for another. This is what you should consider before moving ahead.
