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.
![A heart knickknack sits on top of a stack of hundred-dollar bills.](https://cdn.mos.cms.futurecdn.net/8yhSBRi3JwAq5KVohfSagW-415-80.jpg)
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.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-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.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Hannah Shaw Grove is the chief marketing officer of Foundation Source, founder of "Private Wealth" magazine and author of 11 data-based books and hundreds of reports and articles on topics relating to the creation, management, disposition and transfer of wealth. Hannah has previously been the chief marketing officer at Apex Clearing, iCapital Network and Merrill Lynch Investment Managers and is a cum laude graduate of Harvard University. She holds the FINRA Series 6, 7, 24, 26 and 63 licenses.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Confused by Annuities? Making Sense of the Different Types
Many investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC® Published
-
Talkin' 'Bout My Generational Wealth: Baby Boomers
With retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
By Alvina Lo Published
-
How to Avoid a Big Hassle if Your Financed Car Gets Wrecked
How an insurance check is made out for repairs can cause a world of problems if the lienholder is left out.
By H. Dennis Beaver, Esq. Published
-
Estate Planning Strategies to Consider as Election Nears
Are big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
By David Handler, J.D. Published
-
How to Get Your Money's Worth From Your Financial Adviser
A good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
By Pam Krueger Published
-
Think of Prenups and Postnups as Financial Planning Tools
These contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
By Andrew Hatherley, CDFA®, CRPC® Published
-
Congratulations on Your Raise: Three Things to Do With It
We're not saying you shouldn't spend it on a new car, but there are some considerations to guard against lifestyle creep and to help ensure a comfy retirement.
By Andrew Rosen, CFP®, CEP Published
-
Check Off These Four Financial Tasks to Finish 2024 Strong
The new year is a popular time to set financial goals, but now is the ideal time to check how you're doing. Four tweaks could make a big difference.
By Daniel Razvi, Esquire Published