A recent study by Indiana University in collaboration with Bank of America presented an optimistic finding that 90% of affluent households gave to charities in 2020, a number similar to previous years. Furthermore, these affluent donors (defined as households with a net worth of $1 million or more – excluding their primary home value – and an annual income of $200,000 or more) increased their average giving by 48% last year, from $29,000 in 2017 to $43,000. The study’s authors and researchers were surprised by this finding, that despite the global challenges the COVID-19 pandemic created, affluent families were able to maintain a pattern of giving that had been “characteristic of better times.”
The world feels awfully divided these days, but I have long believed that all people, no matter their politics or beliefs, are far more alike than different. Learning that charitable giving has increased is undoubtedly inspiring.
We often counsel our clients about their charitable giving at this time of year, which makes perfect sense. This season is traditionally the time of harvest when we gather our crops from the field. In these modern times, our harvest may be literal, as the Sonoma County grape harvest ends, or metaphorical, as we turn our thoughts to upcoming holidays and celebrating our good fortune with friends and family.
Either way, as I thought more about this study of the philanthropy of affluent households, I was struck by the thought: you don’t have to be affluent to give, and all of us can give more than just our dollars. In the lead-up toward the end of the year and as we take stock of the previous ten months of 2021, what more might we do with our time, talent, and treasure to close out the year?
The Importance of Philanthropy
Philanthropy is crucial on so many levels. It can benefit the giver financially and psychologically, and it has the potential to transform communities, build systems, and spread ideas. We frequently work with clients to include charitable giving in their financial planning process, as it can help to illuminate their values and define their legacies. Philanthropy teaches us that we can see a problem and become part of the solution, an empowering lesson we all can continue to learn and practice.
But these data points on the charitable giving activities of the affluent could also diminish the significance of smaller gifts, and they leave out entirely the magnitude of non-monetary gifts of time and talent. I am reminded of a friend’s mother who donated more than 100 gallons of blood in her lifetime or the family who crocheted hundreds of hats and booties for premature babies around the world. My own co-workers recently got together for a beach clean-up on the Sonoma Coast. Some gifts are priceless – they transcend monetary value.
Financial Planning Conversations Lead to Much More
My colleagues and I often marvel at the profound conversations that happen spontaneously with clients when we discuss finances. One moment we are gathering information to set up a donor-advised fund, and the next moment we are learning about a beloved grandmother who collected cookie jars. Whether building a financial plan or an estate plan, it all comes from the same place. You cannot compartmentalize your money from your values from your family from your career because they all work together to create the life you have lived and the future you want.
So, whatever your reasons are for charitable giving, you can plan your philanthropy to achieve very different goals. Certainly, making tax-deductible donations can be an excellent strategy and typically a win-win solution for the donor and the recipient. Donor-advised funds, charitable trusts, and family foundations create opportunities for different generations to bond over shared interests and values. But don’t discount the impact you can have involving the whole family in volunteer work or encouraging your friends to get involved in a cause you care about.
As Robert Louis Stevenson wrote, “Don’t judge each day by the harvest you reap, but by the seeds you plant.”
The best charitable giving is worth more than the dollars it represents; if it truly is the thought that counts, there is no reason to limit our generosity.
CFP® CAP®, CCO & Managing Partner, Senior Wealth Advisor