During normal times, Americans are tremendously generous, but in times of crisis they rise to meet new challenges brought on by disaster. The pandemic is no different.
In response to the unparalleled economic and health challenges, affluent households increased their giving, increased the flexibility of their gifts and concentrated giving on their local communities in 2020. These are several findings from a new report that highlights how Americans responded to the tremendous needs triggered by the pandemic.
Bank of America and Indiana University Lilly Family School of Philanthropy surveyed more than 1,600 high net worth households across America to explore their giving over the past year. They found that nearly 90% of wealthy households gave to charity in 2020. Several important patterns emerged about their giving:
1. Increased unrestricted gifts
2. Concentration of giving to local causes
3. Increased giving outside of charities
First, donors adopted a more flexible approach to their giving by making gifts that were not designated for a specific purpose. For example, 83% of affluent donors gave gifts to arts and cultural organizations that were unrestricted. Two out of three affluent donors gave unrestricted gifts to health and medical organizations and for education.
There are many reasons donors, who desire to support a specific project or advance a specific cause, want to ensure that their gifts are only used for those purposes. However, by making more gifts unrestricted, it helped charities use available funds on areas of most need. This may be a trend that continues into the future.
Next, affluent households focused more of their giving on their own communities, reflecting the desire to address the pressing needs of those around them. Some 90% of these households increased giving for basic needs to organizations in their communities. Far fewer supported U.S. organizations outside of their communities (35%) or overseas (15%). The emphasis on giving locally reflects the deep connections to the communities that donors reside in, possibly because they can often see the impact of the gifts right away and directly around them. It’s not surprising that wealthy households prioritized their neighbors rather than far-removed causes.
Finally, local charities were not the only recipients of increased giving. Nearly one in four affluent households gave money or goods directly to local individuals and companies.
Although the survey does not provide information about the specific giving vehicles these households employed, we know that donors increasingly turned to donor-advised funds for their giving last year. Bank of America’s donor-advised charitable gift fund reportedly experienced a 50% increase in grants made and dollars gifted last year. More than $500 million went to nonprofits as a result, and, as we know, local causes tend to benefit most from these gifts.
Overall, this and other recent data signal that in stepping up giving during the last year, private philanthropy helped local communities weather the unprecedented challenges of the pandemic.